It’s the Season of Mergers and Mega-Consolidations – Weekly Market Wrap-up
In this Weekly Market Newsletter:
- What to expect from the markets
- Market Outlook
- Stock Recommendation
- Options Hub
- Quick Bites
- IPO Corner
- Sustainability Corner
Megadeals are happening on the D-street. HDFC Bank and HDFC decided to join hands and become one giant monolith in the financial services space. This was a nod to RBI’s recommendation that large NBFCs should consider turning into banks. Axis acquired Citibank’s retail banking business for $1.6 billion. These deals may open doors to multiple cross-selling opportunities for the banks. Tata launched a new super app Neu which integrates the digital experience of all of the Tata group’s most trusted brands. PVR and Inox form a blockbuster merger deal.
In other news, Elon Musk tops the list of Forbes’ Billionaires. India detected its first case of the XE variant and has launched booster doses for all adults at private vaccination centers.
| Nifty | Sensex | Bank Nifty | Nifty Midcap 100 |
| 17,784, ▲0.64% | 59,447, ▲0.29% | 37,752, ▲1.62% | 31,214, ▲3.58% |
Sensex, Nifty, and Bank Nifty experienced huge gains early in the week as a result of these mega-deals. But, ended the week with bleak returns. Nifty closed the week with a 0.64% profit ending at 17,784 while BSE Sensex ended the week at 59,447 gaining 0.29%. Most of the sectoral indices were in the green with Nifty FMCG, Nifty Metal, and Nifty PSU Bank clocking the highest gains at 4.39%, 4.30%, and 3.90% respectively. Nifty IT(-2.61%), Nifty Media (-0.33), Nifty Realty(-0.01%) were the only losers.
📊What to Expect from the Markets
-Mr. Abhishek Jain, Research Head, Arihant Capital
Indian markets closed with positive momentum aided by gains across the sector except for minor weakness in the Nifty Media and IT index. The market declined for three out of the five sessions but snapped a three-day losing streak on Friday after the RBI decided to keep policy rates unchanged.
Realty and Financials continue to lead the gains in markets as investors continue to accumulate companies in anticipation of strong earnings. Commentaries from management in the financial sector have been very strong.
We believe markets continue to remain stock specific as the markets are entering the result season. Investors would be keenly watching the results of companies in the IT sector. Infy, TCS & Mindtree are declaring their results next week. Investors are looking at value stocks in the last few weeks where companies like ITC have delivered 25 pc returns in the last few weeks.
Earnings season has started in the US with companies like JP Morgan, Goldman, Blackrock, and Citi will post numbers in the next few days. Investors would also be keeping an eye on inflation with key CPI data that would be announced next week in the US.
🔭Market Outlook
–Mr. Ratnesh Goyal, Senior Research Analyst
Nifty
The daily chart of the Nifty is trading above all the important moving averages but it may take resistance of upper channel formation. On the weekly front index has formed a “Doji” candle. It follows that the market may consolidate and stock-specific activity may continue. We need to maintain a “buy” on dips strategy. Now Nifty has to cross the 17,950 level to see a bounce towards 18,150 and 18,300 levels, while on the downside support if it crosses below 17,800 then it can test 17,680 and 17,500 levels.
Bank Nifty
Bank Nifty has filled the upward gap area in its daily chart and has formed a “Doji” candle formation on its weekly chart. We conclude that Bank nifty may also consolidate and the “buy” on dips strategy needs to be followed. This week Bank Nifty futures closed at 38,042 levels. In the coming trading session if it holds below 37,900 then weakness could take it to 37,500 and 37,200 whereas minor resistance on the upside is capped around 38,600-38,900 levels.
