When markets resume trading today, Hindustan Zinc, Vedanta, Marico, Vodafone IdeaVodafone Idea narrowed its consolidated losses to Rs 5,286 crore in Q3FY26 versus Rs 6,609 crore in the year ago period. The telecom company's revenue from operations for the quarter stood at Rs 11,323 crore, up 2% over Rs 11,117 crore in the corresponding quarter of the last financial year.Live EventsVedanta / Hindustan Zinc on Tuesday approved the sale of up to 1.59% stake representing up to 6.7 crore equity shares in its su ...

Market Overview - Markets opened weakly on Tuesday, with the Nifty 50 at 25,580.30, down 127.65 points or 0.50% from the previous close of 25,585.50, and the Sensex at 83,207.38, down 341.95 points or 0.41% from 83,246.18 [1] - The previous session saw the Nifty end 109 points lower and the Sensex drop by 324 points, with the Reality Index losing over 2% [2] Investor Sentiment - Concerns over potential US tariffs on Europe and geopolitical uncertainties are dampening investor sentiment, leading to continued market volatility [3] - Foreign Institutional Investors (FIIs) sold Indian equities worth approximately ₹3,263 crore on January 19, while Domestic Institutional Investors (DIIs) purchased around ₹4,234 crore, indicating a net selling of ₹26,000 crore by FIIs and net purchases of ₹34,000 crore by DIIs for January so far [3] Stock Performance - Among the top gainers on the Nifty 50, Kotak Mahindra Bank rose by 0.73% to ₹430.00, Hindustan Unilever increased by 0.58% to ₹2,427.80, and NTPC gained 0.48% to ₹345.00 [4] - On the losing side, Eicher Motors fell by 2.90% to ₹273.20, Bajaj Finance declined by 2.61% to ₹944.15, and Trent dropped by 1.87% to ₹3,872.00 [5] Economic Indicators - The IMF has raised India's FY 26 GDP growth rate to 7.3%, indicating robust economic performance despite challenges [6]

Economic Outlook - Double-digit loan growth across most large banks indicates rising economic activity after a prolonged phase of single-digit growth, suggesting an economic pickup [1][13] - System-wide gross NPAs have fallen to multi-year lows, strengthening the investment case for large banks [5][13] Banking Sector - Axis Bank and Kotak Mahindra Bank reported strong Q3 updates, while HDFC Bank showed stable but unspectacular growth; Axis is considered attractive from a valuation standpoint [2][13] - Preference remains with large banks over smaller lenders due to historical asset-quality risks associated with aggressive lending by smaller institutions [6][13] - Preferred banking holdings include ICICI Bank, Axis Bank, State Bank of India, and IDFC First Bank, which may benefit from lower interest rates [13] Consumption and Retail - Caution is advised on high-valuation retail stocks, with expectations for Trent being high, making sustained 20%+ growth difficult [7][13] - FMCG companies like Marico and Britannia have performed well during the consumption slowdown, while stocks such as Dabur and Godrej Consumer Products could emerge as strong performers in the next one to two years [8][13] FMCG Sector - ITC faces challenges due to a sharp excise duty hike on cigarettes, which could hurt volumes and presents risks from illicit cigarette inflows; its non-tobacco FMCG business has yet to achieve meaningful profitability [9][13] Power Sector - Preference is for transmission, transformer, and power equipment companies over pure financiers or generators due to long-term risks in solar project financing [10][11][13] Automotive Sector - Market leaders in the automotive sector continue to outperform, making turnaround bets less attractive; Mahindra & Mahindra is highlighted as a strong position [12][14] - Commercial vehicles are seen as having better prospects than passenger vehicles within Tata Motors [14] Staples Sector - A gradual recovery in staples is expected after two to three years of weak demand, with potential for double-digit returns if consumer demand picks up and inflation eases [12][14]

