US Fed & ECB Hike Interest Rates | Indian Stock Market Weekly Update 6 May
US Fed and ECB hike interest rates
The US central bank raised interest rates by 0.25% to 5.25%, the highest level in 16 years in its 10th hike in 14 months. The European Central Bank raised interest rates by 0.25% to 3.75%. The idea here is to give people more incentive to save rather than spend, lower the demand, and in turn reduce inflation.
In April, inflation in the Eurozone increased to 7% from 6.9% in March. In the US, inflation has been falling from the peak of 9.1% in June 2022 and reached 5% in March 2023 – still above their target of 2%.
Debt instruments from the US and Germany are considered safer than other debt instruments. As interest rates rise in the US and Germany, could we see funds flow from other markets to their debt instruments?
🧾In this Article
– Mr. Abhishek Jain, Head of Research at Arihant Capital
Despite the markets correcting on Friday, the Indian equity markets ended the week on a positive note. The Nifty 50 witnessed its best weekly performance in nine months, and the Sensex closed above 61,000 for the first time since Feb 17. The IT, PSU Banks and media stocks led the gains.
However, global stocks faced losses due to the announcement of further interest rate hikes in the U.S. and Europe, resulting from persistent inflationary pressures and economic resilience.
Japanese stocks, on the other hand, rose by up to 1.5% as the Bank of Japan reaffirmed its commitment to stimulus, leaving its short-term policy rate unchanged at 0.1%.
Nifty ended 441 points up at the 18,065 level. Sensex was up by 2.44% and stood at 61,112 and Nifty Bank was up by 2.65% at 43,233.
🔐KEY RESULTS Q4FY23
- HDFC – Net profit up 20% YoY to ₹4,425 crore. Net interest income increased 16% YoY to ₹5,321 crore.
- Tata Steel – Net profit dropped 84% YoY to ₹1,566 crore. Net sales fell 9.18% YoY to ₹62,962 crore.
- Ambuja Cements – Net revenue grew by 8.3% YoY to ₹4,256 crore. Standalone profit grew 1.6% YoY to ₹502 crore.
- MRF – Net profit grew 106% YoY to ₹340 crore. Revenue from operations grew 10% YoY to ₹5,841 crore.
- Adani Wilmar – Net sales fell 7.27% YoY to ₹13,873 crore. Net profit fell over 60% YoY to ₹94 crore.
- Titan – Standalone net profit rose 50% YoY to ₹734 crore. Revenue from operations rose 33% YoY to ₹9,704 crore.
- Central Bank of India – Net profit rose 84% YoY to ₹571 crore. Net interest income rose 45% YoY to ₹3,513 crore
📈Market Outlook
–Mr. Ratnesh Goyal, Senior Research Analyst, Arihant Capital.
Nifty
If we look at the daily chart of Nifty, we see that prices have tested the “Upward gap area”. On the weekly chart, we see a “Doji” candlestick formation.
If we analyze both charts, it indicates that still positive momentum can continue and we should maintain a buy-on-dips approach.
If Nifty starts trading above the 18,150 level, then it can touch the 18,300-18,500 level. On the downside, support is 17,950. If Nifty starts to trade below 17,950 then it can test the levels of 17,850 and 17,750.
Bank Nifty
If we look at the daily chart of Bank Nifty, we see a breakdown of the “Upward Trendline”. On the weekly chart, Bank Nifty is still taking support from short-term moving averages.
It indicates that we can see some consolidation in Bank Nifty compared to Nifty.
In the coming week if Bank Nifty trades above 42,850 then it can touch 43,100 and 43,350 levels. However, downside support comes at 42,600, and below that, we can see 42,450 and 42,250 levels.
🏦Federal Bank Slips Despite a Surge in Profit
Federal Bank reported that in Q4 FY 2022-23, its net profit rose 66.98% on a YoY basis to ₹903 crore. Despite this, Federal Bank’s shares slipped 5.54% this week. This fall can be attributed to the difference between expected and reported results.
The consensus estimate on Bloomberg for the net interest income was ₹2,577 crore, but the reported net interest income was ₹1,909 crore. The company also suffered a drop in the net interest margin in Q4 FY 2022-23 to 3.31% from 3.49% in the previous quarter.
💸UPI Transactions Hit an All-Time High
In April, transactions made through Unified Payment Interface (UPI) rose 59% on a YoY basis to an all-time high of 890 crore. The value of transactions also rose 49% on a YoY basis to an all-time high of ₹14 lakh crore.
The numbers suggest that UPI remains dominant on the digital payments front, with its closest rival being Immediate Payment Service (IMPS). In April, IMPS recorded 49.6 crore transactions worth ₹5.21 lakh crore.
💰Options Hub
– Ms. Kavita Jain, Sr Research Analyst, and Learning Head, Arihant Capital
🔎Quick Bites
Global
- Ajay Banga makes history as the first Indian-origin President of the World Bank 🏦🇮🇳. The former CEO of Mastercard has been officially confirmed as the 14th President of The World Bank.