💰Stock Recommendation
From the Technical Desk
-Kavita Jain, Head Learning and Senior Research Analyst
From the Fundamental Desk
-Mr. Abhishek Jain, Research Head, Arihant Capital
Raymond can be an interesting pick at current levels despite a strong performance. We are positive about the company’s growth and believe the company can deliver 50 pc returns in the next 18 months. We are expecting a strong performance from the company’s fabric & apparel division ahead of the marriage season. Demand is also expected to be boosted by corporate and school re-opening. The company has also been witnessing a revival in the tools & auto segment. The management is also looking for value unlocking for listing its subsidiary JK files limited. Proceeds are expected to be used for debt reduction and working capital requirements. The realty segment has been a strong pick post covid. We are advising investors to accumulate with a price objective of ₹1,350
🏷️Options Hub
-Kavita Jain, Head Learning and Senior Research Analyst
Option Strategy
🔎Quick Bites
Global
- India sent one consignment each of 36,000 MT petrol and 40,000 MT diesel to Sri Lanka.
- Sri Lanka faces worst currency depreciation, tourism affected: Lanka IOC MD.
- Turkish inflation hits a 20-year high of 61% as energy and food costs soar.
- The UN General Assembly has suspended Russia from the UN Human Rights Council. More sanctions are being discussed globally.
Economy
- India’s Manufacturing Purchasing Managers’ Index (PMI), an indicator of growth or fall in manufacturing activity, was recorded at 54.0 in March, down from 54.9 in February.
- Domestic funds buy a net 16.8 billion rupees of stocks.
- The total increase in petrol and diesel rates in the last two weeks is ₹10 a liter.
- India bond yields jump toward 7% on borrowing target surprise.
- India’s march trade deficit widened 36.97% YoY to $18.69 billion.
- India’s tax collections rose to a record high of ₹27.07 lakh crore in the financial year ended March 31.
- RBI keeps the repo rate unchanged, cuts the GDP growth forecast to 7.2%, and raises the inflation forecast from 5.5% to 5.7%.
- Bond and green bonds opening likely in the 2nd half of FY23.
Energy and Infrastructure
- The Adani Group has crossed $200 billion in market capitalization – becoming the third conglomerate in India to cross the number.
- Abu Dhabi’s IHC to invest $2 billion in three Adani Group companies – Adani Green Energy Ltd (AGEL), Adani Transmission Ltd (ATL), and Adani Enterprises Ltd (AEL).
- Adani Ports handled the highest ever monthly cargo of 29.16 MMT in March 2022.
- Adani Power has received ₹3,000 crore dues with interest from the state-owned power distribution companies of Rajasthan as compensation for higher fuel costs.
- Coal India plans to set up 12 new coking coal washeries and one non-coking coal new washery to reduce ash and other waste.
- Coastal Corp to start operations at its new plant at Kakinada SEZ in Andhra Pradesh.
- IEX recorded a 16% YoY growth in electricity volumes in March 2022.
- NLC India registered an 18.64% increase in power generation in FY22.
- ONGC to see a $3 billion rise in earnings, Reliance $1.5 billion from the gas price hike.
- Rail Vikas Nigam to acquire metro coaches for the Kolkata Metro Railway project from Integral Coach Factory (ICF).
- RIL gets an NCLT nod for the transfer of its gasification operations to Reliance Syngas.
- Torrent Power has raised ₹600 crores through the issuance of 6,000 non-convertible debentures (NCDs) on a private placement basis.
- IOC to pump in ₹840 cr to set up POL plant and raise storage capacity in Northeast. IOC chief Narinder Batra under probe over misuse of Hockey India funds.
- Torrent Power took over the power distribution operations in Dadra & Nagar Haveli, Daman, and Diu.
- K E C International secures orders worth ₹945 crores across its various businesses.
- Resurgent Power Ventures completes acquisition of NRSS XXXVI Transmission.
Industry
- JSW Steel posted a 37% growth (YoY) in combined crude steel production of 5.98 million tonnes for Q4’22.
- Tata Steel‘s total sales rose to 7.82 MT in Q4’22 up 4% from Q4’21.
