Is the Market Flushed with Liquidity? Idea FPO Subscribes 7x | Weekly Update April 27th
Hello Readers!
We’ve turned the page on another market week during earnings season! So without further ado, let’s dissect recent performance and gauge if a surge in liquidity might be influencing market behavior, right after we
🧾In this Article
Weekly Market Wrap-up
Quick bites
Stocks in News
Sustainability Corner
Cover story: Is the Market Flushed with Liquidity? Idea FPO Subscribes 7x
Key events
📈 Weekly Market Wrap-up
This week, Indian markets ended on a positive note, defying the global trend of volatility. The benchmark indices, SENSEX and NIFTY, closed higher with gains of 0.88% and 1.23% respectively. SENSEX ended the week at 73,730.16, adding 641.83 points, while NIFTY settled at 22,419.95, up 272.95 points.
Winners:
The week also saw some impressive individual stock performances. Axis Bank emerged as the top gainer; its share price skyrocketed 9.77% to ₹1130.05. Divi’s Lab wasn’t far behind, closing 9.7% higher at ₹4025.35. Tech Mahindra, State Bank of India, and Hero MotoCorp also witnessed impressive gains, climbing 7.01%, 6.74%, and 6.47% respectively.
Top Losers:
Despite the overall market gains, some stocks like Kotak Mahindra Bank (-10.31%) and Bajaj Finance (-5.51%) faced losses. Other notable decliners included Tata Consumer (-3.11%), IndusInd Bank (-2.51%), and HDFC Life Insurance (-2.3%), which closed at ₹587.8, down from a weekly high of ₹603.55.
Sector Spotlight:
Looking at sectoral performance, it was a mixed bag. While the IT sector (BSE IT) remained flat with a slight drop of 0.82%, other sectors like FMCG (BSE FMCG), Consumer Goods (BSE CG), Consumer Durables (BSE CD), and Healthcare (BSE HC) witnessed significant gains. FMCG stocks surged the most, rising 2.73%, followed by Consumer Goods (3.41%), Consumer Durables (4.99%), and Healthcare (2.96%).
Market Breadth:
Broader markets outperformed the benchmarks this week. The S&P BSE Midcap and Smallcap indices closed up 0.83% and 0.27% respectively. Market breadth also favored the buyers, with around 52% of stocks on the BSE advancing, while 45% declined, and the remaining 3.3% remained unchanged. This indicates a more positive sentiment among investors.
Rupee Report:
On the currency front, the Rupee ended the week on a slightly weaker note compared to the U.S. Dollar. It closed at ₹83.35 per dollar, a 2 paise depreciation from the previous week’s closing of ₹83.33.
Gold Surges:
Gold prices experienced a slight downturn over the past week. After reaching a near all-time high in April, the yellow metal faced selling pressure. As of today (April 26th), it’s down roughly 1.5% compared to last week’s highs. Mixed economic data and rising interest rate expectations are likely contributing factors. Despite the dip, gold remains up over 13% year-to-date, highlighting its role as a potential hedge against inflation. It will be interesting to see if gold regains momentum or settles into a new trading range in the coming days.
Global Gossip:
Global markets saw a choppy week with mixed results. Emerging markets were the bright spot, rising around 3.5%. China’s Shanghai Composite jumped 1.52% after exceeding GDP growth expectations. Developed markets like Europe struggled, with the STOXX Europe 600 down 1.18%. Geopolitical tensions weighed on some European indexes, though gains in Italy partially offset losses. The US market started strong but lost momentum, closing down around 0.2% despite a positive start. Rising bond yields were a key factor in the decline.
Bottom Line
Overall, it was a positive week for the Indian markets, defying the global trend. While some sectors and stocks witnessed significant gains, others faced losses. The Rupee weakened slightly against the U.S. Dollar, and broader markets outperformed the benchmark indices. It will be interesting to see how these trends unfold in the coming week!
🍟 Quick Bites
📊 India’s pharma exports surged 9.67% to ₹2.79 lakh crore in FY 2024.
🏦 RBI mandates ARCs to hold a minimum capital of ₹300 cr with new master directions.
🚗 Macquarie’s Vertelo, an EV financing firm, debuts in India with a ₹15,000 crore investment.
📈 India’s Composite PMI hits a 14-year high at 62.2 in April: HSBC PMI Flash.
💳 BharatPe unveils India’s inaugural all-in-one payment device integrating POS, QR code, and speaker.
🌍 EU relaxes visa rules for Indians in the Schengen area, extending validity and allowing multiple entries.
