- What to expect from the markets
- Market Outlook
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- IPO Corner
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Phew, what a week! While investors rushed in to fill the LIC IPO, the Fed and the RBI were busy raising the rates. These moves made the stock markets plunge into deep reds. Domestic stocks lost nearly ₹12 lakh crore in value, led by heavy selling across the board. This was in response to the rising inflation, which is biting into everyone’s pocket💸
Reliance reported ₹7,92,756 crore consolidated annual revenue, to become the first Indian company to enter the $100 billion club 🥳. Indian Government invoked Section 11 of the Electricity Act mandating all imported coal-based projects to generate power at their full capacity because of the power crisis.
All the benchmark indices were colored red amid a major selloff following the RBI rate hike. Nifty ended the week 4.04% down at 16,411. Sensex wiped out 3.9% and ended at 54,836. Bank Nifty lost 4.15% while Nifty Midcap was down 4.34%.
On the sectoral front, just about nothing was spared. Realty led the selloff (-8%), with an assist from Consumer Durables (-7.81%). Sectors like Media(-6%), Healthcare(-5.82%) and Auto(-5.05%) were also hit.
📊What to Expect from the Markets
-Mr. Abhishek Jain, Research Head, Arihant Capital
Indian markets closed with negative momentum dragged by global sentiment and stagflation fears, which may slow down the growth in the future.
Broader indices underperformed their larger peers with S&P BSE midcap and smallcap falling over 4%. Barring S&P BSE Power and Utilities, all the other 17 sectoral indices compiled by BSE Ltd. declined with S&P BSE Realty falling over 3.5%. This is the worst week in over five months for Sensex and Nifty since the week ended November 26, 2021.
Global markets fell continuously post Fed’s 50 bps hike in rates which was largely in line with expectations. On the domestic front, a pre-emptive and an unexpected 40-bps hike dampened the domestic sentiments. We continue to advise a sector or a stock-specific approach for investors. Agriculture spending to pick up due to high cereal prices. The food grain prices are up 35-40% which will be a big positive for the sector
–Mr. Ratnesh Goyal, Senior Research Analyst
The daily chart of Nifty gives a breakdown of a “Symmetrical Triangle” pattern and the weekly chart shows a breakdown of the lower trend line. We believe the market will continue to show supply from this level. If it crosses the 16,550 level, it will see a bounce towards the 16,800 and 16,950 levels. But, if it crosses below 16,350 then it can test 16,100 and 15,800 levels.
The daily chart of Bank Nifty shows a “Doji” candle formation and the weekly chart gave a breakdown of the lower trend line. Together, Bank Nifty’s technical chart looks weaker and traders need to be cautious from higher levels. This week Bank Nifty futures closed at 34,690. In the coming trading session if it holds below 34,400 then weakness could take it to 34,050 and 33,800 whereas minor resistance on the upside is capped around 34,900-35,200 levels.
-Mr. Abhishek Jain, Research Head, Arihant Capital
From the Fundamental Desk
Agri theme can be played by the investors for managing their portfolio. Investors can look at Pitti Engineering at its current levels. We have a price objective of ₹435 for the stock. Investors can also pick up Equitas Holdings in the Midcap sector. The reverse merger getting approved will be a big trigger and we have a price objective of ₹150 on the stock.
We continue to have an accumulate at current levels stance on Ujjivan Financials. Vishnu Chemicals will be posting its result on 16th May. We are expecting a strong set of numbers. The company is a market leader in chromium and barium segments with backward integration benefits likely in FY 23. The stock is currently available at 12X valuation and investors with a 3-year horizon may see the stock doubling.
- Britannia reported a YoY increase of 4.96% in consolidated net profit at ₹377.95 crores for Q4’22. The company has recommended a dividend of ₹56.50 per share.
- Kotak Mahindra Bank reported a 65% YoY increase in net profit to ₹2,767 crores for Q4’22. It has also announced a dividend of ₹1.1 per share.
- Tata Steel posted a 37% increase in consolidated net profit at ₹9,835.12 crores for Q4’22. The company has also announced a 10:1 stock split and a dividend of ₹51.
- Tata Consumer Products’ consolidated net profit for Q4’22 stood at ₹239.05 crore – up 221.52% year on year. In announced a dividend of Rs. 6.05 per equity share.
- Hero MotoCorp consolidated PAT declined by 30% YoY to ₹621 crores for Q4’22. It announced a dividend of ₹35 per share.
- The net profit of Titan was reported at ₹527 crores during Q4’22 7% lower than Q4’21. Total revenue was up 4% to ₹7,872 crores.
- HDFC reported a PAT of ₹3,700 crores representing a growth of 16% against Q4’21. The NII for Q4’22 stood at ₹4,601 crores a growth of 14% over the previous year. It has recommended a dividend of ₹30 per equity share.
- Adani Wilmar reported a 25.6% YoY decline in its consolidated net profit at ₹234.3 crores for Q4’22.
- Countries fight inflation with rate hikes across the board. Bank of England raised their interest rates to their highest levels in 13 years. US Federal Reserve has raised the benchmark lending rate by 50 basis points, its highest in 22 years.
- Asian Games 2022 has been postponed indefinitely amidst a surge in cases in China.
- Sri Lanka has extended a credit line with India by $200 million to procure emergency fuel stocks.
The war against inflation
Temperatures across large swathes of the country are touching new highs, and so are prices of goods.
