Newsletter
Inflation above RBIās upper limit, Defence stocks retreat, and AI overbooking backfired.
šļø Morning, folks and Happy Fridayyyyy! āļø
This is bigger than the āBig Thingā we usually cover, so we are putting it right at the top.
Nvidia co-founder Jensen Huang resigned as CEO, president and board member on Thursday, ending his 33-year run at the company he helped build into the centre of the AI boom.
The stock fell nearly 9% in extended trading as investors reacted to the sudden leadership change.
The resignation came shortly after reports that Nvidiaās board was considering removing Huang. Chief Financial Officer Colette Kress will serve as interim CEO while the company searches for a permanent successor. Huang will not retain a seat on Nvidiaās board.
Quick revision: Huang admitted that he had been unfaithful to his wife after reports connected him with Alice Huang, a business executive whom US intelligence reportedly suspected of working with Chinese intelligence. China has denied the allegation.
The New York Times later reported a separate relationship with Nvidia executive Kimberly Powell, who reported to Huang.
A small Indian angle: Indian-origin executive Aarti Shah, a former Eli Lilly digital chief and Nvidia director since 2020, was among the board members deciding Huangās future.
The larger picture: the US and China are competing to lead the development of advanced AI technology. Nvidiaās chips are central to that race because they provide the computing power needed to build and run AI systems.
Meanwhile, back home š,
Dalal Street gained for a third consecutive session, with both the Nifty and Sensex closing higher.
Sector performance was mixed. Realty stocks led the gains, while banking and financial stocks remained firm.
Auto and FMCG stocks faced selling pressure, and IT stocks fell for a fourth straight session.
š” Spotlight: MSCI shuffles its India lineup š
MSCI has added LIC, Adani Green Energy, Coforge and Meesho to its India Standard Index and removed PI Industries. The changes take effect after markets close on November 30.
MSCI creates stock market indices that investors use to track markets and build portfolios.
It regularly reviews companiesā size, trading activity and shares available to investors, updating its indices to reflect market changes.
According to CNBC-TV18, Indiaās share of MSCIās emerging markets index is expected to rise from around 12.9% to 13.15%.
The small-cap shuffle: India Small Cap Index will add E2E Networks, Apollo Micro Systems, HUDCO, AXISCADES Technologies, Shadowfax Technologies and PI Industries. Coforge will leave that index as it moves into the Standard Index.
Letās hit it! šŖš»
1 Big Thing: Indiaās retail inflation hits a two-year high š
Indiaās retail inflation rose to 6.09% in October, crossing the RBIās upper limit of 6% for the first time in two years.
What drove the rise: food prices were the biggest factor. Food inflation climbed to 8.94% from 7.74% in September, with essentials such as onions, garlic and ginger becoming more expensive.
Food accounts for nearly 40% of the basket used to measure retail inflation, so rising grocery bills can significantly push up the overall figure.
Food prices rose faster in rural areas, where inflation reached 9.09%, compared with 8.68% in urban areas, according to provisional October data.
Beyond the kitchen:
- Restaurants and accommodation: inflation increased to 10.06% from 9.36%.
- Clothing and footwear: 4.96%, up from 3.93%.
- Housing: 2.90%, up from 2.74%.
- Healthcare: 2.05%, up from 1.40%.
- Information and communication: 3.16%, up from 2.44%.
Inflation in personal care and other miscellaneous goods and services slowed to 10.14% from 13.75%. That means prices were still rising, but at a slower pace.
What happens next: the RBI targets inflation of 4%, with an acceptable range of 2-6%. Octoberās reading is above that range, but one month alone does not count as a formal failure. That happens when average inflation stays outside the range for three consecutive quarters.
The RBI will watch whether this rise fades or spreads to more goods and services.
Could food get costlier: weak rainfall and a possible El NiƱo weather pattern could hurt harvests and tighten supplies, keeping some food prices high.
2. Not a good day for defence stocks š
Hindustan Aeronautics fell more than 2% as the companyās operating profitability fell short of market expectations.
