VIX soars while repo rates stay unmoved| Weekly Update August 9th
Hello Readers!
We’ve seen a lot of lows this week, from the olympics to markets, but there’s much more to the highlights! So, let’s take a Quick Look at what made it to the headlines in the stock markets this week and then deep dive into unwrapping the VIX spike and rep rates stagnancy.
🧾In this Article
Cover story: VIX soars while repo rates stay unmoved
📈 Weekly Market Wrap-up
Domestic equities witnessed a sharp downturn this week. The benchmark SENSEX plunged by 1276.04 points, closing at 79705.91, marking a decline of 1.58%. Similarly, the broader NIFTY shed 350.2 points to settle at 24367.5, registering a 1.42% drop. This steep correction was likely influenced by a combination of domestic and global factors, including investor sentiment, economic indicators, and geopolitical tensions.
Sector Spotlight:
The IT sector faced headwinds, with the BSE IT index declining by 1.93%. Conversely, the FMCG sector showed resilience, gaining 0.7%. The Consumer Durables and Capital Goods sectors experienced moderate losses of 2.76% and 1.3%, respectively. Healthcare, on the other hand, closed with a modest gain of 0.67%. These sectoral trends indicate varying investor sentiments and economic conditions impacting different industries.
Nifty 100 Top gainers
- Trent: ₹6276.90 (+13.24%)
- ABB: ₹7970.35 (+5.15%)
- Zydus Lifesci.: ₹1302.00 (+4.17%)
- Torrent Pharma: ₹3323.20 (+3.17%)
- Cipla: ₹1574.75 (+3.11%)
- Colgate-Palmolive: ₹3460.00 (+2.71%)
Nifty 100 Top losers
- Adani Energy Sol: ₹1103.80 (-12.52%)
- Shree Cement: ₹24285.05 (-10.78%)
- Tata Power Co.: ₹417.80 (-9.23%)
- IRFC: ₹179.80 (-6.50%)
- Bosch: ₹31901.10 (-5.89%)
- Adani Green: ₹1775.00 (-5.61%)
FII and DII Activity:
FIIs were net sellers this week, offloading a total of over ₹19,139 crore worth of Indian stocks. DIIs, on the other hand, continued their buying spree, net purchasing over ₹20,871.1 crore worth of equities. DIIs have been the primary buyers in the market for several weeks now, supporting the market amid FIl selling pressure.
| Date | FII Net Activity | DII Net Activity |
| 05-AUG-24 | -₹10,073.75cr | ₹9,155.55cr |
| 06-AUG-24 | -₹3,531.24 cr | ₹3,357.45cr |
| 07-AUG-24 | -₹3,314.76 cr | ₹ 3,801.21cr |
| 08-AUG-24 | –₹2,626.73 cr | ₹577.30cr |
| 09-AUG-24 | ₹406.72 cr | ₹3,979.59cr |
| Total | ₹19,139.76cr | ₹20,8791.1cr |
Global Gossip:
US markets experienced a decline this week. The Dow Jones fell by 0.60%, the S&P 500 by 0.04%, and the Nasdaq by 0.18%. In Europe, the FTSE decreased by 0.08%, while the CAC and DAX managed to eke out small gains of 0.25% and 0.35% respectively.
Asian markets were largely negative. The Nikkei 225 plummeted by 2.46%. The Straits Times declined by 4.62%, the KOSPI by 3.28%, and the Taiwan Weighted by 0.78%. The Hang Seng increased by 0.85%, while the Jakarta Composite and Shanghai Composite declined by 0.94% and 1.49% respectively.
Rupee Report:
The Indian Rupee marginally weakened this week against the US Dollar. The USDINR spot rate closed at 83.9525, up by 0.195 points or 0.23% compared to the previous week’s close of 83.7575. The slight depreciation can be attributed to a combination of factors such as increased import demand, global economic uncertainties, and fluctuations in crude oil prices.
Gold Surges:
Gold prices continued their upward trajectory this week, marking a modest gain. The precious metal closed at ₹69,850 per 10 grams, registering a slight increase of ₹58 compared to the previous week’s closing price of ₹69,792. This incremental change translates to a weekly growth of 0.08%.