- The Asian Development Bank’s president stated that the bank will explore the possibility of raising resources through rupee-denominated bonds.
- Amid sanctions from the West, India, and Russia are exploring the possibility of accepting payments in Rupay and Mir cards to facilitate hassle-free payments.
- To attract businesses from India, Russia is considering tax concessions in light of 8.5% of firms from the European Union and G7 countries exiting their Russian businesses.
- In April, the finance ministry reported the highest-ever GST collection of ₹1.87 lakh crore.
- Unemployment in India rose to 8.11% in April from 7.8% in March.
Automobiles
- According to FADA data, the total retail sales of vehicles in April fell by 4% on a YoY basis.
- Hero MotoCorp plans to introduce its e-scooter, Vida, in 100 cities this year.
- According to data from JATO Dynamics, Indian automakers will be launching 81 new models in FY 2023-24 as compared to 54 new models launched last year.
Infrastructure
- GR Infraprojects won a project worth ₹737 crore for the construction of a 4-lane highway in Uttar Pradesh.
- Adani Ports and Special Economic Zone has completed the sale of its Myanmar port for a total consideration of $30 million.
- NBCC bagged an order worth ₹749 crore for a redevelopment project from the Ministry of Housing and Urban Affairs.
- Ahluwalia Contracts secured an order worth ₹2,450 crore from the Rail Land Development Authority to redevelop Chhatrapati Shivaji Maharaj Terminus (CSMT) in Mumbai.
Banking, financial services, and insurance
- HDFC Bank stated that a recent order to pay higher gratuity to former employees would cause unquantifiable “irreparable loss, harm, and damages”.
- The finance ministry wants public sector banks to recover at least ₹2 lakh crore from loans they have written off over the years.
- The government is considering amending rules to expedite the resolution of pending cases in Debts Recovery Tribunals (DRTs).
Oil
- Oil India and Assam Gas Company to form a joint venture for piped natural gas distribution.
- Indian Oil Corporation is planning to build a ₹1,000 crore plant in Haryana for sustainable aviation fuel.
- The government slashed the windfall gains tax on crude oil by ₹2,300 per tonne to ₹4,100 per tonne.
- In April, the demand for diesel rose by 6.7% while the sale of petrol rose by 2.5% on a YoY basis.
- Union Minister Piyush Goyal stated that India is aiming for 20% ethanol-blended petrol by 2025.
Power
- Electricity tariffs are expected to rise as a result of expensive imported coal and longer transport routes for coal.
- NTPC’s installed capacity reached 72,304 MW after the installation of a thermal power plant in Bangladesh.
- NTPC entered into a joint venture with the Nuclear Power Corporation of India to develop nuclear power projects in India.
Airlines
- Shares of SpiceJet and Interglobe Aviation rose by 2.09% and 5.99% respectively this week as competitor Go First filed for insolvency proceedings.
- Using funds from the ECLGS scheme, SpiceJet plans to revive 25 grounded planes.
Pharma
- Strides Pharma will partner with Orbicular Pharmaceutical to develop a range of nasal sprays slated for a global launch.
Real estate
- Macrotech Developers, owner of Lodha brand, to invest ₹4,500 crore on construction of real estate projects this year.
Mining
- NMDC reported that its iron ore output rose 11.42% on a YoY basis to 3.51 MT in April.
🏗️Corporate Actions
| Bonus | ||
| Company | Ratio | Ex-Date |
| Sirca Paints India | 1:1 | 11 May 2023 |
| Right | ||
| Company | Ratio | Ex-Date |
| Enbee Trade and Finance | 1:20 | 10 May 2023 |
| Clara Industries | 2:3 | 11 May 2023 |
| Buyback | ||||
| Company | Ex Date | Start Date | End Date | Offer Price |
| Welspun India | 10 May 2023 | — | — | 120.00 |
| Symphony | — | 3 May 2023 | 17 May 2023 | 2000.00 |
| Dividend for May 08th– May 13th 2023 | |||
| Company | Dividend Type | Dividend (In ₹) | Ex-Date |
| Oracle Financial Services Software | Interim | 225 | 9 May 2023 |
| Ramkrishna Forgings | Interim | 0.50 | 9 May 2023 |
| Coforge | Interim | 19 | 10 May 2023 |
| Laurus Labs | Interim | 1.20 | 10 May 2023 |
| IndiaMART InterMESH | Final | 20 | 11 May 2023 |
| Kewal Kiran Clothing | Interim | 2 | 11 May 2023 |
| 360 One Wam | Interim | 4 | 12 May 2023 |
| Aptus Value Housing Finance India | Interim | 2 | 12 May 2023 |
🪜Others
- In response to a public interest litigation, the Securities and Exchange Board of India plans to extend its investigation into Adani group’s financial transactions, looking into their bank accounts over the past decade.
- Reliance Strategic Investments will demerge from Reliance Industries and is expected to list on NSE and BSE as Jio Financial Services.
