Indian Stock Market Update | Early Bumps in the Road for Jio Financial’s
We hope you had a great week!
Jio Financial Services’s (JFS) debut in the stock market didn’t go as expected. When the stock started trading on the NSE, it dropped by 5% from ₹261.85 to ₹248.9 per share. So, why did this happen?
One reason is that the initial price set for the stock was much higher than what many experts had predicted. JFS shares were priced at ₹261.85 per share during a particular trading session on July 20th, while market estimates had ranged from ₹120 to ₹200 per share. This higher price led to selling pressure. From existing investors of Reliance Industries, who had been waiting for over 20 days for the stock to start trading. Throughout the day, there were no buyers for JFS shares, and their prices remained at a lower limit.
For the next three days, JFS shares will be part of the NIFTY50 index, and for the following ten trading days, they can only be traded through delivery, not intraday trading.
Interestingly, the listing of JFS impacted other Non-Banking Financial Companies (NBFCs) too. JFS is now the third-largest NBFC in India in terms of market capitalization, after Bajaj Finance and Bajaj Finserv. Bajaj Finance’s shares have dropped by more than 10% since July 20th, the record date for JFS. However, after JFS’s lukewarm debut, shares of several other listed NBFCs, including Bajaj Finance, Shriram Finance, and Cholamandalam Investment, rose by 1% to 3% on the same day.
Some experts think that Jio Financial might be unable to disrupt the NBFC industry like Jio Infocomm disrupted the telecom industry. The reason is that the NBFC sector is tightly regulated by established players, and companies must follow the rules set by the RBI.
In conclusion, while JFS’s listing is a step in the right direction for Reliance Industries to create value for its shareholders, the company still has challenges ahead if it aims to significantly impact the financial services sector.
🧾In this Article
– Mr Abhishek Jain, Head of Research, Arihant Capital
On Friday, India’s key stock benchmarks experienced a decline in response to a worldwide market sell-off. Sectors like banking, healthcare, and realty exerted downward pressure on the overall market performance. This marked the second consecutive session in which the indices registered a decline. The Sensex concluded the day below the 65,000 level for the first time in a week since August 18th, while the Nifty finished below the 19,300 mark for the first time since June 30th, 2023. This downturn extended the indices’ declining streak to the fifth consecutive week.
Nifty ended down by 0.23% at 19,266 level. Sensex was down 0.1%, at 64,887, and Bank Nifty was up 0.87% at 44,232.
–Mr. Ratnesh Goyal, Senior Research Analyst, Arihant Capital.
If we look at the daily and weekly chart of Nifty, we are observing a “Breakdown of lower trend line”, and on the daily chart, prices close below 50 Day SMA; if we analyse both chart patterns, it indicates some pressure will remain to continue from higher levels, and we can see some consolidation also. If Nifty starts trading above the 19,350 level, then it can touch the 19,450-19,550 level, while on the downside, support is 19,200, and if it starts to trade below, then it can test the level 19,100 and 19,000 levels.
If we look at the daily chart of Bank-Nifty, we observe the prices close below the 50-day moving averages. On the weekly chart, trading below short-term moving averages suggests that pressure from a higher level may continue, but compared to Nifty, it may recover fast. Bank-nifty starts trading above 44,350, then can touch 44,500 and 44,650 levels. However, downside support comes at 44,050; below that, we can see 43,850 and 43,700 levels.
🔎Stocks in News
💼 Sapphire Foods: Sapphire Foods Mauritius sold 16.25 lakh company shares at an average price of ₹1,355 per share.
🛰️ Bharat Electronics: The Ministry of Defence approved the buying of an electronic warfare suite from Bharat Electronics.
💰 Jio Financial: Removal from BSE indices has been postponed by another 3 days to 1st Sept.
🔌 Power Finance: will provide ₹4,527.68 crore loan to set up a 1,320 MW project in Raghunathpur (West Bengal).
🚗 Tata Motors: The Competition Commission has closed a case (related to authorised dealers) against the company.