🍟 Quick Bites
📈 RBI kept the interest rate unchanged after a 3-day policy meeting. It also raised the inflation forecast from 3.8% to 4.4% for the July-Sept quarter.
💳 The upper limit for UPI payments has been increased from Rs 1 lakh to Rs 5 lakh for tax payments: RBI.
🏠 The central government has changed the LTCG tax rules for real estate. Owners now have 2 options: they can pay 12.5% without indexation or 20% with indexation benefit.
🚗 India’s automobile retail sales rose 13.84% year-on-year in July. 2-wheeler sales rose 17%, 3-wheelers rose 13%: FADA.
📊 UPI transactions rose 36% year-on-year to Rs 60 lakh cr in the April-June quarter (vs 44 lakh cr previous year).
🔎 Stocks in news
🌍 Wipro subsidiary acquires US-based Columbus Hydraulics to expand North America business.
📈 Jio adds 42.4 million subscribers, taking total to 481.8 million and holding 85% of India’s 5G capacity.
🌐 LTIMindtree becomes global digital service provider for German engineering firm Exyte.
💰 AIA Engineering announces ₹500 crore share buyback.
⚖️ NTPC to appeal against ₹1.19 crore tax and interest penalty from Andhra Pradesh.
🔥 Coal India and GAIL form joint venture for coal-to-SNG project in West Bengal.
✈️ IndiGo launches new business class ‘IndiGo Stretch’ with Delhi-Mumbai tickets starting August 6 for mid-November travel.
📈 1QFY25 key results this week
📈 RVNL Q1 net profit up 34.70% quarter-on-quarter to ₹223.92 cr.
🛢️ Oil India Q1 net profit up 32.19% quarter-on-quarter to ₹1,885.78 cr.
🔩 Bharat Forge Q1 net profit down 9.22% quarter-on-quarter to ₹202.81 cr.
⚡ ABB India Q1 net profit up 50% year-on-year to ₹443.49 cr, interim dividend ₹10.66/share (record date: Aug 23).
🏦 LIC Q1 net profit up 9.44% quarter-on-quarter to ₹10,544.33 cr.
🚛 Eicher Motors Q1 net profit up 20% quarter-on-quarter to ₹1,101.46 cr.
🚢 Cochin Shipyard Q1 net profit up 76.62% quarter-on-quarter to ₹174.23 cr.
🛒 Godrej Consumer Q1 net profit up 41.36% quarter-on-quarter to ₹450.69 cr, interim dividend ₹5/share (record date: Aug 16).
🔧 Uno Minda Q1 net profit down 15.21% quarter-on-quarter to ₹199.03 cr.
🧴 Pidilite Q1 net profit up 17.98% year-on-year to ₹551.57 cr.
⚡ Power Finance Corp Q1 net profit up 20.06% year-on-year to ₹7,182.06 cr, interim dividend ₹3.25/share (record date: Aug 30).
💎 Vedanta Q1 net profit up 36.59% quarter-on-quarter to ₹3,606 cr.
🔌 Tata Power Q1 net profit down 0.16% quarter-on-quarter to ₹970.91 cr, TVS Motor Q1 net profit up 6.12% quarter-on-quarter to ₹460.88 cr.
🚛 Cummins India Q1 net profit up 30.78% quarter-on-quarter to ₹462.61 cr.
🏗️ Shree Cement Q1 net profit down 51.32% quarter-on-quarter to ₹278.61 cr.
🌞 Solar Industries Q1 net profit up 45.11% quarter-on-quarter to ₹286.46 cr.
📞 Bharti Hexacom Q1 net profit up 101.90% quarter-on-quarter to ₹511.2 cr.
⚙️ Honeywell Automation Q1 net profit up 32.01% quarter-on-quarter to ₹136.5 cr.
🌾 Marico Q1 net profit up 8.67% quarter-on-quarter to ₹464 cr.
📱 Airtel Q1 net profit up 158% year-on-year to ₹4,160 cr, ARPU rises to ₹211.
