The company demonstrates robust long-term Return on Equity and a significant rebound in TTM profit growth to 23% after a multi-year deceleration, while sales growth shows moderate stability.
However, recent quarterly results reveal a substantial YoY net profit decline of nearly 38% despite healthy operating profit growth, contrasting sharply with the attractive 7.48% dividend yield and moderate P/E of 17.8.
Retail investors should thoroughly investigate the drivers behind this recent quarterly net profit slump to assess the sustainability of its overall performance and dividend.
News TidBits
Infosys ADRs experienced extreme intraday volatility on the NYSE, surging dramatically up to 40% to hit a 52-week high, indicating unusual trading activity.
This sharp price movement was significant enough to trigger multiple trading halts, underscoring the intensity of the market reaction.
The volatility was primarily attributed to factors such as a short squeeze, automated trading glitches, and the thin year-end liquidity typical of holiday periods.
Despite the dramatic surge, Infosys explicitly stated that the company was not aware of any material events that would fundamentally justify such an extreme price movement.
This incident serves as a crucial reminder for retail investors about the risks associated with investing during periods of low liquidity and potential for technical disruptions, emphasizing the importance of understanding underlying fundamentals.
Stacks on Stacks: Tip Time 🤑
During periods like the 'Santa Claus Rally,' when small-cap stocks historically outperform, remember Charlie Munger's wisdom: true insight comes from understanding 'why' something works, not just 'that' it works; dig beyond the seasonal trend to fundamental drivers, which helps you discern between temporary market anomalies and genuine shifts in value, preventing emotional decisions based purely on short-term patterns.
Inside The Fund
Fund Size:
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Top News Developments
SEBI Plans Tech Overhaul for Stock Exchanges
Regulators globally are focused on ensuring market resilience and latency competitiveness, with Sebi's new working group addressing rising electronic volumes, algorithmic trading, and the need to attract global liquidity.
This initiative is expected to boost capital expenditure by exchanges and vendors on advanced matching engines and network upgrades, creating potential opportunities for technology suppliers and systems integrators such as TCS and LTI Mindtree.
Potential changes in access or fee structures (e.g., microsecond-tiered co-location pricing) could significantly impact high-frequency trading players and market liquidity providers, altering transaction-cost economics across the board.
Policy outcomes may include updated certification/audit regimes or new rules for algorithmic trading and cloud use, leading to increased compliance costs for brokers and trading members.
The long-term outlook is mildly bullish for technology and systems-integration vendors over quarters as they win mandates, while exchange-related revenues may vary depending on fee and market structure changes implemented over months to years.
Year-End Holiday Trading Set to Impact Market Liquidity
The truncated trading week due to year-end holidays, including Christmas, will compress order flow into fewer sessions, raising the probability of larger intraday volatility and increasing the value of overnight hedges and options for risk management.
Retail investors should be aware that lower trading days can amplify price movements, making markets more susceptible to outsized moves and widened bid-ask spreads.
Portfolio rebalancing (quarter/year-end window dressing) and concentrated FPI flows can disproportionately affect large-cap index constituents such as Reliance Industries, HDFC Bank, and TCS.
Illiquid mid and small-cap stocks are particularly vulnerable to exaggerated moves during this period, while derivatives-heavy names face increased gamma risk.
This mechanical liquidity effect is not a fundamental directional driver but is crucial for execution and risk management, suggesting a short-term mixed-to-volatile market over the coming days.
FPI Inflows and Rupee Recovery Boost Indian Equities
Renewed foreign portfolio investor (FPI) buying and a strengthening rupee are providing a near-term bullish bias for Indian equities, significantly buoyed by hopes of Fed easing due to lower US inflation.
This increase in global liquidity and improved 'carry' for emerging markets is attracting FPIs back into Indian equities, lifting large-cap indices and potentially reducing borrowing costs for Indian corporates.
The rupee's recovery to around 89.27-89.59 benefits import-heavy sectors by reducing the cost of imports and enhances the appeal of rupee-denominated assets for foreign investors.
Expectations of easing monetary policy typically drive outperformance in longer-duration sectors like IT exporters (e.g., TCS, Infosys) and consumer discretionary stocks.
Analysts are recommending allocations to financials (HDFC Bank, ICICI Bank, SBI), healthcare, and IT, suggesting potential opportunities in these sectors for retail investors if global disinflation and FPI flows persist over weeks to quarters.
Cha-Ching Cheatsheet 💵
When fear and pessimism reach their peak in certain sectors, as observed in NBFCs where asset quality stabilizes and valuations become attractive, it often presents a fertile ground for patient, contrarian investors. As Warren Buffett teaches, 'Be fearful when others are greedy, and greedy when others are fearful'; identifying sectors with improving fundamentals but depressed sentiment can lead to significant long-term gains if you have the conviction to buy when others are selling.
* Valuation category is calculated as a weighted average of PE ratio, CAPE, forward PE, historical PEG, and forward PEG. We are currently showing PE, Forward PE, and Forward PEG for reference.
Soft US inflation data released recently strengthened expectations for additional Federal Reserve rate cuts in 2025, triggering a broad rally in Indian indices and positive spillover from Wall Street gains.
Renewed foreign institutional investor inflows into Indian equities for two consecutive sessions supported market recovery, driven by improved global risk appetite post-US data.
US markets showed upbeat performance overnight with major indices higher, influenced by softer inflation and hopes of Fed easing, aiding Asian peers including India on December 19.
