The Indian equity markets closed the week ending 8 October on a positive note after a dismal closing last week, on account of positive news. Moody’s upgraded India’s sovereign rating to “stable” while RBI leaves the benchmark interest unchanged at 4%. Auto sales figures released during the week showed mixed numbers. Looks like the auto sales are still not out of the woods from the Covid-19 pandemic.
📈Indian stock markets bounce back
After a dismal performance last week, the Indian stock markets opened Monday with a bang, snapping 4-days losing streak and ending with strong gains. Tuesday was another great day when the Oil & Gas stocks rallied due to the crude oil price rise. While the markets were positive most part of the week, Wednesday saw a huge sell-off with Nifty ending below the 17650-mark. But it soon recovered, and the markets closed the week ending on 8th October on a positive note with Nifty gaining 1% at 17,895 while Sensex closed at 60,059 up by 0.64%. The upgrade of India’s sovereign rating by Moody’s, RBI’s monetary policy announcement leaving the interest rate unchanged to 4% were the key factors for the market bounce back this week.
In terms of the sectoral performance, the IT sector was the top gainer of the week closing 4.66% up as the companies are due to deliver their results next week. The media and auto sectors were the other two great performers ending the week with 4.63% and 4.55% gains respectively. On the stock level, Tata Motors was the top gainer of the week clocking a whopping 14.9% return followed by ONGC and Titan gaining 10.1% and 8.99% respectively.
With Tata’s gaining back control of Air- India, the market expectation for disinvestment seems positive for PSU banks and state-owned companies like BPCL, BEML, SCI, etc.
Market outlook: Technically speaking, on the monthly chart, we are observing a strong bull candle that is nearing the upper trendline of the channel. At present there is no weakness on the chart, hence momentum on the upside is likely to continue. In the coming month, if Nifty trades and closes above 17,791 levels then it is likely to test 18,052 – 18,312 – 18,616 levels. However, if Nifty trades and closes below the 17,744 level then it can test 17,184 – 16,924 – 16,621 levels. At present, the monthly trend is positive and there can be an upside.
However, any disappointment can lead to a sell-off in markets. Global markets also look edgy currently with correction seen from higher levels due to concern about the Chinese real estate crisis, inflation, rate hike risk, and valuations. We are expecting one more volatile next week with maintaining a stock-specific approach to the investors.
Stocks to watch out: HDFC bank is expected to announce financial numbers next week, the markets are abuzz with a positive expectation of company performances following economic recovery. IT stocks will be in limelight as the companies like Infosys are set to announce their results next week.
Key Events this week:
- 12 October: India’s Manufacturing Output and industrial production for August
- 13 October: USD CPI, USD FOMC meeting minutes
- 14 October: India’s WPI inflation numbers for September (also WPI fuel, food, and manufacturing) and USD PPI m/m
- 15 October: Foreign exchange reserves, balance of trade for September
⛽Crude and coal oil prices touch new high
Crude oil is often called ‘black gold’ in power circles the world over, and this week the epithet came true when crude oil prices surged beyond $80 a barrel sending governments, and the financial markets worldwide into a tizzy! Brent crude oil prices reached an all-time- high of $83.29 per barrel on 4th October, rising by 1.8% highest since 2018. US crude oil too rose to $79.18 sparking fears over an impending energy crisis. Meanwhile, coal prices went through the roof this week, continuing the rise from last week, largely due to mine issues in China and Indonesia.
Tata Power asked Delhi customers to use electricity judiciously as the coal crisis hits home. Shouldn’t we be using electricity wisely whether or not there is an electricity shortage? Have you considered installing solar panels on your premises?
Why are oil- prices rising? Oil prices are primarily rising due to three reasons, one increased global demand for oil, following economic recovery from the pandemic. Secondly, the oil-producing countries (OPEC) have restricted their supplies, with the proposed increase in supply from November, thereby putting much pressure on international oil prices now. Lastly, the overall global shortage of coal, gas, and oil has put intense pressure on energy generating firms amidst less supply.
Impact on India: The cumulative impact of rising oil prices can be seen with the rupee weakening and dollar rising to the 75 mark and petrol and diesel prices surging to ₹100 per liter. Additionally, oil accounts for 20% of India’s imports, so any price hike in crude oil impacts the country’s current account deficit as well as leads to a surge in inflation. While global uncertainty of oil has negatively impacted stock prices, the same cannot be said for share prices of oil companies such as ONGC and OIL India saw a surge in its intraday prices by 6.23% and 3.23% respectively on October4th. ONGC prices reached a high of ₹158.90 while Oil India’s share rose to ₹267.70 bringing much cheer to its shareholders!