📱 Telecom sector registers a 1.88% AGR rise to ₹67,835 cr in Q3 2023: TRAI.
💰 India’s direct tax collection climbs 17.7% to ₹19.58 lakh cr in FY 2024.
🇮🇳 Indians rank 2nd in new US citizenship acquisitions with 65,960 in FY 2022, behind Mexicans.
⚔️ India ranks 4th in global military expenditure in 2023, trailing the US, China, and Russia: SIPRI.
🏦 China’s central bank maintains lending rates at 3.95% (5-year loan prime rate).
📈 India’s service exports grow by 11.4% to ₹34.5 lakh crore in 2023: UN.
🍔 Swiggy gets shareholder nod for IPO, aiming to raise ₹3,750 cr via new shares and ₹6,664 cr through OFS.
📰 Stocks in News
📦 Welspun Corp received orders worth ₹611 cr from the South American region.
🚗 Tata Motors subsidiary TPEM secured a supply order of 2,000 electric cars from Vertelo.
📱 Reliance, Jio emerged as the world’s top telecom company in terms of data consumption according to Tefficient.
💼 LTIMindtree recorded a decline in net profit by 5.86% year-on-year to ₹1,100 cr in the Jan-March quarter with dividend declared ₹45 per share.
⛽ Chennai Petroleum recorded a net profit of ₹628 cr in the Jan-March quarter with dividend declared ₹55 per share.
🏦 Equitas Bank reported an increase of 39% in net profit after tax to ₹799 cr in the financial year 2024 with dividend declared Re 1 per share.
🏦 Nippon Life reported a net profit increase of 73.2% year-on-year to ₹343 cr for the Jan-March quarter with final dividend proposed ₹11 per share.
💹 MCX reported a net profit of ₹87.8 cr in the Jan-March quarter (from a loss in the same quarter previous year).
✈️ HAL awarded as Outstanding PSU of the Year in AIMA’s Managing India Awards after recording its highest-ever revenue for the financial year 2024.
💼 360 One recorded a 24.3% quarter-on-quarter net profit increase to ₹241 cr.
🏦 ICICI Prudential recorded a nearly 26% year-on-year decline in net profit to ₹174 cr in the Jan-March quarter.
💰 Axis Bank will raise ₹55,000 cr funding this year from debt and equity with net profit of Jan-March quarter stood at ₹7,130 cr.
🛍️ Hindustan Unilever reported a 6% year-on-year decline in net profit for the Jan-March quarter with dividend declared ₹24 per share.
🏦 Kotak Mahindra, RBI directed to stop issuing new credit cards and onboarding new online customers after finding non-compliance issues.
🍵 Tata Consumer recorded a net profit decline of 19% year-on-year to ₹217 cr in the Jan-March quarter with dividend declared ₹7.75 per share.
🔧 Tejas Networks reported a net profit of ₹146.78 cr for the Jan-March quarter, from a loss of ₹11.47 cr in the same quarter last year.
🥛 Hatsun Agro recorded a year-on-year net profit increase of 109% to ₹52.2 cr for the Jan-March quarter.
🏦 IFCI got ₹500 cr by a sale of its shares to Government of India on preferential basis.
💰 Reliance Industries net profit fell by 1.8% year-on-year in the Jan-March quarter with dividend declared at ₹10 per share and Jio’s average revenue per user (ARPU) was ₹181.7.
📶 Vodafone Idea (Vi) FPO was subscribed 6.36 times.
💊 Lupin launched a generic drug to treat bladder problems in the US.
🔋 IREDA recorded a year-on-year net profit increase of 32.67% in the Jan-March quarter.
💊 Zydus launched a medication in the US to treat overactive bladder problems.
🏍️ Hero Moto started a new assembly plant in Nepal with a capacity of 75,000 units per year.
🏢 Oberoi Realty sales bookings fell by 53% to ₹4,007 cr in the financial year 2024.
📦 Welspun Corp has received orders of multiple-line pipes from India & US, worth ₹872 cr.
✈️ Indigo placed an order for 30 new Airbus A350 aircrafts with Rolls Royce engines.
💼 L&T Tech recorded a net profit of ₹341 cr in the Jan-March quarter with dividend declared ₹33 per share.
🏦 IndusInd recorded a net profit increase of 14.9% year-on-year to ₹2,349 cr in the Jan-March quarter with dividend declared ₹16.50 per share.
💼 Oracle Financial declared a dividend of ₹240 per share with record date 7 May.