Global aviation disruptions from widespread flight cancellations impacted sentiment, though airlines signaled recovery, indirectly affecting related economic outlooks relevant to India.
US federal government closures on Christmas Eve and December 26 via executive order may extend holiday thinned trading volumes globally, influencing Indian markets ahead of their own December 25 holiday.
Emerging Opportunities
Broad-based sectoral rally on December 19 highlights Auto sector gains over 1%, positioning it as a promising area for medium-term growth amid economic recovery signals and rate cut optimism.
Oil & Gas sector advanced over 1%, emerging as an opportunity with global energy dynamics and potential Fed easing supporting commodity-linked investments for long-term upside.
Realty sector outperformed with over 1% rise, driven by land monetization trends like recent corporate announcements, offering contrarian potential in a rebounding market.
Healthcare sector gained over 1%, presenting medium- to long-term promise amid broad buying and resilience in uncertain macro conditions.
Momentum investing shows short-term dips but long-term edge, favoring sectors with recent rotation like broader midcaps up 1.3%, ideal for investors eyeing volatility plays into 2026.
Policy & Regulations
The Securities and Exchange Board of India (SEBI) has announced a significant initiative to form a working group dedicated to exploring the 'next technological frontier' for stock exchanges, aiming to develop technology roadmaps for the next 5-10 years and ensure future market resilience. This move is expected to drive substantial capital expenditure by exchanges and technology vendors on advanced matching engines and network upgrades, creating opportunities for IT service providers and systems integrators like TCS and LTI Mindtree.
Concurrently, SEBI is actively reviewing existing regulatory frameworks related to margins, position limits, and settlement mechanisms, signaling a potential overhaul that could influence trading strategies and operational compliance costs for brokerage firms and trading members. These reviews, along with the exploration of a single investor protection fund and stronger corporate governance, underline SEBI's commitment to enhancing market efficiency, fairness, and investor safeguards.
Any forthcoming changes in access or fee structures, stemming from these technological advancements or regulatory adjustments, could have a profound impact on high-frequency trading firms and market liquidity providers, potentially altering transaction-cost economics across the broader market. Retail investors should closely monitor these evolving regulatory landscapes, as they will shape the operational environment for financial intermediaries and potentially introduce new compliance requirements for market participants.
Crypto Buzz
Name
Price
Market Cap
24h Change
ATH Change
Bitcoin (BTC)
$88241
$1.76T
0.06%
-30.12%
Ethereum (ETH)
$2987.24
$360.21B
0.95%
-39.79%
Tether (USDT)
$0.99959
$186.25B
0.01%
-24.45%
BNB (BNB)
$852.66
$117.40B
0.64%
-37.85%
XRP (XRP)
$1.94
$117.19B
3.71%
-46.99%
Bitcoin has shown notable strength, increasing by approximately 1.61% to reach $88,347.96 USD over the past 24 hours, contributing to a broader positive sentiment across the digital asset space and pushing the total cryptocurrency market capitalization to roughly $3.07 trillion.
Beyond Bitcoin, several altcoins have also posted double-digit percentage gains, signaling a broad-based buying pressure and a flourishing risk-on environment within the crypto market, while the macro-economic backdrop is increasingly perceived as supportive for digital assets.
The recent debut of the Hong Kong-based exchange HashKey underscores growing institutional interest and increased regulatory clarity in certain regions, which could lead to greater liquidity and mainstream adoption for cryptocurrencies, making it crucial for investors to monitor these developments for long-term stability and growth potential.
Indian Macroeconomy
Currency
Exchange rate against USD
89.58
-0.68
Previous: 90.26
As of Dec 25
Nominal GDP
Annual growth including inflation
8.2%
0.4%
Previous: 7.8%
As of Sep 25
CPI Inflation
Consumer price increase
0.71%
0.46%
Previous: 0.25%
As of Nov 25
Repo Rate
RBI lending rate
5.25%
-0.25%
Previous: 5.5%
As of Dec 25
Trade Balance
Exports minus imports
$-24.53B
$17.15B
Previous: $-41.68B
As of Nov 25
Current Account
Global trade, income & transfers
$-12292M
$-9570M
Previous: $-2722M
As of Sep 25
Mfg PMI
Manufacturing activity level
55.7 points
-0.9 points
Previous: 56.6 points
As of Dec 25
Services PMI
Services activity level
59.1 points
-0.7 points
Previous: 59.8 points
As of Dec 25
The Indian economy is displaying robust growth, with the annual GDP growth rate climbing to 8.2% and the interest rate experiencing a positive adjustment down to 5.25%, which could stimulate credit-led consumption and investment across various sectors. However, investors should note the inflation rate has seen a significant increase to 0.71%, although still relatively low, a factor that might temper expectations for further aggressive rate cuts by the RBI.
A strengthening Rupee, which recovered significantly to close around 89.27-89.59 against the US Dollar, largely attributed to RBI intervention and strong inflows, is a favorable development for import-dependent sectors and could enhance India's appeal for foreign portfolio investments. This currency appreciation also plays a role in the reduced balance of trade deficit, improving by $17.15 billion to $-24.53 billion, signaling a healthier external economic position.
While both manufacturing and services PMIs saw slight moderations, they remain firmly in expansionary territory at 55.7 and 59.1 respectively, indicating continued economic activity, though the pace might be stabilizing after rapid growth. Furthermore, the India VIX closing near its 52-week low signifies reduced market volatility, creating a more stable environment for equity investments and potentially benefiting large-cap stocks by fostering sustained investor confidence.
Inside The Fund
