Storm the streets 👊
Apple dominates, Birla surprises, and stonks need alternatives.
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Market summary: 📊
Losses in India keep piling up, with the sensex now down nearly 6% from all time highs. The circus in the US continued into another day, eventually closing the day out on a high.
US:
S&P 500 - up 0.98%
Nasdaq 100 - up 0.68%
India:
Nifty 50 - down 1.07%
Sensex - down 1.13%
Hottest from the oven ♨️
✅ nothing goes unsold—by the end of the bidding process, StoveKraft IPO was subscribed like 18 times over, almost guaranteeing a blowout run when trading goes live in a few days. The retail investor portion was oversubscribed nearly 26 times. To remind you, SK sells stoves, cookware, and kitchen appliances under notable brand names like Pigeon, and the fundamentals look pretty attractive.
✅ issa V shaped comeback—The Aditya Birla Group is optimistic that India’s recovery will not skip a single beat here on out. Taking a few jibes at “economists” with distorting perspectives, Chairman of the Birla empire committed to investing nearly $2.4 billion under the group’s banner to chase opportunities emerging across the spectrum. Not a huge surprise really considering consumer spending, inflation, earnings, all singularly point towards faster than expected economic recovery.
Birla already putting that optimism to work 🤝
Aditya Birla Fashion and Retail threw investors a puzzle by purchasing 51% stake in luxury ethnic wear label Sabyasachi for ₹398 crores. Market’s first reaction? Obviously displeasure— kuch digital-wigital jaise naya karo, kya ethnic fashion.
Birla’s long term vision sees India’s ethnic wear segment, particularly in the luxury category, continue to explode over the next 4-5 years, with potential to deliver a globally recognizable brand. With this deal, they’re very obviously buying into the “creative” machine that Sabyasachi has built, with some of India’s best apparel designers in the category vying to work for the label.
On the other hand, Sabyasachi gets to leverage Birla’s wide and unrivaled distribution network to bring these products to the masses (online and offline, and don’t forget Flipkart owns a bit of Birla Fashion too).
What matters: the possibilities here are endless—the two companies can create a fast fashion phenomenon, for example a Zara-like refreshing take on ethnic wear for the upper-mass market, modestly expensive segment. Foreign markets are proof that if done right, businesses in these categories can be extremely profitable—it’s a long game, and the ball’s in Birla’s court.
Yeah, no shit Goldman 🙄
“Parts of the market are in a bubble, but they’re likely not going to pose a risk to the broad market.”—warned Goldman Sachs in a research piece released earlier this week. After that, the street has boiled even more.
In times when the market gets frothy, everyone suddenly becomes a dooms-pundit, so take these opinions with a pinch of salt.
Goldman is basically saying there are two major areas of concern right now—SPACs (acquisition companies that are taking startups public) with literally no credibility raising big money and avoiding scrutiny. And high-flying tech companies with no profitability in sight. Which kinda makes sense.
However, they’re also reiterating that investors staying long in credible businesses don’t need to worry too much, and the consequences on the broad market won’t be as harsh. Choose yo game.
Timmy and Zuck had dates with Wall Street 🌹
Tis’ earnings time, and both Apple and Facebook reported their numbers for the last 3 months of December 2020, giving investors valuable clues on spending patterns.
Apple absolutely crushed it—like “BEST QUARTER EVER” crushed it. The company made $111 billion in revenues—billion with a B, as iPhones cleared shelves faster than they could restock em. The massive digital store launch right before Diwali in India helped too.
Some other major highlights:
IPad (grew 41%) , Mac books (grew 21%) — the strength was consistent across, aided by strong pull from work-from-home upgrades
Services, the unassuming subscription business in Apple’s belly, reported nearly $16 billion in revenues for a quarter!
Wearables (watch, airpods, etc.) grew another 30%
Facebook on the other hand continues to win from increased digital activity—revenues grew a solid 33.2% and FB’s “other” segment which includes payments, commerce, and hardware related revenues surprisingly grew 156%. 3.3 billion people use the platform each month.
But Facebook’s tone was a bit less enthusiastic about the future—Zuck and team basically told investors they can’t guarantee growth will continue strong in 2021, because first of all, Apple’s latest IOS update which gives users more control on sharing their data, is having a harsh impact on FB’s ad targeting.
And secondly, nobody knows how the economy will play out, so advertisers are being a little cautious. The markets kinda walked away with “all good” numbers, but with mixed uncertainty about the future.
Closing out—need alternatives to Stonks 👋
GrowFix, a digital investment platform raised $2 million for a seed round from Zerodha’s fintech fund Rainmatter. Better Capital, and a bunch of other notable angels piled in as well.
The ongoing circus is obviously surfacing the market’s worst side, and Zerodha believes this is the right time to revisit the question—how can the average retail investor insulate themselves from such volatility, but still dip toes to reap some respectable returns? Growfix is trying to solve that problem by offering an asset-backed alternative with slightly better returns than boring FDs, minus all the risk and volatility of stonks.
India’s diversity brings diverse investors with an appetite for diverse risk profiles. More optionality is always good for the markets.
Tweet of the day 🐦
The storm out to take down Wall Street faced an ugly truth—trading services into stocks like Gamestop were cut off for redditors. The hypocrisy of the situation is that platforms like Robinhood rose up with the promise of creating more equitable markets for the average investor. Just dug their own grave. People are furious.
What else are we snackin’ 🍿
📚 Ridin the MBA wave - BITS Pilani will be financing ₹1,500 crore for a new B-School in Mumbai. BITS School of Management (BITSoM) will offer specialization in a variety of areas. BITS promises to pull in top-class faculty from schools like Wharton and SMU. First batch starts in July'21 with 120 students.
🙌Doubling down like a king- after phenomenal response for its online store launch, which overnight helped double market share, Apple is planning on rolling out self owned stores across India. The first retail store will be inaugurated in Mumbai this year.
Hit that 💚 if you liked today’s issue.
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