Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Bottom-Up

<ul>
<li>
Context: This article provides an update on a previously identified pair trading opportunity between <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> and <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance (BAF IN)</a>, based on statistical mean reversion analysis.</li>
<li>
Key Insights: The trade has now reached its exit signal as the price ratio reverted to its one-standard deviation band, yielding a +4.7% return.</li>
<li>
Why Read It: For investors interested in quantitative trading strategies, this article demonstrates how statistical arbitrage can generate short-term alpha and highlights actionable similar opportunities in the current market.</li>
</ul>



Context: This article provides an update on a previously identified pair trading opportunity between Kotak Mahindra Bank (KMB IN) and Bajaj Finance (BAF IN), based on statistical mean reversion analysis.

Key Insights: The trade has now reached its exit signal as the price ratio reverted to its one-standard deviation band, yielding a +4.7% return.

Why Read It: For investors interested in quantitative trading strategies, this article demonstrates how statistical arbitrage can generate short-term alpha and highlights actionable similar opportunities in the current market.


Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

India Equity Analyst - Fundamental & Thematic, Beat the Street

Sudarshan Bhandari

India Equity Analyst - Fundamental & Thematic

Beat the Street

Beat The Street was founded by Nimish Maheshwari and Sudarshan Bhandari, both of whom are Chartered Accountants by Profession, known for their expert analysis in the fields of Business, Sectoral analysis, and Corporate governance.

With a strong social media presence of 45,000+ Subscribers across various platforms, they are considered trusted voices in the industry. Their insights and analysis have been featured in some of India’s most prominent publications, including the Economic Times, Dalal Street Investment Journal, The Morning Context, and The Ken.

Their analysis on Bankrupt & Insolvent companies has been instrumental in saving investors from significant losses. They have a keen eye for identifying red flags and has identified exclusive redflags earlier in Vedanta, Nykaa, Dhani Services, Adani and many more.

Read Business Not Stock Prices

Thematic (Sector/Industry)

<ul>
<li>India's corporate profit-to-GDP ratio held steady at a 17-year high of 4.7% in FY25 for the Nifty-500 universe, reflecting a healthy 10.5% YoY PAT growth</li>
<li>While the world grapples with geopolitical challenges, India's macroeconomic indicators- including strong GDP growth, a stable currency, and moderating inflation and interest rates - present a contrasting and resilient picture.</li>
<li>India Inc is entering again the faster earnings growth cycle than GDP growth, currently growing at 3x of broder economic growth.</li>
</ul>


India's corporate profit-to-GDP ratio held steady at a 17-year high of 4.7% in FY25 for the Nifty-500 universe, reflecting a healthy 10.5% YoY PAT growth
While the world grapples with geopolitical challenges, India's macroeconomic indicators- including strong GDP growth, a stable currency, and moderating inflation and interest rates - present a contrasting and resilient picture.
India Inc is entering again the faster earnings growth cycle than GDP growth, currently growing at 3x of broder economic growth.


Charted Insights : India's Corporate Profit-To-GDP Ratio: A Structural Shift

Market & Forensics Analyst, Beat the Street

Nimish Maheshwari

Market & Forensics Analyst

<ul>
<li>Corporate India’s capex momentum is showing a healthy revival, marking a significant shift from the risk-averse investment behavior seen post-COVID.</li>
<li>Based on FY25 data from 1,393 listed companies (excluding banks and NBFCs), total gross fixed assets rose 7.6% year-on-year to ₹28.5 lakh crore - the strongest expansion in recent years.</li>
<li>This increase signals renewed investment intent across infrastructure, manufacturing, and select consumption-facing sectors</li>
</ul>


Corporate India’s capex momentum is showing a healthy revival, marking a significant shift from the risk-averse investment behavior seen post-COVID.
Based on FY25 data from 1,393 listed companies (excluding banks and NBFCs), total gross fixed assets rose 7.6% year-on-year to ₹28.5 lakh crore - the strongest expansion in recent years.
This increase signals renewed investment intent across infrastructure, manufacturing, and select consumption-facing sectors


Charted Insights: Capex Revival in India Inc; Which Sectors Are Leading the Investment Cycle?

Event-Driven

<ul>
<li>
Context: On June 6, 2025, the Reserve Bank of India (RBI) unexpectedly cut interest rates by 50 basis points to 5.5%, double the anticipated 25 basis points.</li>
<li>
The <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY 50 Index</a> fluctuated initially but later stabilized at a 1.0% gain, while the <a href="https://www.smartkarma.com/entities/nse-nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">NSE Nifty Bank Index</a> rose 1.5%. At-the-money implied volatility changed little, while the skew rotated.</li>
<li>
This Insight explains the RBI’s bold policy move, market reactions, and limitations of predictive models in navigating central bank decisions.</li>
</ul>



Context: On June 6, 2025, the Reserve Bank of India (RBI) unexpectedly cut interest rates by 50 basis points to 5.5%, double the anticipated 25 basis points.

