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Market Today with EZWealth – 12 Oct 2021
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Equity benchmarks Sensex and Nifty opened on a choppy note on Tuesday, tracking weakness in index heavyweights Infosys, ICICI Bank and HCL Tech amid a negative trend in global markets. After swinging over 200 points in the opening session, the 30-share Sensex was trading 34.62 points or 0.06 per cent lower at 60,101.16. Similarly, the Nifty slipped 2.45 points or 0.01 per cent to 17,943.50
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1) India’s move to privatize flag carrier Air India Ltd. in its first big-ticket sale in almost two decades promises to further boost the appeal of the nation’s booming equity market just when China is intensifying its crackdown on private firms. The high-profile sale puts investor spotlight on Prime Minister Narendra Modi’s aggressive reform agenda, as it shows that his plans to tap the private sector for the country’s assets are gaining traction. It could also pique interest in a number of state-run firms in which the government intends to divest stake, providing another potential catalyst to a market that’s rallied to successive all-time highs.
India’s equity markets, including initial public offerings, have drawn global attention and benefited from the ongoing regulatory clampdown in China as Beijing’s moves to tighten its grip on a swathe of sectors from technology to education to achieve President Xi Jinping’s vision of “common prosperity” has spooked global funds. Powered by record-low interest rates, a retail-investing boom and a spate of tech listings, India’s market capitalization has surged 37% this year to $3.46 trillion, according to an index compiled by Bloomberg.
2) Automakers are expected to report muted earnings for the second quarter of financial year 2021-22 (Q2FY22) because of supply-side constraints like the shortage of semiconductors, brokerages say.
The average estimates of brokerages Motilal Oswal, YES Securities, IDBI Capital, and Phillip Capital show that while supply constraints weighed on passenger vehicle (PV) volumes, tepid domestic demand kept two-wheeler sales in check. As a result, the firms in the auto universe among the Nifty50 companies (including Tata Motors consolidated) are expected to swing to a year-on-year loss of Rs. 399 crore, against a cumulative profit of Rs. 4395 crore last year. The loss will primarily be driven by Tata Motors, which is expected to report a loss of over Rs. 4000 crore in Q2.
Even as demand for PVs and commercial vehicles remained strong, the chip shortage deepened in August and September, resulting in production cuts and a volume impact of 40-45%. Low inventory at the PV sales channels is likely to dampen festive season volumes.
3) Listed banks are likely to post over 20% rise in profit in the second quarter ended July-September 2021-22 on improvement in collections and credit offtake amid pressure of slippages and provisions bills, revealed analysts. Bloomberg’s estimates showed that for 19 lenders, profit would grow 21.7% to Rs 32075 crore in Q2 YoY.
In keeping with the gradual economic upturn, the pace of bank credit YoY gained traction. The banking system’s credit rose 6.7% YoY in the second half of September, up from 5.6% in March, according to RBI data. Loan portfolio has witnessed gradual accretion all through Q2FY22, with signs of improvement in pockets. While interest income may see limited rise due to slashing of lending rates to mop-up business, banks have continued to benefit from a fall in the cost of funds due to cut in deposit rates.
4) Non-life insurance business in India was below pre-pandemic level in September even as it recovered from the second wave of Covid-19. The industry’s revenue or gross premium underwritten rose 1.6% over August to Rs 22,226.4 crore in September, according to data filed with the the Insurance Regulatory and Development Authority of India. That’s 2.8% lower than a year earlier and a 10% contraction from the pre-pandemic month of 2019.
General insurers, which offer cover for home, travel, motor, health, fire and other natural or man-made calamities, witnessed a 22% increase in revenue over the preceding month to Rs 19,021.7 crore in September. That was 0.6% higher than a year earlier. Standalone private health insurers’ revenue rose 8% to Rs 1,743 crore month-on-month, recovering from the decline in August. On a year-on-year basis, it rose 32%. Revenue for specialised state-run non-life insurers, which had been rising since June, declined 68% over August to Rs 1,461.7 crore. It fell 45% over September 2020.
5) There were more people visiting retail and recreation spots last week than at any point since the March 2020 national lockdown. Retail and recreation visits hit 90.7% of pre-covid levels, shows mobility data from Google. Growth moved higher for Indian Railways in terms of both goods carried and revenue earned from them. Nitrogen dioxide, which usually comes from industrial activity and vehicles, also have been increasing. These and several other indicators together provide a positive picture for the economy.