💻 Tech Mahindra recorded a net profit decrease of 41% year-on-year to ₹661 cr in the Jan-March quarter with dividend declared ₹28 per share.
🍫 Nestle recorded a net profit increase of 27% year-on-year to ₹934 cr in the Jan-March quarter with dividend declared ₹8.5 per share.
💊 Dr Reddy’s formed a joint venture with Nestle India to increase sales of Nestle’s nutritional products across the country.
💨 Inox Wind announced issue of 3 bonus shares for each share held by investors.
🏢 Happiest Minds will acquire PureSoftware Technologies for ₹779 cr.
💼 ACC recorded a net profit increase of 300% year-on-year to ₹945 cr in the Jan-March quarter with dividend declared ₹7.5 per share.
🏢 Macrotech recorded a net profit decrease of 10.61% year-on-year to ₹667 cr with dividend declared ₹2.25 per share.
🏢 Indian Hotels recorded a net profit increase of 27.43% year-on-year to ₹418 cr with dividend declared ₹1.75 per share.
💼 Dalmia Bharat recorded a net profit decrease of 48% year-on-year to ₹320 cr with dividend declared ₹5 per share.
🌱 Sustainability Corner
🏭 Sona BLW has commissioned a new factory in Mexico to produce parts of EVs for North America.
☀️ JSW Energy got a 700 MW solar project from NTPC.
IPO corner
JNK India IPO was oversubscribed 28.13 times with a retail subscription of 4.11 times before closing.
Is the Market Flushed with Liquidity? Idea FPO Subscribes 7x
Idea Cellular’s recent public offering (FPO) sent shockwaves through the financial world. Aiming to raise ₹6,250 crore (US$8.2 billion), the issue received a staggering 7x oversubscription. This begs the question: is this a sign of overflowing market liquidity, or is there more to the story? Let’s dive in and explore the potential reasons behind this overwhelming response.
Growth Calling:
India’s telecom sector is booming. Rising internet penetration, surging data consumption, and the ongoing 5G rollout fuel this growth. Investors see Idea as a key player in this exciting story, well-positioned to capitalize on the expanding digital landscape.
Confidence in the Strategy:
Idea’s recent merger with Vodafone India created a formidable telecom giant, better equipped to compete in the market. Investors likely appreciate the combined entity’s stronger financial standing, wider network reach, and enhanced spectrum holding.
Attractive Price Point:
The FPO was competitively priced, offering the potential for good returns. Coupled with the positive sector outlook, this aspect likely incentivized investors to participate actively.
Liquidity Factor – A Double-Edged Sword:
There’s no denying the presence of ample liquidity in the Indian markets. Low-interest rates and increased investor participation have fueled a surge in investments across sectors. This abundance of funds undoubtedly contributed to the strong demand for Idea’s FPO. However, it’s important to remember that market liquidity is cyclical. While it can create a favorable environment for fundraising, attributing Idea’s success solely to this factor would be a mistake.
Beyond Liquidity: Anchor Investors & Retail Interest
The FPO received significant interest from prominent anchor investors, including sovereign wealth funds and insurance companies. These institutions typically invest with a long-term perspective, signifying their belief in Idea’s future prospects. Retail investor participation was also remarkable, highlighting growing confidence in the telecom sector and a willingness to participate in growth stories. While retail enthusiasm is positive, it also emphasizes the need for investor education and a focus on long-term wealth creation strategies.
What Does This Mean for You?
Idea’s FPO success doesn’t translate to guaranteed returns for everyone. Always conduct thorough research, understand your risk tolerance, and align your investment decisions with your financial goals.
The Road Ahead:
The telecom sector is poised for exciting times. Idea’s FPO outcome is a positive indicator for the industry, but it’s just one piece of the puzzle. Investors should stay informed about evolving trends, technological advancements, and regulatory changes before making any investment decisions.
Key Takeaways:
- Idea’s FPO success stems from a combination of factors.
- While market liquidity played a role, the company’s strategic positioning and attractive valuation were crucial.
- Investors should prioritize research and long-term planning for successful investing.
The Indian telecom sector is on a growth trajectory, and Idea’s FPO might be a sign of things to come. However, a prudent approach and due diligence are always recommended before making any investment decisions.
Upcoming key financial events for the week:
| Date | Event |
| 26-Apr-24 | – USD Core PCE Price Index m/m |
| – USD Revised UoM Consumer Sentiment | |
| 29-Apr-24 | – EUR German Prelim CPI m/m |
| 30-Apr-24 | – USD Employment Cost Index q/q |
| – USD CB Consumer Confidence |