The NIFTY 50 Index fluctuated initially but later stabilized at a 1.0% gain, while the NSE Nifty Bank Index rose 1.5%. At-the-money implied volatility changed little, while the skew rotated.

This Insight explains the RBI’s bold policy move, market reactions, and limitations of predictive models in navigating central bank decisions.


India's Unexpected 0.5% Rate Cut: Friday’s Market Reaction Breakdown

<ul>
<li>The banking sector will likely see earnings growth bottom out in FY26, with the second half potentially performing better than the first half as deposit rate reductions eventually flow through.</li>
<li>This divergence between declining lending rates and sticky deposit costs is the core driver of NIM compression.</li>
<li>This monetary easing is expected to exert downward pressure on banks' lending yields, impacting NIMs, particularly in the first half of fiscal year 2026 (1HFY26). </li>
</ul>


The banking sector will likely see earnings growth bottom out in FY26, with the second half potentially performing better than the first half as deposit rate reductions eventually flow through.
This divergence between declining lending rates and sticky deposit costs is the core driver of NIM compression.
This monetary easing is expected to exert downward pressure on banks' lending yields, impacting NIMs, particularly in the first half of fiscal year 2026 (1HFY26). 


Impact of Rate Cut on Indian Banking Sector: NIMs & Earnings to Contract Further Amid Slowdown

India

Nifty Bank Index is a free-float capitalization-weighted index comprised of the most liquid and large capitalized Indian Banking stocks. The index will have 12 stocks from the banking sector, which trade on the National Stock Exchange. The index was developed with a base value of 1000 as of January 1, 2000.

NSE Nifty Bank Index (NSEBANK INDEX EQUITY)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

NSE Nifty Bank Index (NSEBANK INDEX EQUITY)

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

Gaudenz Schneider

Charted Insights : India's Corporate Profit-To-GDP Ratio: A Structural Shift

India's corporate profits remain strong at a 17-year high, outpacing GDP growth and showing resilience amidst global challenges.

Sudarshan Bhandari

Charted Insights: Capex Revival in India Inc; Which Sectors Are Leading the Investment Cycle?

Corporate India is seeing a strong revival in capex momentum post-COVID, with total gross fixed assets rising 7.6% year-on-year to ₹28.5 lakh crore.

Nimish Maheshwari

India's Unexpected 0.5% Rate Cut: Friday’s Market Reaction Breakdown

RBI surprises with 50 bps rate cut, NIFTY 50 and NSE Nifty Bank rise. Insight on market reactions and implied volatility.

Gaudenz Schneider

Impact of Rate Cut on Indian Banking Sector: NIMs & Earnings to Contract Further Amid Slowdown

Banking sector earnings growth expected to improve in FY26 as deposit rate reductions flow through, but NIM compression likely due to declining...

Nimish Maheshwari

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

​Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

Gaudenz Schneider

Charted Insights : India's Corporate Profit-To-GDP Ratio: A Structural Shift

​India's corporate profits remain strong at a 17-year high, outpacing GDP growth and showing resilience amidst global challenges.

Sudarshan Bhandari

Charted Insights: Capex Revival in India Inc; Which Sectors Are Leading the Investment Cycle?

​Corporate India is seeing a strong revival in capex momentum post-COVID, with total gross fixed assets rising 7.6% year-on-year to ₹28.5 lakh crore.

Nimish Maheshwari

India's Unexpected 0.5% Rate Cut: Friday’s Market Reaction Breakdown

​RBI surprises with 50 bps rate cut, NIFTY 50 and NSE Nifty Bank rise. Insight on market reactions and implied volatility.

Gaudenz Schneider

Impact of Rate Cut on Indian Banking Sector: NIMs & Earnings to Contract Further Amid Slowdown

​Banking sector earnings growth expected to improve in FY26 as deposit rate reductions flow through, but NIM compression likely due to declining...

Nimish Maheshwari

Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

India's corporate profits remain strong at a 17-year high, outpacing GDP growth and showing resilience amidst global challenges.

Corporate India is seeing a strong revival in capex momentum post-COVID, with total gross fixed assets rising 7.6% year-on-year to ₹28.5 lakh crore.

RBI surprises with 50 bps rate cut, NIFTY 50 and NSE Nifty Bank rise. Insight on market reactions and implied volatility.

Banking sector earnings growth expected to improve in FY26 as deposit rate reductions flow through, but NIM compression likely due to declining...