6) Competition is set to heat up in India’s electric vehicle segment with Honda Motorcycle & Scooter India (HMSI) looking at launching an electric scooter next financial year to take on former partner Hero MotoCorp, Bajaj Auto, TVS Motor and SoftBank-backed Ola Electric. People in the know of its plans said the company is in the process of testing electric scooter BENLY e, developed by Japanese parent Honda Motor, at the Automotive Research Association of India.
Honda Motor had unveiled the BENLY e at the Tokyo Motor Show in 2019. But it is unclear if it would introduce this two-wheeler, which was primarily designed for commercial use, or a new EV in India. Honda Motor globally has announced plans to launch three new EVs for personal use by 2024.
7) India may look at increasing tax on some goods and services in a step toward moving to a simpler structure with fewer rates, according to people familiar with the matter.
A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system, the people said, asking not to be identified as the discussions are private.
The two lowest rates could be raised by a percentage point each to 6% and 13%, respectively, the people said. While the rates would eventually be pared to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month, they said.
8) Future Group and Amazon are likely to start negotiations for a possible out-of-court settlement of a year-long legal standoff over the proposed sale of Future Group assets to Reliance Retail once the Singapore arbitrator gives its initial rulings later this month, according to two people familiar with the matter.
The Singapore International Arbitration Centre (SIAC) is to decide whether BSE-listed Future Retail Ltd (FRL) should be a party to the arbitration. The stay restrained Future from going ahead with the Reliance Retail deal until a final outcome on Amazon’s challenge. In the event of non-negotiation between the two groups, the SIAC final ruling could spill over well into 2022, as the Centre is only expected to start hearing on the actual arbitration in November or December, sources said. A delay in the arbitration process could be detrimental to Future Group, which is laden with debt and facing a cash crunch
Stocks in the news:
Aditya Birla Group chairman Kumar Mangalam Birla is considering infusing some of his own capital into Vodafone Idea while the Vodafone Group may sell at least a part of its stake in tower firm – Indus Towers – and channel the proceeds into the loss-making telco. This will be followed by external funding, say people aware of the matter.
Shares of Hero MotoCorp gained 2 per cent on Tuesday after the auto company said that it has expanded the range of Pleasure scooters.
Delta Corp share price touched a 52-week high of Rs 305, gaining 12 percent in the early trade on October 12 after the gaming and hospitality company narrowed its losses in the September 2021 quarter to Rs 22.57 crore from Rs 54.91 crore in the year-ago period.
Tata Motors share price continued to gain for the fourth straight session on October 12 after the company reported 24 percent higher global wholesale figures for the September quarter compared the year-ago period.
Radico Khaitan share price touched a 52-week high of Rs 1,043.80, rising 2 percent in the morning trade on October 12 after the liquor manufacturer unveiled two new luxury products in the brown and white spirit categories
Shares of Maharashtra Seamless have added over 15% intraday as the company announced that it secured Rs 237 crore order from Oil and Natural Gas Corporation Ltd. (ONGC) for supply of seamless casing pipes
Shares of Everest Organics Ltd. rose 11.57% to Rs 335 apiece on the BSE, after the company announced it developed anti-viral API ‘Molnupiravir’ as additional Covid-19 treatment drug successfully
Shares of Ujjivan Small Finance Bank Ltd. advanced 10.34% in intraday trade to Rs 22.95 apiece, after the company reported 3% QoQ rise in its gross loan book in September quarter, in its Q2 business update post market hours Monday
L&T Construction, the construction arm of Larsen & Toubro Ltd. secured various order in India for its metallurgical and material handling, buildings and factories, and water and effluent treatment businesses. Metallurgical & Material Handling business won an order to set up coke over, coke dry quenching plants in steel sector. Buildings and Factories business won an order for construction of office space at Hyderabad with an approximate built-up area of 20 lakh square feet, scheduled to be completed in 14 months. Water & Effluent Treatment business won an order from Indian Oil Corporation Ltd. to construct a demineralization plan for Barauni Refinery in Bihar. Besides these, L&T Geostructure Pvt Ltd, a wholly owned subsidiary of L&T, secured a strategic order from Department of Water Resources, Government of Odisha for construction of concrete cut-off wall for the Kanupur Irrigation Project at Keonjhar district in the state. L&T termed the orders ‘significant’, meaning that the orders are worth between Rs 1,000 crore and Rs 2,500 crore.
Sales at Jindal Steel & Power Ltd. and Tata Steel Ltd. was higher than their peers in the quarter ended September, aided by inventory liquidation and higher exports.[/vc_column_text][vc_column_text]
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