- NCLT approves Tata Steel Mining Limited’s plan for the acquisition of debt-laden Rohit Ferro-Tech Limited.
- Tata Steel India has clocked its highest-ever annual crude steel output of 19.06 million tonnes, a 13% growth YoY. Tata Steel India deliveries rose 6% YoY in FY22, Tata Steel Europe steel output in FY22 grew by 6%YoY and total deliveries increased by 2% YoY, driven by a broad-based improvement in most steel-consuming sectors.
- HAL recorded its highest-ever revenue of over ₹24,000 crores (provisional) in FY22.
- Vedanta Ltd’s aluminum, zinc output grew 8%; iron ore by 18% in Jan-Mar ’22 versus Q4 ‘21.
Automobile
- Rising input costs force automakers to raise prices.
- Domestic passenger vehicle sales declined 4.87% as compared to Mar 21.
- Carmakers brave a tough FY22 to sell 3.1 million units, up 13% from FY 21, despite failing to keep up with consumer demand amid a global shortage of semiconductors.
- Maruti announced a “proactive and voluntary” recall of 19,731 units of its EECO model.
- Tata Motors mentioned that subsidiary Jaguar Land Rover has continued to face chip shortages.
- M&M has terminated its deal to sell its bankrupt unit, SsangYong Motor Co, to South Korean electric carmaker Edison Motors.
Banking and Finance
- HDFC Bank plans a mega-merger of parent company HDFC in a $60 billion deal.
- HDFC Bank plans to raise ₹50, 000 crores through a bond sale to back the merger.
- RBI to introduce card-less cash withdrawal across all banks and ATM networks using UPI.
- Bajaj Finance booked 6.3 million new loans during Q4 vs 5.5 million in Q4’21.
- Banks post Q4 numbers, Bank of Maharashtra booked a 27% growth in gross advances against FY’21. IDFC First Bank’s gross funded assets grew 12.8% over Mar’21. RBL Bank’s total deposits grew 8% by Mar ‘22 over Mar’21. HDFC Bank’s loan book expanded by 2% YoY to ₹13.69 trillion in FY22.
- M&M Financial Services Q4 FY22 disbursements grow 66% YoY.
- Bandhan bank leads the race to buy IDFC AMC and IDFC AMC Trustee Company for ₹4,500 crores
- Carlyle Group offloaded 2.6 crore shares of SBI Cards and Payment Services Ltd for ₹2,229 crores.
- IRDA mulls removal of the minimum entry capital requirement of ₹100 crores for setting up an insurance business to encourage micro insurers and niche players.
- BoM in talks to sell 4% in India SME Asset Reconstruction Company.
- Public Sector banks that received recapitalization bonds may have to take a massive hit following RBI’s directive to recognize these bonds at market value.
- ICICI Bank reduced interest rates on its fixed deposits on various tenures.
Other
- Amazon and Future Retail to appear before the Singapore Arbitration Tribunal in the matter relating to the Reliance-Future-Amazon feud. Future also missed the due date for repayment of ₹5,322.32 crores to lenders on account of the ongoing litigation with e-commerce major Amazon.
- Swiggy and Zomato are under CCI scanner for allegations of unfair use of their market dominance.
- The Tata group has launched its super app ‘Tata Neu’. The app will offer services for all of Tata Group’s in-house brands including Air Asia, Big Basket, and Croma.
- Dr. Lal PathLabs piloted the use of drones for transporting blood samples.
- Dr. Reddy launches generic Methylprednisolone Sodium Succinate for injection in the US.
- Glenmark Pharmaceuticals approves repurchase of outstanding dollar bonds.
- Indo Count: has completed the acquisition of the home textile business of GHCL for ₹608 crores.
- IPL TV ratings declined 33% in the opening week and viewership dropped 14%.
- CRISIL has rated PVR’s bank facilities aggregating to ₹1,033 crores at CRISIL A+.
