Nvidia bags the third spot

10th February 2024 – 17th February 2024 | Another week in the markets

S&P 500	Nasdaq	VIX	DJIA	Russell 1000	NYSE
5,005.57	15,775.65	14.24	38,627.99	3,276.02	17,409.30
-0.42%	-1.34%	10.13%	-0.11%	-1.25%	-0.77%
Nifty 50	Gold	Silver	Brent crude	USD-INR	EUR-INR
22,040.70	$2,025.40	$23.47	$83.58	83.02	89.48
1.19%	-0.65%	3.55%	2.10%	0.00	-0.06%

Source: MarketWatch 

Hello Saturday,

This week, Nvidia scales past Alphabet and Amazon in market cap, Nissan Motors posts a fall in third-quarter net profit and Pernod Ricard’s stock rises after it reaffirms a positive annual outlook.

• Nvidia became the third-largest company in the world by market capitalisation after it scaled past Alphabet and Amazon
• Japanese automaker Nissan Motors posted a 42% fall in net profit for the quarter ending December on a y-o-y basis. The company has also projected a fall in annual car sales from 3.70 million units to 3.55 million units.
• Pernod Ricard’s management gave an encouraging outlook for the year, reaffirming that it will achieve anywhere between 4 and 7% of net sales growth. 
• US sanctions targetting Russian crude hurt Indian fiscal interests
• Mutual funds accumulate HDFC Bank on dips

Taking stock | Nvidia bags the third spot | Nissan’s net profit troubles | Pernod Ricard rises on strong outlook | Sanctions Setback | Mutual funds load up on HDFC Bank | Invest wisely | Another week in the markets

Taking stock

All three major indices hit a speedbreaker this week as consumer prices rose by 3.1% in January on a y-o-y basis. While inflation did cool down, it still outstripped the 2.9% inflation figure pencilled in by the market. The Nasdaq composite tanked by 0.8%, while the S&P 500 shed 0.5%. Dow Jones fell by 0.4%.

Nvidia bags the third spot

Nividia became the third-largest company in the world on Thursday after it sped past Alphabet and Amazon in the market capitalisation race. Currently, Nvidia’s market cap is only dwarfed by the likes of Apple and Microsoft.

Anticipation over the upcoming quarterly reports helped the Nvidia stock soar by over 2.4% pushing the chip manufacturer’s market valuation to a whopping $1.825 trillion. Nvidia leapfrogged into the third position after outpacing Alphabet’s market cap which stands at $1.821 trillion.

Nvidia’s investors have been cashing on the market’s drive to heavily invest in companies with robust AI prospects. Nvidia, just like the other bigwigs in the Magnificent Seven, has green-flagged several pathbreaking AI initiatives, and market participants have been enthusiastically funnelling in larger investments in the company.

In its race to the third position, Nvidia also zoomed past Amazon’s market cap, which hovers close to $1.776 trillion. 

Currently, the company controls 80% of the upscale AI chip market, a distinction that has boosted its share price by over 47% in 2023 alone. For now, the world’s largest tech companies are vying with each other to produce their own GPU chip that could unseat Nvidia from its chip monopoly. Interestingly, Nvidia ends up recording the maximum sales from the very tech companies that are looking to dethrone it. 

Media reports suggest that Nvidia is very close to releasing an upgraded AI chip, the H200, which delivered superior performance in terms of memory and bandwidth compared to its predecessor.

Nvidia scales past Alphabet and Amazon in market cap 

Source: Google Finance

Nissan’s net profit troubles

Nissan Motors reported a disappointing 42% fall in net profit on a year-on-year basis in the quarter ending December. The net profit of the Japanese auto company plummeted to 29.14 billion yen or $196.7 million. The net profit missed the 76.14 billion yen estimate chalked in by market analysts.

The auto manufacturer has also issued cutbacks in its global sales projection. For FY24, the company has forecasted that sales will drop to 3.55 million units from 3.70 million in light of the ratcheting competition and logistics disruption.

However, the financial fortunes of the company seem to have been salvaged, courtesy of a weaker yen. Nissan maintained that it would be able to meet its annual projections for revenue and net profit — a consequence of falling yen value.