By the numbers:
- Net profit: up 16% YoY at ā¹1,936 crore
- Revenue: up 14.9% YoY at ā¹7,613 crore
- EBITDA: up 11.6% YoY at ā¹1,739 crore
- Margin: down to 22.8% from 23.5%
Why the fall: HALās revenue and net profit grew at a healthy pace. However, operating profit increased more slowly than revenue and missed analystsā expectations.
In simple words, HAL sold more during the quarter but kept a slightly smaller operating profit from every ā¹100 it earned.
The margin specifically fell as expenses increased faster than revenue.
The helicopter move: HAL has acquired the remaining 50% of HATSOFF Helicopter Training from CAE Canada.
HATSOFF provides simulator-based training for military and civilian helicopter pilots. It will now become HALās wholly owned subsidiary, giving the company complete control over the business and its future expansion.
While we are on earnings š,
Bharat Dynamics sold significantly more missiles and defence equipment in Q2, but earned less operating profit from those sales.
Its shares fell over 3% after the results as a sharp decline in margins overshadowed better-than-expected revenue growth.
By the numbers š:
- Net profit: at ā¹183 crore, down 15.3% YoY
- Revenue: at ā¹1,664 crore, up 45.1% YoY
- EBITDA: at ā¹101 crore, down 46.1% YoY
- Margin: at 6.1%, down from 16.3% YoY
What happened: revenue was a clear positive.
The company delivered more orders, but those sales generated much lower operating margins.
Zoom out: demand is not the immediate concern for Bharat Dynamics. It has a large order book and the government continues to increase domestic defence procurement.
The bigger question is execution. The company must secure critical components on time, deliver orders faster and restore margins.
3. How SoftBank lost $3.7B on AI equipment š«£
SoftBank just lost $3.73 billion after overcommitting to power equipment for its planned AI data centres.
Masayoshi Sonās company reserved gas turbines years in advance, even before its projectsā requirements were finalised. When those plans changed, billions in advance payments were lost.
And with turbine manufacturers already booking delivery slots for 2032, SoftBankās mistake exposes an expensive problem facing the AI infrastructure boom.
4. Stocks that kept us interested š
What went up ā¬ļø
š” Godrej Industries rallied 11% after Temasek invested ā¹2,500 crore in Godrej Capital, valuing it at up to ā¹28,000 crore.
ā”ļøBajaj Finance rose over 3% following the launch of its qualified institutional placement to raise funds from institutional investors.
āØ Kalyan Jewellers gained 7% and over 20% during the week after Q2 FY27 consolidated profit rose 64% YoY to ā¹427 crore.
š®āšØ HDFC Life gained nearly 4%, its highest since June, as October premium income rose 17.8% to ā¹3,334 crore.
š SBI Life gained nearly 3% as October first-year premium income rose 11.6% YoY to ā¹3,556 crore.
What went down ā¬ļø
šš» Page Industries fell over 12% after subdued Q2 results, despite revenue rising 11.5% YoY to ā¹1,439.6 crore from ā¹1,291 crore.
š Caplin Point Laboratories slipped over 5% despite September-quarter revenue rising 18% YoY and profit increasing 15.3% to ā¹178 crore.
ā Chennai Petroleum, ONGC, Oil India and other oil stocks fell 1-3% as global crude prices declined.
What else are we snackinā šæ
šļø Mega investment: ReNew plans to invest ā¹80,000 crore in Andhra Pradesh across green data centres, solar manufacturing and permanent magnet production.
š¢ Leadership change: Tata Steel CEO TV Narendran will take over as Tata International chairman, succeeding Noel Tata amid leadership changes across the Tata Group.
š IPO plans: Haldiram Snacks has reportedly begun preparations for a potential ā¹10,000 crore IPO, targeting a listing in late 2027.
And thatās a wrap. Pour yourself an extra one this weekend š„
Weāll be back like clockwork on Monday!
Hit that š if you liked this issue.
Disclaimer: this newsletter is for informational and research purposes only. Nothing here should be considered financial, investment, legal, or professional advice.