- SEBI to investigate Invesco’s fixed income schemes.
- Suven Pharma to acquire Casper Pharma for ₹155 crores.
- Tata Consumer Products is consolidating its business by merging its various subsidiaries.
- Zee’s biggest shareholder, Invesco to sell 7.8% equity via a block deal.
- Asian Paints’ promoters unite to delist Elcid Investments.
- NCLT approves the scheme of amalgamation of Dr. Reddy’s Holdings, which holds 24.83% equity shares of Dr. Reddy’s Laboratories into the company.
- Coffee Day Enterprises defaulted on ₹479.68 crore repayment of loans and unlisted debt securities in Q4’22 due to a liquidity crisis.
- Lupin entered into a licensing agreement with Alvion Pharmaceuticals to commercialize medicines for Cardiometabolic diseases in the Southeast Asia region.
- Fertilizer companies have started passing on a portion of rising input costs to the farmers.
- Banks back Kalrock-Jalan consortium’s plea for an extra two months to fulfill conditions for Jet Airways revival.
- Indigo plans to sell stake; ropes in 4 investment banks.
- Spicejet fleet expansion hit by Boeing’s delivery issues.
🚀IPO Corner
- SEBI allows UPI payment to individual investors applying to public offers for amounts up to ₹5 lakh.
- Uma Exports Stock Lists at Premium, Rises 17% on Market Debut
- LIC IPO is expected by May 12. According to SEBI ICDR Regulations 2018 for public offers, if LIC’s initial public offer (IPO) does not take place by May 12, it will need to update the offer document with FY23 financials, which may delay the issue to June or even beyond.
- DCX Systems files draft papers for ₹600-cr IPO. The public issue comprises a fresh issue of equity shares, aggregating up to ₹500 crores, and an offer for sale of equity shares to the tune of up to ₹100 crores by promoters.
- The Dharmaj Crop Guard, Venus Pipes & Tubes get SEBI nod to float IPOs.
- Yatharth Hospital & Trauma Care Services Limited has filed draft papers with SEBI for an IPO.
🔌Sustainability Corner
- JSW Neo Energy tied up with the Chhattisgarh government to set up a 1,000 MW capacity hydro-pumped storage project.
- JSW Renewable Energy started operations of a 225 MW solar plant at Vijayanagar in Karnataka.
- NTPC & Gujarat Gas Ltd tie up to blend green hydrogen with piped natural gas.
- Tata Power Renewables has commissioned a 300 MW solar plant in Dholera, Gujarat.
- Tata Power Solar Systems, a wholly-owned subsidiary of Tata Power, commissioned a 160 MW AC solar project at Jetstar, Rajasthan.
- MahaGenco and NTPC form a JV to set up an ultra-mega solar power park with a total generation capacity of 2,500 MW.
- Indian Oil Corp, Larsen & Toubro, and ReNew Power will form a joint venture to develop green hydrogen projects.
- Jio-BP and TVS Motor Company partner to set up public EV charging infrastructure for electric two-wheelers and three-wheelers across India.
- Delhi govt is likely to roll out EMI on electric 2-wheelers for employees.
- NITI Aayog is likely to roll out the ‘Battery Swapping Policy’ by December.
- Delhi govt offers a subsidy of ₹5,500 for the first 10,000 buyers of e-cycles.
- India may add 48,000 charging stations with ₹14,000 crore investment in 3-4 years: ICRA.
- Hero Electric to supply e-scooters to last-mile delivery provider Shadowfax.
- Simple Energy inks pact with US-based C4V for cell manufacturing in India.
- EV startup ElectriVa announces free electric vehicle charging in Delhi between 12-3 PM.
- Lucas TVS is looking to invest around ₹3,000 crores over the next 3-5 years to build EV and consumer appliances.
- MCA sends notice to L&T on corporate governance.
That’s all for now folks! See you next week!