Throughout 2023, Nissan has been hard at work reshaping its sales strategy in prominent markets around the globe. This comes in the wake of the restructuring of its partnership with Renault and Mitsubishi announced in February 2023. Reportedly, Nissan will also hold a stake in Ampere, an electric car unit that will be formed out of Renault.

Recently, the Japanese carmaker has been steering away from its conventional gas-powered vehicles. It plans on releasing new models in China, including versions of electric and hybrid cars. It is also planning on exporting vehicles beginning in 2025.

Pernod Ricard rises on strong outlook

Pernod Ricard’s shares rose after the company management backed its annual sales and net profit outlook. The company backed its mid-term guidance reaffirming that it will clock in anywhere between 4%-7% of net sales growth.

For the six months ending in December, the French liquor manufacturer posted a net profit of €1.57 billion, slipping from €1.79 billion posted in the same period last year. Despite the fall in revenue, the stock rose because total sales managed to beat market estimates of €1.45 billion.

Analysts are counting on a re-rating of the stock on account of the positive outlook, accompanied by a strong first-half performance. 

Sanctions Setback

Washington’s new sanctions intended to target Russia are hurting India’s fiscal interests. Earlier, the US had targeted vessels carrying Russian premium crudes like Sokol to India. Now, Washington is stepping up its offensive by gunning for vessels that carry the low-grade Russian benchmark crude called the Urals.

Seen collectively, the Sokol and the Ural account for 30% of the overall crude imports by India. The two grades put together also comprise 80% of the total crude exports to Indian shores from Russia in 2023.

The latest sanction was issued on February 8, when the Office of Foreign Assets Control operating under the US Treasury Department sanctioned several UAE-headquartered shipping firms for supplying Russian crude. 

Shipping industry leaders have indicated that more sanctions are likely to be issued by the US government. According to Bloomberg, nearly half of the vessels sanctioned for carrying Russian crude are sitting idle. 

Speaking to the media, Russian envoy to India, Denis Alipov said that US officials are seeking to create a rift between Russia and India. He added that the threats of secondary sanctions by the US are forcing Indian officials to ‘exercise caution’

The Urals accounted for nearly 70% of the total oil import of 1.53 million b/d by India in January. In 2023, Urals became extremely popular with Indian refiners and accounted for 68% of the total oil volume of 1.22 million bpd from Russia.

Mutual funds load up on HDFC Bank

Mutual funds made a beeline for HDFC bank and accumulated shares worth ₹13,849 crore in January after the stocks suffered a dip of 14%.

Mutual funds increased their shareholding in HDFC Bank by 6.92% in January taking the total number of shares owned by them to 136.26 crore, up from 127.44 crore in December. 

An overwhelming 560 schemes have invested in HDFC Bank. However, the exposure of 517 of these schemes is less than ₹1,000 crore. Only two schemes, namely, the SBI Nifty 50 ETF and the SBI S&P BSE Sensex ETF have an exposure of ₹19,899.22 crore and ₹14,211.64 crore respectively. SBI Nifty 50 ETF’s exposure is the highest among all the schemes. 

In terms of mutual funds, around six mutual funds have exposure north of ₹10,000 crore in HDFC Bank. SBI mutual fund has total investments of ₹52,918.66 crore in HDFC Bank, whereas HDFC mutual fund has an exposure of ₹23,686 crore. ICICI Prudential mutual fund and UTI mutual fund have channelled investments of ₹19,990 crore and 18,707 crore in the private lender respectively.

Meanwhile, India’s largest insurance company LIC has received the go-ahead from RBI to increase its stake in HDFC Bank to 9.99% within the space of the next 1-year.

Invest wisely 

It is only investors with foresight and vision who could have predicted accurately the meteoric growth of Nvidia, and the promise of its AI capabilities. Such insightful and precise predictions come naturally to those who allocate massive resources towards researching company roadmaps and anticipated trajectories. With the Appreciate app, you have access to bespoke, in-depth research that distils the noise from the signals and helps you build your wealth in the long run.

Warm regards,
Another week
in the markets