Summary of Conference Call Notes Industry Overview: FMCG Sector in India Key Insights - **Earnings Growth Acceleration**: The FMCG sector is expected to see strong earnings growth in 2026, driven by revenue growth and margin improvements. The anticipated earnings growth is attributed to GST rate cuts and low food inflation, which will benefit mass-consumption categories like soap, hair oil, shampoo, and biscuits [1][5][10]. - **Demand Drivers**: The combination of GST rate cuts and a low base from the weak summer season in 2025 is expected to accelerate growth in various categories, including aerated beverages [1][10]. - **Margin Improvements**: Companies are experiencing favorable conditions due to declining input costs for key materials such as palm oil, crude oil, tea, and copra, which will enhance gross margins [1][10]. Earnings Downgrade Cycle - **Conclusion of Downgrade Cycle**: The earnings downgrade cycle for many leading FMCG stocks is believed to be over, with expectations of strong EPS growth moving forward. This follows significant downgrades in 2HFY25 and 1HFY26 due to volume growth moderation and margin pressures [3][19]. Company-Specific Insights Top Picks in FMCG - **GCPL, TCPL, and Marico**: These companies are highlighted as top picks due to their strong growth potential and favorable market conditions. GCPL is expected to see strong earnings growth driven by high-growth segments, while TCPL is anticipated to deliver significant revenue growth from its diversified product offerings [2][24][45]. - **Varun Beverages (VBL)**: VBL is projected to experience strong revenue growth as it recovers from a low base due to the weak summer season in 2025. The company is also improving margins through backward integration in its Africa business [2][24][40]. Consumer Discretionary Sector - **Cautious Outlook**: The consumer discretionary sector is viewed with caution due to high valuations and increased competition. Titan is identified as a top pick within this sector, expected to maintain consistent earnings growth [4][26][27]. - **Competitive Intensity**: High competition in grocery retailing, paints, and fashion is noted, which may impact profitability for many companies in this sector [4][27]. Financial Projections - **Sales and PBT Growth Estimates**: - FMCG sales growth is projected to increase from 5.8% in FY24 to 10.0% in FY27 [9]. - PBT growth for FMCG coverage (excluding ITC) is expected to accelerate to mid-teens in FY27 [7][10]. Input Cost Trends - **Moderation in Input Prices**: Key input costs such as crude oil, palm oil, and tea are showing signs of moderation, which is expected to positively impact gross margins for FMCG companies [10][11][18]. Risks and Considerations - **Regulatory Risks**: Potential regulatory changes affecting gold imports could impact companies like Titan, while adverse weather conditions may affect demand for FMCG products [35][39][47]. - **Competitive Pressures**: Increased competition in various segments could lead to pricing pressures and impact margins for companies across the FMCG and discretionary sectors [27][41]. Conclusion The FMCG sector in India is poised for a strong recovery in 2026, driven by favorable demand conditions and margin improvements. Key players like GCPL, TCPL, and Marico are well-positioned to capitalize on these trends, while caution is advised in the consumer discretionary sector due to competitive pressures and high valuations.

Market Overview - The equity markets ended marginally lower, with the BSE Sensex closing at 84,559.65, down 120.21 points or 0.14 percent, and the NSE Nifty falling 41.55 points or 0.16 percent to settle at 25,818.55 [2][9] - Nearly two-thirds of traded stocks declined, with 2,761 out of 4,328 stocks on the BSE experiencing losses, and 196 stocks hitting 52-week lows [2][3] Currency Impact - The Indian rupee opened at a record low of 91.07 against the US dollar but briefly recovered to 89.96 before falling back above 90, influenced by continued foreign outflows [3][4] - The rupee's volatility is expected to persist, with predictions of trading in the 89.80–90.80 range [4] Sector Performance - Among sectoral indices, Nifty PSU Bank saw a gain of 1.20 percent, while Nifty Media dropped by 1.80 percent, with Nifty Realty and FMCG also lagging [6] - The Nifty Midcap 100 declined by 321.95 points or 0.54 percent, and the Nifty Smallcap 100 fell by 126.60 points or 0.73 percent [6] Notable Stock Movements - Shriram Finance led the gainers, rising 2.07 percent to ₹866.00, followed by State Bank of India at ₹976.35, Hindalco at ₹848.00, Eicher Motors at ₹7,143.00, and Tata Consumer at ₹1,180.00 [7] - On the losing side, Max Healthcare plunged 3.71 percent to ₹1,033.20, Apollo Hospitals fell 1.98 percent to ₹6,912.00, and HDFC Life slipped 1.49 percent to ₹752.95 [8] Technical Analysis - The market faced resistance near 25,920/84,900, forming a bearish candle on daily charts, indicating a negative trend [9] - A decisive slip below 25,700 could trigger a correction towards 25,500–25,400, while the 25,950-26,000 zone is expected to act as crucial resistance [10]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: India Consumer Sector - **Outlook for CY26/FY27**: Improvement in staples volumes, sales, and EBITDA growth expected to reach 6%, 9%, and 2% year-on-year respectively, compared to 3%, 8%, and 5% in CY25/FY26, indicating a positive trend above the 10-year average [1][2][4] Core Insights and Arguments - **Positive Macro Parameters**: A combination of low inflation, improved wage growth, favorable agricultural conditions, GST cuts, and tax reforms are expected to enhance consumption demand [2][4] - **Volume Growth Recovery**: Anticipated mid-single-digit percentage growth in volumes after four years of low growth, with rural areas expected to see more significant improvements than urban areas [2][3][4] - **Pricing Power**: While pricing-led growth is limited, companies are expected to regain pricing power due to improved affordability and potential raw material price increases [2][3][4] - **GST Rate Cuts**: The reduction in GST rates for daily items is expected to drive formalization in the market, benefiting organized companies by narrowing the gap with unorganized products [2][3][4][99] - **Quick Commerce Growth**: The quick commerce channel is growing rapidly, providing a competitive edge for FMCG companies through convenience and discounts, while competition from D2C brands is easing [2][3][106] Additional Important Insights - **Brand Performance**: Companies with high market share and brand recall are likely to benefit from the new distribution channels, while D2C brands face challenges in scaling and profitability [3][106] - **Margin Recovery**: Improvement in gross profit margins is expected due to soft raw material prices and previous price hikes, with a return to normative levels anticipated in 2HFY26F [3][4][107] - **Sector-Specific Trends**: - **Paints**: Expected cyclical recovery with projected growth of 12% in volumes and 9% in sales for CY26/FY27 [3] - **Jewelry**: Strong demand growth of over 20% expected, driven by wedding season despite high gold prices [3] - **Retail Categories**: Other retail sectors like apparel and QSR are expected to recover gradually in CY26 [3][4] Valuation and Investment Recommendations - **Valuation Levels**: Consumer staple stocks are currently trading at reasonable levels, providing comfort for investment [3][4] - **Top Picks**: - **Consumer Staples**: Godrej Consumer Products, Tata Consumer Products, Marico, Britannia Industries [5][6] - **Consumer Discretionary**: Titan Co Ltd, Asian Paints [5][6] Conclusion - **Overall Outlook**: The confluence of favorable macroeconomic factors is expected to drive a recovery in consumption across the Indian consumer sector, with a preference for consumer discretionary over staples due to anticipated stronger cyclical recovery [4][6]