♻️ Sustainability Corner
🔋 Tata Power and Tata Passenger Electric Mobility join forces to promote EVs and rooftop solar panels.
🚀 IPO corner
Upcoming SME IPOs:
- Saraswati Saree Depot Limited IPO (Aug 12, 2024 – Aug 14, 2024)
- Positron Energy Limited IPO (Aug 12, 2024 – Aug 14, 2024)
- Sunlite Recycling Industries Limited IPO (Aug 12, 2024 – Aug 14, 2024)
- Broach Lifecare Hospital Limited IPO (Aug 13, 2024 – Aug 16, 2024)
- Solve Plastic Products Limited IPO (Aug 13, 2024 – Aug 16, 2024)
Subscription status:
- Unicommerce IPO was oversubscribed 168.39 times, with retail portion subscribed 131.15 times.
- Brainbees Solutions (FirstCry) IPO oversubscribed 12.22 times, with retail portion subscribed 2.31 times.
- Interarch Building Products to launch IPO next week, raising up to ₹200 crore through a fresh issue and OFS.
News:
- Ola Electric shares debuted flat at ₹75.99, but closed 20% higher at ₹91.18.
- Afcom Holdings listed at ₹108, surging 90% to ₹205.20 on debut.
VIX soars while repo rates stay unmoved
You’ve probably heard the term “VIX” thrown around a lot lately, especially when the market seems to be on a rollercoaster. It’s like the fear gauge of the stock market. When it goes up, it means investors are getting nervous. Recently, it spiked by over 50%. That’s a big deal! It suggests a significant increase in market volatility.
What Does This Mean for You?
A surge in VIX typically indicates that investors expect big price swings in the near future. It’s like a storm warning for the financial world. Stocks can become more volatile, meaning they can go up or down sharply in a short period. Bonds might also be affected.
But here’s the kicker: even with the VIX skyrocketing, the central bank decided to keep interest rates unchanged. This is a surprising move, to say the least.
Why is this happening?
- Balancing Act: The central bank is in a tough spot. On one hand, they want to control inflation. Raising interest rates can help cool down the economy and slow down price increases. On the other hand, they don’t want to choke off economic growth.
- Data-Dependent: Central banks typically base their decisions on economic data. Maybe they’re seeing signs of a slowing economy, which could offset the inflationary pressures.
- Market Psychology: Sometimes, central banks let the market cool down on its own. By not reacting to the VIX spike, they might be trying to calm investor nerves.
What Should You Do?
- Don’t Panic: Easier said than done, right? But remember, market fluctuations are normal. Trying to time the market is incredibly difficult.
- Revisit Your Financial Plan: This is a good time to review your investment goals and risk
tolerance. If you’re investing for the long term, market volatility shouldn’t derail your plans.
- Diversification: A well-diversified portfolio can help cushion the impact of market downturns. Make sure your investments are spread across different asset classes.
- Consider Professional Advice: If you’re unsure about how to navigate these turbulent waters, consulting a financial advisor can provide valuable guidance.
The Bottom Line
While the VIX surge is a cause for concern, it’s important to maintain perspective. The central bank’s decision to keep rates unchanged adds an extra layer of complexity. It’s a reminder that the economy is a complex system with many moving parts. Remember, investing involves risks. Past performance is not indicative of future results. It’s essential to do your own research or consult with a financial advisor before making any investment decisions.
Upcoming key financial events for the week:
| Date | Event |
| 12-Aug-24 | – INR CPI (YoY) (Jul) |
| 13-Aug-24 | – GBP Claimant Count Change |
| – USD Core PPI m/m | |
| 14-Aug-24 | – GBP CPI y/y |
| – USD Core CPI m/m | |
| – USD CPI y/y | |
| – INR WPI Inflation (YoY) (Jul) | |
| 15-Aug-24 | – GBP GDP m/m |
| – USD Core Retail Sales m/m | |
| – USD Empire State Manufacturing Index | |
| – USD Unemployment Claims | |
| 16-Aug-24 | – GBP Retail Sales m/m |
| – USD Prelim UoM Consumer Sentiment |