An increment in oil prices, not only leads to higher import bills for countries like India but also impacts various industries whose input costs spike up.
💬Instagram, WhatsApp and Facebook’s global outage send Mark Zuckerberg’s wealth tumbling by $6 billion
Did the outage on WhatsApp make you restless? It sure must have Zuckerberg.
Monday blues just got real this week for tech baron Mark Zuckerberg when 3 of the world’s biggest social media companies owned by him went down for 6 hours. This outage invited the wrath of millions of users and wiped off $50bn from the company’s market value by jittery investors. Facebook’s stock price plunged 5%.
What went wrong? The outage began on Monday afternoon (Eastern Time), aka 10 pm in India, and went about for 6 hours before being resolved during which people could not access WhatsApp, Instagram and Facebook as all the three applications were down. The outage also brought down Facebook’s internal systems, including its Workplace internal comms platform, and the security system. This meant staff couldn’t use their passes to access the building. A team of engineers reportedly had to be sent out to manually reset the servers in California. Why did this happen? Facebook’s server stopped talking to the global internet network, thereby preventing any communication from being sent to and from the server. It all happened because of the configuration changes Facebook made to its backbone routers.
How Facebook controls the internet? Facebook has been the leader when it comes to social media. WhatsApp and Instagram are the most popular picture and message-sharing applications in the world, with a combined user base of approximately 3 billion users. Mark Zuckerberg purchased these applications for billions of dollars to thwart any competition from rivals and establish Facebook as an industry leader. Hence, it wouldn’t be incorrect to add that Facebook has a monopoly in the kind of content which is shared via these platforms on the internet, and the current crisis would no doubt impact people globally.
What does it mean for FB investors? If Facebook needs 7 hours to fix an outage, it doesn’t exactly inspire confidence in the company’s ability to troubleshoot similar problems in the future. Or does it?
There are a lot of things going on wrong at Facebook – first, it was the halt of its Instagram for kids, then Facebook was accused of prioritising growth and profit over the public good, after the site’s former civic integrity product manager, Frances Haugen, went public and the final blow came because of the outages. Is it the beginning of the fall of Facebook? One needs to wait and watch.
Overall, the outage impacted businesses and individuals who rely on these platforms for work. At the same time, it offered people a much-needed break from screen-time and an opportunity to interact with the real- world instead of their virtual friends.
- Moody’s revises India’s rating from negative to stable after two years. The rating agency improved the outlook for India due to the stability in the Indian markets and quick recovery across all business sectors. The credit rating agency also revised its rating for 9 Indian banks from’ negative to stable’, the banks are HDFC Bank, Axis Bank, Bank of Baroda, Canara Bank, ICICI Bank, PNB Bank, Export -Import Bank of India, SBI and Union Bank.
- Union Government offers the beleaguered telecom sector a sigh relief by approving 100 percent FDI via the automatic route. The government recently also approved a moratorium on AGR dues, thereby financial helping telecom companies.
- Life insurance major Nippon Life Insurance recently announced acquisition of 20 lakh shares of Bharti Airtel at ₹204.95 per share on the NSE.
- Mahanagar Gas hikes LPG cylinder price by ₹15.
- Semiconductor chip shortage hits the Indian automotive industry hard; sales decline by 36% on a YoY basis and 28.5 percent MoM. Maruti Suzuki (-57%), Hyundai (-34%), Hero MotoCorp (-27%), Bajaj Auto (-21%) report decline; Tata Motors (21%), Skoda (131%), Nissan (261%), MG Motors (28%) grow yoy. The festive season is expected to boost the auto sector performance in the coming months.
- Mahindra sets record by selling 25,000 units of its XUV 700 SUV in 57 minutes as its booking opened.
- Crypto start-up Coin switch Kuber is the newest entrant to India’s burgeoning unicorn club; raises $262 million in a recent funding round. It is India’s 30th unicorn this year and the second crypto-start-up in the club.
- Marico shares jumped 6% on October 6 reaching a high of ₹590, following positive financial results for FY22.
- Bosch shares prices rocketed by 12% on October 6, reaching a value of ₹17,315 per share.
- Union Cabinet approves 7 mega textile parks worth ₹4,445 crores under the PM- Mitra scheme. The textile parks seek to consolidate India’s wide-ranging textile industry, incentives are to be distributed over 5 years.