- Reliance Consumer Products will partner with Muttiah Muralidaran’s Ceylon Beverage International as a packaging partner for Campa Cola’s canning operations.
- In April, foreign portfolio investors bought Indian shares worth ₹11,631 crore, the highest in the last 4 months.
- Nexus Select Trust REIT’s ₹3,200 crore IPO will open on 9th May with a price band of ₹95 to ₹100 per share. Nexus Select Trust is India’s largest mall platform.
- During the March quarter, promoters of the top 500 companies have brought down the value of shares pledged by them by at least ₹88,345 crore.
- Amid global uncertainties, RBI bought 10 tonnes of gold in the March quarter.
- On Monday, regulators seized First Republic Bank and sold its assets to JPMorgan Chase.
🔌Sustainability Corner
- BluSmart Mobility raised $42 million (nearly ₹342 crore) through equity and debt from existing investors.
- KPIT Technologies, which recorded 27% growth in revenues of Rs 3,447 crore in FY 2023 (47% from Europe, 36% USA, and 17% Asia) and has bagged business from Honda and Renault for work on software-defined vehicles, expects to grow by 27–30% in FY 2024.
- Cummins and Tata Motors strengthen a 30-year alliance by signing a definitive agreement to manufacture a range of low- to zero-emissions technology products in India over the next few years.
- Bajaj Auto plans ₹500 crore capital expenditure in its EV business in FY 2024. This includes EV component volumes and also building capabilities for its soon-to-be-revealed electric 3-wheeler.
- Bosch to acquire US chipmaker TSI Semiconductors. Rising demand from the EV industry for silicon carbide chips, which enable increased range and more efficient recharging for EVs, sees Bosch make moves to expand its global portfolio of SiC semiconductors.
- PLI scheme for construction equipment likely to attract $4 billion of domestic and foreign investments in the near term, SAYS ICEMA.
- ZF reveals a modular electric high-speed air compressor for fuel-cell-powered MCVs and HCVs which leverages Liebherr-Aerospace’s tech. The air bearing design of the optimized compressor offers benefits like oil-free, high-speed, efficient operation, and high power density.
- The Ministry of Heavy Industries (MHI) announced the release of SOPs under the Production Linked Incentive (PLI) Auto scheme for testing agencies. The applicants under the scheme can now submit their applications for the testing and certification of AAT products (both OEMs and components), which will help them qualify for incentives under the PLI Auto scheme.
- Autoliv will set up an airbag cushion and fabric plant in Vietnam, which has drawn investment in local production from Skoda and BMW. It aims to meet expanded future airbag production needs for the fast-growing ASEAN market.
- Mahindra Last Mile Mobility breaks ground on new EV plant in Zaheerabad, Telangana. The plant will house a state-of-the-art battery assembly line producing power packs and also manufacture electronic, drivetrain components for 3- and 4-wheeled EVs.
Result Calendar for May 08th – May 13th 2023
| Date 8th May | |||
| VIP Industries | CG Power and Industrial Solutions | Pidilite Industries | Aarti Industries |
| Exide Industries | Indian Bank | Canara Bank | UPL |
| Carborundum Universal | Birlasoft | Happiest Minds Technologies | Kansai Nerolac Paints |
| Coal India | Mahanagar Gas | Kalpataru Power Transmission | HFCL |
| Easy Trip Planners | — | — | — |
| Date 9th May | |||
| Indraprastha Gas | Westlife Foodworld | Chalet Hotels | JM Financial |
| KSB | Birla Corporation | SRF | Hatsun Agro Product |
| Godrej Agrovet | Nuvoco Vistas Corporation | Castrol India | Lupin |
| Rain Industries | Poly Medicure | Latent View Analytics | HFCL |
| Raymond | Apollo Tyres | — | — |
| Date 10th May | |||
| PGHL | Godrej Consumer Products | MAS Financial Services | Larsen & Toubro |
| Cera Sanitaryware | Prism Johnson | Escorts Kubota | Bosch |
| BASF India | Dr. Reddy’s Laboratories | Sanofi India | Ratnamani Metals & Tubes |
| Relaxo Footwears | Gujarat Gas | — | — |
| Date 11th May | |||
| Gillette India | Dr Lal Path Labs | Aditya Birla Capital | Siemens |
| Alkyl Amines Chemicals | Deepak Nitrite | Eicher Motors | Zensar Technologies |
| Intellect Design Arena | Asian Paints | Gujarat State Petronet | Balrampur Chini Mills |
| ITI | — | — | — |
| Date 12th May | |||
| Indraprastha Gas | Colgate-Palmolive (India) | Manappuram Finance | Cholamandalam Financial Holdings |
| Greaves Cotton | Sapphire Foods India | Laxmi Organic Industries | Polycab India |
| Indian Overseas Bank | Tata Motors | Cipla | GE Shipping Company |
| Date 13th May | |||
| Navin Fluorine International | Sonata Software | Avenue Supermarts | |
📬Also Read: Sustainable Investing in India: ESG Investments
