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Market Today with EZWealth – 8 Oct 2021
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The markets reacted positively minutes after the Reserve Bank of India’s policy decision, as the Sensex reclaimed 60000-mount, while Nifty inched near 18000-mark in the early morning trade on Friday.
Domestic stocks opened higher as US senators approved legislation to temporarily raise the debt limit, avoiding the risk of a default this month. They extended gains after RBI kept policy rates unchanged and maintained accommodative stance. Investors will await TCS’ quarterly numbers today, which will officially kick off the Q2 earning season
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1) The RBI kept key policy interest rates unchanged as expected to strengthen a fragile economic recovery and reiterated an accommodative stance that supports sufficient liquidity to keep borrowing costs low for both the state and companies to help drive investments.All the six members of the Monetary Policy Committee (MPC) voted to keep rates unchanged, but J.R. Varma, an external member, voted for the second straight time to end the accommodative stance, something he has said is not necessary to keep rates low but has the potential to dent the credibility of the central bank’s inflation targeting framework. CPI inflation seen at 5.3% for this fiscal. In Q2, it is seen at 5.1%, 4.5% in Q3 and 5.8% in Q4, with risks broadly balanced
2) The hit from China’s energy crunch is starting to ripple throughout the globe, hurting everyone from Toyota Motor Corp. to Australian sheep farmers and makers of cardboard boxes.
Production of cardboard boxes and packing materials was already strained by skyrocketing demand during the pandemic. Now, temporary shutdowns in China have hit output even harder, leading to a possible 10% to 15% reduction in supply for September and October, according to Rabobank.
The food supply chain is also at risk as the energy crisis makes harvest season more challenging for the world’s biggest agricultural producer. Global food prices have already jumped to a decade high, and worries are mounting that the situation will worsen as China struggles to handle crops from corn to soy to peanuts and cotton.
Outside of China, Australian sheep farmers are bracing for weaker demand just as they seek to sell their wool at auctions. The industry saw Chinese mills reduce production by up to 40% due to power cuts last week, Australian Broadcasting Corp. reported.
The tech world could also see a dramatic hit, given that China is the world’s biggest production base for gadgets from iPhones to gaming consoles, and a major center for the packaging of semiconductors used in autos and appliances.
Any further deterioration of the semiconductor market would also add headaches for automakers, who have already seen production crunched by the chip shortage. The industry, which is high on the list of protected sectors in times like these, has thus far largely been spared from the effects of the power crisis.
3) The Tamil Nadu government is in talks with the Tata Group over a possible takeover of Ford India’s unit at Maraimalai Nagar in Chennai. The buzz about Tata Motors taking over the plant got stronger following news reports about Tata Sons Chairman N Chandrasekaran meeting with chief minister MK Stalin and state industries minister Thangam Thennarasu. This was said to be the second round of high-level talks that took place within a span of two weeks. On September 27, Tata Motors executive director Girish Wagh had met the CM.
Details of the meetings have not been divulged. The source said since the chief minister chaired those, the announcement regarding the final decision too would come from the chief minister himself.
4) Maruti has had to cut production in the last two months because of the chip shortage. And it’s not sure when the supply will improve. “[The] situation is very dynamic,” Shashank Srivastava, executive director, sales and marketing at Maruti Suzuki India Ltd., said in an interview. “The visibility on the availability of chips is not so clear.”
He added that production volume would slump to 60% of the usual level in October—a month that marks the beginning of the festive period considered auspicious for new purchases. It’s also crucial for automakers looking to make up for lost sales after the second wave of Covid-19. The company estimated production volume to be around 40% of normal production in September, after halting production for three consecutive Saturdays and cutting one shift in August.
The chip crunch began in December last year as sale of laptops and mobile phones to televisions soared with people working remotely during the pandemic. Rising Covid-19 cases in key supplier markets such as Malaysia has worsened the problem even as demand for personal mobility has spiked. While Maruti Suzuki will try to focus on festive demand, Srivastava said, “Inventory levels are much below th
5) An acute coal crunch in India has created a “precarious situation” for aluminum producers as stockpiles of the fuel plummet to critical levels, according to the country’s top industry group. Most aluminum factories, which have their own power generation plants, have stockpiles for only one to two days, B.K. Bhatia, additional secretary general at the Federation of Indian Mineral Industries said.
While aluminum output hasn’t been affected so far, there may be production cuts by the end of the month if coal supplies don’t recover, he said. Tightening supplies of coal have triggered a power crisis in India as about 70% of the nation’s electricity is fired by the fuel. A power cut of more than two hours at aluminum plants can cause the molten metal in the potline to become solid, forcing the the smelting unit to shut down for at least six months, according to the Aluminium Association of India.
6) Tata Consultancy Services vying to participate in a massive $50 billion information technology procurement contract floated by the US Government’s National Institute of Health (NIH), alongside other global IT majors including Capgemini, official documents reveal.
CIO-SP4 is among the largest technology procurement vehicles to be launched in recent years, and is aimed at meeting the general IT, biomedical and health IT needs of US government agencies across areas such as IT services, outsourcing, cybersecurity, cloud services and software development. Even a partial win will enable India’s largest software exporter to further compete in the massive market for US federal technology procurements, analysts aware of the development said.
7) Private equity group TPG is in advanced discussions with the Tata Group to invest $1 billion or more in the electric vehicles (EV) division of Tata Motors, said people aware of the matter. The country’s largest vehicle maker is in the process of transferring its passenger vehicles division, including its EV portfolio, to a step-down subsidiary. The company got shareholder approval for the move in March.
TPG’s $1 billion investment, which could even go up to $1.5 billion, values the EV division at $8-9 billion. The final quantum of investment and the valuation is yet to be sealed, the people added. A formal announcement is expected this month. The final due diligence is ongoing but both sides, said company officials, have “had a handshake two-three weeks back.”
8) In a big respite for Indian travellers flying to England, the UK has announced that they will abolish the mandatory quarantine period for Indians starting October 11, 2021. “No quarantine for Indian travellers to UK fully vaccinated with Covishield or another UK-approved vaccine from 11 October. Thanks to Indian government for close cooperation over last month,” Alex Ellis, British High Commissioner to India said in a message on Twitter.
Stocks in the news:
Macrotech Developers share price added 4 percent in early trade on October 8 after foreign broking house Jefferies maintained the buy call on the stock and raised the target price. Jefferies has raised the target price of Macrotech Developers to Rs 1,220 from Rs 1,068 per share and also raised the FY23-24 sales estimate by 7-10 percent.
Oberoi Realty: The realy estate firm reported over two-fold jump in its sales bookings at Rs 828.52 crore for the quarter ended September on improved housing demand driven by low mortgage rates. Its sales bookings stood at Rs 327.30 crore in the year-ago period.
Vedanta: The natural resources company said it has taken up a transformative programme to embed environmental, social and governance (ESG) into every aspect of the decision-making and performance evaluation process.
TVS Motor Company: The two wheeler player said it has expanded the Jupiter range with the launch of a 125cc version of the scooter, with price starting at Rs 73,400 (ex-showroom Delhi). The company already sells a 110cc version of the scooter and Jupiter 125 expands the product portfolio.
Bank of Baroda: The state-run lender said it has reduced its home loan rate by 25 basis points (bps) to 6.50 per cent from 6.75 per cent. The new rate will be available for customers till December 31, 2021.
Puravankara: The realty firm said it has partnered with IBM Global Business Services (GBS) to fuel tech-led innovations in its operations. IBM will integrate the SAP cloud environment with Puravankara’s cloud environment to ensure seamless enterprise functions.[/vc_column_text][vc_separator][vc_column_text]
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