- NTPC share price reaches a 52-week high of ₹ 145.75 following its announcement of listing 3 of its subsidiaries by 2024.
- RBI takes control of Kolkata based SREI Infrastructure LTD and its subsidiary, the central bank has appointed an administrator to overlook its operations.
- Adani Group announced that its Ports and SEZ company’s cargo volume rose by 24% YoY to 23.08 MMT.
- IndusInd Bank’s net advances rise by 10%YoY to ₹2,21,821 crores in September’21.
- HDFC Bank is planning to go public via its NBFC arm HDB Financial services, the bank aims to raise a value anywhere between $6-8billion.
- Piramal Enterprises Ltd (PEL), in its board meeting held today, has approved demerger of its pharma business Piramal Pharma Ltd (PPL) and plans to list it as a separate entity. They will merge the group’s financial services units, including Dewan Housing Finance Corp. Ltd (DHFL), with the group holding company to simplify the corporate structure and unlock value.
- The number of companies filing their draft red herring prospectus (DRHP) with Sebi crosses century, highlighting the IPO frenzy among companies to cash in amid favourable market conditions. The latest firms to file draft papers of their IPOs are Softbank-backed Oravel Stays, which operates OYO Hotels, and Adar Poonawalla-backed Wellness Forever, which operates retail pharmacy stores.
🔌EV and Sustainability Corner
- Adani Green acquires SB Energy India for $3.5billion in an all-cash deal.
- TVS Motors collaborates with Tata Power to install EV chargers in the country.
- Auto major Tata Motors reported a growth of 21% in its sales on the back of demand recovery in the industry post the Covid second wave. The market leader in the EV segment also stated that the company for the second month in succession crossed the 1,000 unit milestone for EVs to register its highest ever monthly and quarterly sales of 1,078 units and 2,704 units respectively.
- Nippon India Asset Management (formerly Reliance Mutual Fund) files for electric vehicle index fund with SEBI. The fund house plans to launch an open-ended scheme that will look to replicate or track S&P Kensho Electric Vehicles Index, which is designed to measure the performance of companies involved in the electric vehicle sector and the ecosystem supporting it.
- Ola Electric has raised $200 million, or about Rs 1,500 crore, from a clutch of investors in a fresh funding round, valuing the electric vehicle maker at more than $5 billion, according to The Economic Times.
- Private equity firm TPG is reportedly in talks with the Tata Group to invest at least $1 billion in the electric vehicles (EV) venture of Tata Motors. TPG’s investment may even be raised to $1.5 billion and may value the Tata Motors’ EV division at $8-9 billion, according to media reports. Tata Motors is in the process of completing the subsidiarisation programme of its passenger vehicle (PV) business, paving the way for onboarding a partner.
- Tata Power, India’s largest integrated power utility, announced that it has signed a three year commercial agreement with BluWave-ai, the world’s first renewable energy AI company. This agreement comes at the conclusion of a successful trial project during which Tata Power evaluated the performance of the BluWave-ai cloud platform to generate intra-day and day-ahead dispatches for use in its power scheduling operations. The company has deployed a few AI solutions such as The Central Control room for Renewable Assets (CCRA) which uses Machine Learning based on loss estimation, forecasting and alert/notification.
- India’s new liberalised petrol pump licensing norms allow setting up of EV charging stations and CNG outlets even before the start of petrol and diesel sales. “While an authorised entity is required to set up its retail outlets for petrol and diesel… the said entity is required to install facilities for at least one new generation alternate fuels like CNG, biofuels, LNG, electric vehicle charging points etc at the proposed retail outlets,” the ministry said in an October 5 notice.
- The government intends to have EV sales penetration of 30 per cent for private cars, 70 per cent for commercial vehicles and 80 per cent for two and three-wheelers by 2030 as there is an immediate need to decarbonize the transport sector. According to the union minister, Mr. Nitin Gadkari, if electric vehicles penetrate to 40 per cent in the two-wheelers and cars segment and close to 100 per cent for buses by 2030, India would be able to reduce crude oil consumption by 156 million tonne worth Rs 3.5 lakh crore.
- Electric scooters startup, kWh Bikes has raised $2 million in a seed round led by LetsVenture, and participation from Better Capital and Cloud Capital, making it one of the largest funding in the Indian EV space. The funding will help the startup to take its prototype to production and expand R&D across various electric vehicle (EV) components like battery, battery management system, vehicle control unit, and motors.