Market Overview - India's Q2 GDP growth of 8.2% provided an initial boost to markets, leading the Nifty and BSE Sensex to record highs of 26,325.80 and 86,159 respectively [6] - Selling pressure in pharma and financial stocks caused a decline in indices, despite support from auto and IT sectors [6] Derivatives Insights - Derivatives data indicated noticeable call writing at the 26,250 strike and strong put interest at 26,150, suggesting a tight near-term trading range [6] - A sustained close above 26,300 is deemed essential to reignite bullish momentum in upcoming sessions [6] Company Developments - Bajaj Housing Finance is expected to see a block deal where promoter Bajaj Finance may sell a 2% stake at a floor price of Rs 95 per share, representing a 9% discount to the closing price of Rs 104.59 [6] - Hero MotoCorp reported dispatches of 604,490 units in November 2025, reflecting a 31% year-on-year growth [6] - Ambuja Cement successfully commissioned a 4 Million Ton Per Annum (MTPA) brownfield expansion of its Clinker Unit in Bhatapara, Chhattisgarh [6] - Hindustan Unilever Limited appointed Vandana Suri as Executive Director, Home Care, effective January 1, 2026 [6] - Amber Enterprises announced that its subsidiary IL JIN Electronics acquired an 80% equity stake in Shogini Technoarts Pvt Ltd for approximately Rs 506 crore [6] - IHCL's subsidiary, Roots Corporation Ltd, acquired a 51% stake in Pride Hospitality and ANK Hotels with investments of Rs 81.2 crore and Rs 109.3 crore respectively [6]

Company Developments - Marico's digital brands have surpassed Rs 1,000 crore in annual recurring revenue, with expectations that food and premium personal care will contribute 25% of its India revenue [4] - Tata Power has signed agreements to acquire a 40% stake in a special purpose vehicle for Rs 1,572 crore to develop the 1,125 MW Dorjilung hydro power project in Bhutan, which will be the largest public-private partnership hydro project in the country [6] - Adani Green has established two new subsidiaries to enhance its renewable energy operations in Gujarat [7] - Tata Consultancy Services (TCS) faced an adverse judgment from the US Court of Appeals regarding a legal dispute with DXC Technology, confirming damages but sending the injunction back for reconsideration [8] - Kotak Mahindra Bank announced a stock split of one share into five to make shares more affordable and increase retail investor participation [9] - Tata Chemicals' board approved an investment of Rs 910 crore for expanding manufacturing capacities at its plants in Mithapur and Cuddalore, including Rs 135 crore for dense soda ash production at Mithapur [10] Market Insights - Traders are advised to focus on sectoral rotation, particularly in the auto and banking sectors, while maintaining a stock-specific and risk-managed approach [1][12] - The market experienced a decline of nearly 0.5% amid weak global cues, with analysts suggesting that a sustained move above 26,250 could lead to a target of 26,500 [11]