⚙️ Hindustan Zinc: regained ownership of 13.94 crore shares representing 3.3% of equity that was pledged to Axis Trustee.
🛒 Reliance Industries: launched a new retail format Yousta with all products priced below ₹999.
💼 Coforge: Hulst BV has reportedly sold approx 1.63 crore shares (26.63% stake) in Coforge.
🌐 Tata Communications: planning to raise ₹1,750 crore through debentures.
🏭 Linde India: got an order from Indian Oil Corporation (IOCL) for an air separation unit.
💰 Piramal Enterprises: will raise ₹3,000 crore through debentures.
🏭 Hindalco: will invest ₹2,000 crore in a copper and e-waste recycling facility.
📱 Reliance: Jio Financial Services got listed on BSE at ₹265 per share. On NSE, the listing price was ₹262.
⌚ Titan: will acquire an additional 27.18% stake in CaratLane for ₹4,621 crore.
🏭 BHEL: got an order from Mahan Energen worth approx ₹4,000 crore.
🏭 Bharat Forge: a wholly owned subsidiary Of Kalyani Strategic Systems got export orders worth ₹850 crore.
💊 Wockhardt: shareholders rejected a proposal to raise ₹1,600 crore from a promoter.
🏢 PNB Housing Finance: fully recovered a corporate non-performing asset (NPA) of ₹784 crore.
🏥 KEC International: got new orders worth ₹1,007 crores, including for the construction of a multi-specialty hospital.
📰 Quick Bites
📈 Pyramid Technoplast IPO has been subscribed 5.84 times so far. Retail investors have subscribed 6.52 times. The IPO is open till 22 August.
🧅 The government has imposed an export duty of 40% on onions with immediate effect.
📱 HonorTech is planning to relaunch the Honor brand of smartphones in India.
💼 Retirement fund body EPFO added 17.89 lakh members in June.
💼 Vishnu Prakash R Punglia IPO (worth ₹308.88 crore) will be open between 24 – 28 Aug. Price band: ₹94 to ₹99.
🚀 Chandrayaan-2 (launched in 2019) and Chandrayaan-3 (2023) can now communicate.
💰 Value of foreign portfolio investors’ investments in Indian stock markets stood at $626 billion in the April-June quarter, 20% higher year-on-year: Morningstar.
⛽ India’s crude oil production rose 2.1% year-on-year to 2.5 million metric tonnes in July 2023.
📈 Pyramid Technoplast IPO was subscribed 18.29 times. Retail investors subscribed 14.72 times.
📈 Aeroflex Industries IPO was subscribed 97.11 times. Retail investors subscribed 34.41 times.
🌕 India’s Chandrayaan-3 is set to land on the moon on 23 August at around 6:04 PM. The live telecast will begin at 5:20 PM tomorrow.
✈️ Vistara (airline) reported a net loss of ₹1,393 crore for the year 2022-23 vs. ₹2,031 crore last year.
💼 Shiva Pharmachem has filed draft papers with SEBI for an IPO.
💼 Jupiter Life Line has received SEBI’s approval for an IPO.
🚗 Porsche AG is expecting around 80% of its sales in India to come from electric vehicles by 2030.
💳 RBI has increased the transaction limit for small-value digital. Payments are made via the offline mode to ₹500 per transaction.
💼 Vishnu Prakash R Punglia IPO has been subscribed 3.77 times so far. Retail investors have subscribed 4.88 times.
📱 Reliance Jio added 22.7 lakh subscribers in June, while Airtel gained 14.1 lakh subscribers. Vodafone-Idea (Vi) lost 12.9 lakh customers.
🌾 The government has set a target to procure 521.27 lakh tonnes of rice during the ongoing kharif season.
🌍 The BRICS group has invited Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the UAE to join.
🌱 Sustainability Corner:
🚗 Omega Seiki Mobility and Punjab National Bank signed an INR 300 crore EV financing agreement; Omega Seiki Mobility also aims to raise over US$ 100 mn to ramp up production of electric three-wheelers.
