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This week’s hot topics —
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Deepseek shook things up this week. Everywhere.
Starting with big US tech stocks like Nvidia and Meta tanked, triggering a Nasdaq selloff. Even back home, stocks like Anant Raj, and Netweb Technologies dropped.
Why? Right after this Chinese AI startup dropped its latest version, it shot to the top of the Apple Store charts. What makes it stand out is that it says it was built way cheaper than big names like OpenAI (ChatGPT’s parent), using fewer high-end chips. That sparked global fears — challenging the idea that AI needs pricey, complex hardware to advance.
But, why did Anant Raj, Netweb crash? Well, Anant Raj, mostly known for real estate, expanded into data centers and offering secure solutions. They’ve also jumped into AI, teaming up with Google in 2024 to create AI-powered tech.
And Netweb Technologies, which gets around 15% of its revenue from AI, has teamed up with NVIDIA to design advanced GPU systems. This partnership is key to their AI growth strategy.
So shifts in the AI hardware landscape do make such companies vulnerable.
But then came a clarification, and both stocks hit their 10% upper circuit limit. It was to calm investors and highlight how Deepseek is more of an opportunity than a threat.
Netweb said DeepSeek helps boost AI adoption and grow the market. And Netweb’s AI solutions support training and inference, backing India’s push for more local tech. It’s also confident in its solid tech and finances, solidifying its lead in high-end computing.
While Anant Raj said most of their revenue comes from real estate and data centers, like colocation and cloud services. They believe the AI boom will drive growth in their data center business, and that new tech will only push up demand for cloud infrastructure.
This calmed investors, and the stocks bounced back. Now, how much they'll make from this opportunity is something to keep an eye on.
Indus Towers reported better-than-expected financial results for the third quarter. And this sparked hopes for the company, including a possibility of a big dividend announcement.
Quick rundown: Indus Towers is India's top mobile tower installation company and 3 out of every 5 calls made are through an Indus site. Its major customers ofcourse include telco giants, Jio, Airtel, Vi, Hexacom, BSNL, among others. And it makes money by setting up, running, and leasing telecom towers to these service providers.
Both Airtel and Vodafone Idea owned stakes in it, but after a 2024 buyback, Airtel now holds more than 50% whereas Vi’s sold its entire stake in December to repay its debt it owed to Indus.
So now thanks to Vi paying its monthly dues to Indus on time since January 2023, Indus Towers made a profit of Rs 4,003 crore in Q3 — more than double last year’s and above analysts' expectations.
Big wins from Indus’s Q3 results, as per brokerage Citi: a) Indus saw a huge jump in EBITDA, up from Rs 4,900 crore to Rs 6,958 crore, mainly from recovering Vi’s dues. As a result, net income more than doubled.
b) Strong cash flow that jumped to Rs 2,700 crore in Q3. They expect this to keep growing in Q4, with the possibility of Rs 20 per share in dividends in the second half of FY25. Indus last paid a dividend in 2022, but then paused them due to rising dues from Vodafone Idea that was hurting its cash flow. So the improvement in finances is leading to the big dividend hopes.
Hopes are also up, with the expectation of a strong order book, thanks to its major client Vi restarting its network expansion. Plus, Indus is also planning to dive into EV charging infrastructure biz.
Last year’s big rally in Indian stocks has hit a bump, with the Nifty 50 facing its worst monthly slump since 2001. And it's the small and mid-cap stocks that have taken the hardest hit as risk-off moves intensifies.+
The NSE Nifty Smallcap 250 Index fell 20% from its September highs on Tuesday, entering the bear market territory along with Nifty Next 50 (which constitutes 50 stocks ranked just after Nifty’s top 50 and is also known as junior 50)
A 20% drop from peak levels is seen as the start of a bear market, showing investor jitters amid rising volatility.
And even though the index bounced back in Wednesday’s session, the concern about the valuation still remains. “This small-cap selloff, caused due to high valuation expansion over the years, can extend the collateral damage for the broader market as well,” Deven Choksey (well-known market expert) told Bloomberg.
With corporate earnings slowing, investors are wondering if Indian stocks are still worth their premium over other emerging markets. Nearly 40% of the listed stocks have tumbled 30-95% from their 52-week highs.
The sell-off has hit smaller stocks hard, with around 222 stocks dropping 60-96% from their 52-week highs*.
Smallcaps are popular for their growth potential and ability to deliver those big alpha returns even though they are riskier than large-caps because they’re smaller, less established, and more vulnerable to market swings, and more prone to big price fluctuations and losses.
But despite this, the last few years, smallcaps were actually valued higher than largecaps, with the idea being that they’re growing faster, so the high multiples made sense. And this led to a lot of excess or “froth” in the space.
But the recent sell-off shows how investors are backing off from risky assets and staying cautious due to all the uncertainty.
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