Group 1: Market Outlook - Global investors are returning to explore bottom-up stock opportunities after 4-5 years of being on the sidelines, indicating a shift in foreign investor behavior [2][18] - India's valuations remain elevated, particularly in the autos, consumption, and industrial sectors, but pressure is easing as global markets correct and corporate earnings stabilize [2][18] - The Nifty's latest quarter showed 8-10% PAT growth, but margins remain soft; markets are expected to break out of consolidation only if earnings shift toward higher double-digit growth [6][18] Group 2: Sector Analysis - UBS remains positive on the BFSI sector, recommending a stock-specific approach rather than a PSU versus private lens; both private and PSU banks are seen as strong, with growth differentiation being key [8][18] - In the consumption sector, segments like jewellery and quick commerce are attractive, while some FMCG and auto names appear stretched [10][18] - The power and energy profit pool expansion is underestimated, with private corporate capex steady as a share of GDP, although a repeat of the 2003-07 boom is not expected [11][18] Group 3: Emerging Trends - Quick commerce is viewed as a high-growth area, with improving unit economics and faster dark-store expansion even in smaller markets [13][18] - Traditional auto manufacturers with limited EV exposure may underperform, and caution is advised in this sector [14][18] - India is not yet part of the global AI boom due to a lack of large capex-heavy AI infrastructure players; focus should be on how IT services adapt and which sectors adopt AI fastest [15][18] Group 4: IPO Market - Global investors are cautious but not worried about the exuberance in India's IPO market, viewing it as a small slice of their exposure; participation in IPOs does not significantly impact core investment strategies [16][18] - Despite global uncertainties and high valuations, India's narrative remains strong and diversified, with a bottom-up market approach being more appealing than a concentrated top-down strategy [16][18]

Consumption Sector - The recent GST reforms are expected to boost affordability and consumption across rural and urban markets, with around 90% of items moved from higher to lower tax slabs [1][38] - Experts anticipate a premiumisation effect among low- and middle-income households, as savings on essential goods will redirect purchasing power towards high-value consumption [2][38] - The consumption sector is projected to recover over the next 12-15 months, with private consumption growth expected to rise by 40-50 basis points in the second half of the current financial year [4][41] Corporate Profitability - Lower prices from GST reforms will create volume acceleration for producers, supporting profit margins and leading to an anticipated overall profitability increase of 1-1.5% relative to 2024-25 earnings [5][41] - The reforms are expected to stimulate demand for first-time buyers and replacement purchases, particularly during the festive season, with an industry expectation of a 10-15% improvement in demand for room air conditioners [22][41] Sector-Specific Impacts - Key beneficiaries in the consumer FMCG sector include Britannia Industries, Colgate Palmolive (India), Nestle India, and Emami due to reduced GST on essentials from 12-18% to 5% [11][15][41] - In the consumer durables sector, companies like LG, Daikin, Blue Star, and Dixon Technologies will benefit from reduced GST on room air conditioners and dishwashers from 28% to 18% [18][41] - The automobile sector, including Maruti Suzuki, TVS Motor, Hero MotoCorp, and Bajaj Auto, will see positive impacts from reduced GST rates on commercial vehicles and small cars [23][41] Infrastructure and Housing - The cement industry is expected to benefit from a reduction in GST from 28% to 9%, potentially lowering cement prices by Rs.25-30 per bag, which will support infrastructure and housing sectors [24][41] - Cost-efficient firms like Prism Johnson and Heidelberg Cement are positioned to enhance net realizations and margins over the medium to long term due to these reforms [25][41] Renewable Energy - The renewable energy sector will benefit from a reduction in GST on equipment from 12% to 5%, with key beneficiaries including Tata Power, JSW Energy, and Vikram Solar [26][41] - This reduction is expected to lower capital costs for solar and wind power projects, improving the internal rate of return and supporting government initiatives around renewable energy transition [31][41] Banking and Financial Services - Banks such as HDFC Bank, ICICI Bank, and IDFC First Bank are expected to benefit from increased demand for credit due to a pick-up in consumption and economic activities [32][41] - Non-Banking Financial Companies (NBFCs) focused on retail loans will also benefit from rising demand for consumer durables and vehicles [32][41] Insurance and Textiles - The insurance sector will face mixed impacts, with a reduction in GST on life and health insurance to nil, improving affordability but potentially diluting margins due to loss of input tax credit [33][41] - The textile industry will see a reduction in GST on fabrics and home textiles from 12% to 5%, benefiting companies like Sanathan Textiles and Grasim Industries [30][36][41] Oil and Gas - The oil exploration sector will be adversely impacted by an increase in GST from 12% to 18%, affecting companies like ONGC and Oil India [37][41] - The increase in costs for exploration and production is expected to dent cash flows significantly, with estimates of Rs.2,500-3,000 crore in losses for ONGC [40][41]