🔌 Tata Punch EV with front charging slot snapped testing the spy photos confirm that, unlike other Tata Motors’ EVs, the Punch will be the brand’s first product to have a charging slot on the front bumper.
🚗 Tata Motors to launch facelifted Nexon and Nexon EV on September 14. This is the Nexon compact SUV’s second major facelift and the Nexon EV’s first. Here’s more about the exterior and interior updates and new variant nomenclature.
⚙️ ZF will display its latest by-wire technologies at IAA Mobility 2023 next month in Munich; it will also showcase an ultra-compact and lightweight 800-volt electric drive with 70 Nm/kg torque density.
🔧 The Schaeffler Group’s new mechatronic rear-wheel steering system, with planetary roller gear, has gone into series production and has been chosen by a global carmaker for its new electric SUV.
🔌 TSMC, Bosch, Infineon & NXP to set up a plant for semiconductor manufacturing in Europe to support future capacity needs of the auto industry, which currently is in 5th place among the major buyers with a global chip procurement volume of US$ 47 billion.
🔌 Volkswagen Group reorganises semiconductor procurement to future-proof supplies – will rely on direct purchasing from chip makers; in collaboration with Tier 1 suppliers, will define which semiconductors and other electronic parts will be used.
🛵 TVS Motor Co, which has sold 150,000 iQubes since launch, targets a 40% share from EV sales by 2025. India’s second-largest 2-wheeler exporter is now eyeing Europe, SE Asia, UAE, and LATAM with its just-launched tech-laden, premium X EV. TVS Motor Co. launches new flagship EV – the X – at the world’s tallest building. Radically styled & tech-laden X, priced at INR 250,000, is the first e-scooter in India to get ABS and has a claimed top speed of 105kph, 140km range.
💼 With growth picking up in its existing business & closure of merger and acquisition-driven revenue, Samvardhana Motherson International is expected to touch INR 100,000 crore in topline revenue in FY2025.
💡🍬 Knowledge Candy: What factors are causing the NIFTY Bank to lag in performance?
Recently, banking stocks have been met with subdued enthusiasm from investors. The NIFTY BANK index, which serves as a gauge for the banking sector, has shown lacklustre performance this month compared to the NIFTY50 index. This is despite several banks reporting robust earnings for the June quarter. Examining the factors contributing to this scenario reveals valuable insights.
In August 2023, the NIFTY BANK index saw a decline of 2.5%, equivalent to a 1,172-point drop. This contrasts with the NIFTY50 index’s 1.5% decrease. A primary reason for this subdued performance is a significant fall in the valuation of banks within the NIFTY BANK index. Shares of major banks such as HDFC Bank, Kotak Bank, ICICI Bank, and SBI have registered declines ranging from 3% to 7% in the month.
The downturn in stocks can be attributed to profit-booking actions. Ahead of the Q1FY24 earnings announcement, many banking stocks experienced upward movement in anticipation of favourable results.
However, upon result disclosure, investors promptly capitalised on profits, leading to the downturn.
Additionally, certain index heavyweights like HDFC Bank faced challenges post-merger with HDFC Ltd. A surge in HDFC Bank’s valuation before the merger was followed by anticipated difficulties in profitability and compliance post-merger, impacting the stock’s trading range.
Similarly, Kotak Bank’s stock declined as institutional investors like Canada Pension Plan (CPP) divested their stakes. CPP, a significant foreign investor, offloaded a 1.7% stake, impacting the stock’s value.
Moreover, a liquidity crunch within the banking system stems from the RBI’s incremental cash reserve ratio (ICRR) announcement, leading to an outflow of approximately ₹1.1 lakh crore from banks. This liquidity shortage impacts loan disbursements and, subsequently, interest income.
Despite several rate hikes, banking stocks exhibited resilience due to steady retail credit growth and robust earnings. Overcoming liquidity challenges remains pivotal.