RBI increased the repo rate by 40 bps to 4.40% and CRR by 50 basis points to 4.5%. This was the first such increase since August 1, 2018. RBI’s sudden move to hike rates is being seen as a delayed measure to curb inflation. Some experts believe more such hikes may be on their way. The hike in CRR will lead to the withdrawal of liquidity of up to ₹87,000 crores.
For the uninitiated, the repo rate is the rate at which the RBI lends money to commercial banks while the CRR or the Cash Reserve Ratio is the proportion of total deposit a commercial bank needs to keep with the central bank as reserves in the form of liquid cash.
What does this mean for you?
This means that the FD rate received by investors will go up. It also means that loan interest rates will also go up. This move is set to reduce inflationary pressures.
- The central government released ₹7,183.42 crores as a revenue deficit grant to 14 states.
- India’s exports rose 24% in April (YoY) to $38.19 billion.
- India’s services exports set a new record of $254.4 billion (19 lakh crore) in 2021-22.
- The S&P Global India Services Purchasing Managers’ Index rose to 57.9 in April from 53.6 in March.
Banking and Finance
- Canara Bank seeks approval to raise ₹9,000 crore capital through tier-1 and tier-2 bonds.
- IDFC First Bank:’s board has approved fundraising of up to ₹3,000 crores.
- RBL Bank’s board has approved raising funds up to $100 million by US dollar-denominated bonds.
- Central Bank of India is planning to close 13% of its branches by 2023.
- HDFC Bank added over 1,000 branches to its network over the past 2 years.
Energy and Infrastructure
Power crisis escalates
The central government invoked Section 11 of the Electricity Act mandating all imported coal-based projects to generate power at full capacity. The directive will bring on stream at least 7 GW of power plants.
Coal India’s supply to the power sector rose 15.6% to 49.7 million tons last month and NTPC plans its first new coal-powered power plant in 6 years; amid a worsening power situation and increasing demand in India.
- ONGC has won 18 out of the 21 areas offered for finding and producing oil and gas in the sixth bid round under Open Acreage Licensing Policy.
- TARC Ltd raises ₹1,330 crores from US-based Bain Capital to repay existing debts.
- RIL becomes the first Indian company to enter the $100 billion club by its consolidated annual revenue.
- The government has extended the deadline to submit applications under the production-linked incentive scheme for speciality steel till May 31.
- Astral to acquire a 51% stake in Gem Paints for ₹194 crores.
- L&T’s construction arm has won a contract with NHSRCL to construct a 116-kilometer route of high-speed track for the Mumbai-Ahmedabad bullet train project.
IT and Telecommunications
- Telecom service providers’ gross revenue declined by 2.64% to ₹69,695 crores in Q3’21.
- L&T announced a merger between two of its software firms, L&T Infotech and Mindtree to create an IT services company worth around $3.5 billion. This will become the 6th largest IT services company in India.
- Wipro & HFCL to engineer a variety of 5G transport products to get ready for 5G services.
- Salasar Techno Engineering announced plans to invest ₹100 crores to expand its business.
- Vodafone-Idea has partnered with Indian Council for Research on International Economic Relations (ICRIER) to set up a telecom Centre of Excellence, InViCT (ICRIER and Vodafone Idea Centre for Telecom).
- Zomato’s price touches a new all-time low leaving shareholders have turned poorer by ₹87,800 crores.
- Tata Communications strengthens collaboration with MotoGP to increase its viewership base.
- Eris Lifesciences acquired a dermatology-focused company, Oaknet Healthcare for ₹650 crores.
- Adani Wilmar acquires the Kohinoor brand from McCormick Switzerland for an undisclosed amount.
- AC sales hit a record high of 17.5 lakh units in April amid a record-breaking heatwave in the country.
- Welspun Corp bags order worth ₹706 crores from Indian Oil Corporation Ltd.
- LIC IPO Day 3: Total subscription at 1.32 times, retail portion booked 1.20 times, NII 67%, QIB 56%, policyholders 3.85 times, employees 2.93 times. LIC raised ₹5,627 crores from anchor investors on Monday. 71% of the total allotment was made to domestic mutual funds (MFs).
- Delhivery has fixed the price band of its IPO at ₹462 – ₹487 per share. The IPO will open for subscription on May 11, 2022.
- Venus Pipes & Tubes IPO will open for subscription on May 11, 2022.
- SJVN bagged a contract worth ₹195 crores to set up its first-ever wind-solar hybrid project with a 30 MW generation capacity.
- Exide Industries has begun mass production at the nation’s largest lithium-ion battery plant situated in Gujarat with a Swiss partner.
- Railways float ₹30,000 crores tender for 800 electric train engines.
- Adani Green receives approval from shareholders for ₹3,850 crores funding from Green Energy Investment Holding RSC Ltd.
- Wardwizard Innovations signs MoU with Singapore-based Sunkonnect to facilitate Li-ion cell production.
- Tata Motors launched the electric version of its mini-truck ‘Ace’. It has received orders for 39,000 units of the truck.
- Tata Power Solar Systems receives India’s largest solar engineering procurement and construction (EPC) order worth ₹5,500 crores from SJVN Ltd.
- ATUM Charge, India’s first 100% self sustaining solar-powered EV charging station, has inaugurated a charging station in Malad, a Mumbai suburb. It plans to set up an EV charging station, the ATUM Solar Roof, with a capacity of 5.2KW in Mumbai. This has been patented in India, the US, and South Africa.
- EKA partners with NuPort Robotics to introduce smart electric buses with advanced driver assistance systems.
That’s all for now folks! See you next week!