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Market Ahead with EZWealth – 14 Oct 2021
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Domestic benchmark equity indices hit fresh record highs in the opening tick even as central banks across the world tightened money supply and inflation rose in major economies. Buying was seen across the sectors.
Strong results from Infosys, Wipro and Mindtree indicate that the market disappointing results from TCS was a one off. Even though high attrition is a challenge for the sector, strong deal wins and robust demand are clear positives, said an analyst.
After opening in the green, benchmark indices continued to gain momentum. At 11.46 am, BSE flagship Sensex was up 434 points or 0.71 per cent to 61,171. NSE benchmark Nifty advanced 150 points or 0.82 per cent to 18,311.
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1) A potential gush of foreign inflows on the back of a slew of large share sales is likely to bring reprieve to the Indian rupee. The currency, which has become emerging Asia’s worst performer over the past month, may gain about 2% from Wednesday’s close to 74 per dollar by the end of December, according to a Bloomberg survey. The rupee will also get a boost from foreign inflows as digital companies, including Warren Buffett-backed Paytm, plan to raise about $10 billion in initial share sales. The rupee has come under pressure as surging commodity prices rekindled worries about inflation and the financial health of the net oil-importing nation. A stronger dollar, spurred by rising wagers of U.S. stimulus taper, has also weighed on the currency.
India got foreign inflows of $134.4 million into stocks so far in October, on top of $445.8 million in the quarter ended September, data compiled by Bloomberg show. Flipkart, the Indian e-commerce giant controlled by Walmart Inc., and Paytm, the country’s leader in digital payments, are among companies aiming for an IPO before March end.
2) Work demand and employment provided under Mahatma Gandhi National Rural Employment Guarantee scheme fell to its lowest since the outbreak of the Covid-19 pandemic as recovery gained ground with hiring picking up across sectors. Data showed that work generated under the scheme fell by 10.9% in September to 23.47 crore person days compared to 26.36 crore person days in September 2020. Sequentially also, work generated under the scheme stood eased. In August work generated stood at 27.61 cr person days
Demand for work fell by 8.3% last month to touch its lowest at 2.86 crore persons in the last 17 months. But work provided under the scheme continued to be higher than the pre-covid levels. Households that benefited under the scheme in September 2019 stood at 1.20 crore while the persondays work generated was 14.6 crore.
3) With flooding in the coal hub of Shanxi province driving prices up to 1,508 yuan ($234) a metric ton even as the government tries to kickstart extra production, further measures are clearly needed to prevent more generators cutting off their turbines and causing blackouts through the cold of northern China’s winter. That means a crackdown on the factories that still consume the lion’s share of electricity.
Industry makes up only 25% of grid demand in the U.S., but in China it’s fully 59% of the total — more than all the country’s homes, offices and retail stores put together. Cheap power has been an essential tool of development, and the government has traditionally encouraged major users with electricity tariffs that get cheaper the more you consume. With about two-thirds of the grid powered by coal, the cost of digging up the black stuff has determined how much industrial users pay for their power
4) Five top lenders, including HDFC Bank and Kotak Mahindra Bank, are expected to submit binding bids for the Citi India consumer businesses before the October 26 deadline, two officials aware of the development told ET. Axis Bank, IndusInd Bank NSE -0.99 % and DBS India are also in contention for the businesses Citi is exiting in India. Although the US lender is seeking a valuation in excess of $2 billion, the bids could be more circumspect after Citi lost significant market share in its retail and credit card books, one of the executives cited above said. HDFC Bank and Kotak Mahindra Bank, two of India’s top three most valued private sector lenders, are considered frontrunners to win the business that generates about $1bn in revenue
5) China’s factory-gate prices rose at the highest rate in at least 25 years in September, official data showed Thursday, hit by the rising cost of coal. The producer price index (PPI), which measures the cost of goods at the factory gate, rose 10.7 percent on-year, according to the National Bureau of Statistics.
It was the highest level on record in NBS data, which goes back to October 1996. The figures come after factory-gate inflation jumped to a 13-year high in August, reflecting a surge in commodity prices — piling pressure on businesses already struggling with power rationing last month that affected output. Many factories have been forced to halt operations owing to power outages caused by emission reduction targets, the surging price of coal and supply shortages — raising concern about global supply chains. Chinese authorities have since ordered mines to expand production, with energy firms told to ensure there are adequate fuel supplies for winter
6) Some of India’s top metals and cement makers are facing severe coal shortages as Coal India’s Southern Eastern Coalfield (SEC) said it will suspend supplies to prioritize dispatches to the power sector. “We are currently sourcing power from the grids and raw materials through imports that are way costlier than sourcing from Coal India,” said an official at a leading aluminium company. Aluminium players are currently sourcing power from the grid at ₹15-20 per unit vs ₹2-5 per unit at their captive power plants (CPP). The CPPs are fired usually with solid fuel procured from Coal India.
“Stocks are available for the next 10 days. After that, we need to increase our grid power consumption, which is not viable and sustainable,” the person cited above said. Coal India usually loads around 210-230 rakes per day for both power and non-power categories. Around 50-60 rakes per day go for non-power categories and half of those go to steel and aluminium. “The issue started in April this year; however, we were getting some supplies. Now, if it comes down to zero, we have no option left than to reduce output,” said one of the industry executives, requesting anonymity.
7) India’s top two crypto platforms have each tapped stars — one, Amitabh Bachchan, may be the most famous Indian actor of all time — to promote cryptocurrencies as a superior and easy investment ahead of Dhanteras, the most auspicious day in the Hindu calendar to buy gold or start new ventures. Indians have expanded their Diwali investments to include stocks, real estate, diamonds and other assets.
Cryptocurrency exchanges like Bangalore-based CoinSwitch Kuber and CoinDCX are touting Bitcoin as another option. In an advertisement for CoinSwitch, Ranveer Singh, star of some of the country’s biggest blockbusters, delivers a rap in Hindi about just how simple crypto trading can be. Ease, though, may not be the central concern. The Reserve Bank of India effectively banned cryptocurrency trading until the courts lifted the prohibitions in March 2020. Since then, the government has flirted with crypto governance legislation that could change the landscape for investors.
8) From toothpaste to ready-to-eat snacks, consumption in rural households outpaced their urban counterparts, helping boost demand in the quarter ended September. And demand for pricier packs is also rising. Two signs that normal consumption behaviour is returning after the pandemic-led upheaval. Demand for consumer goods rose 58.2% year-on-year in India’s hinterland, data compiled by the business intelligence provider Bizom showed. That’s more than twice the rate of urban consumption. The company attributed the trend to a normal rainfall and an uptick in the rural job market, revival in demand for workforce in factories and infrastructure. A steep growth in the number of active kirana, or neighbourhood grocery stores, helped. The number of such outlets now operational rose 2.44 times over a year earlier, said the company that transacts with about 7.5 million retail stores across India.
Stocks in the news:
Power crisis in five most-affected states is likely to ease soon as Tata Power restarted its mega power plant at Mundra on Wednesday after Punjab and Gujarat agreed to pay actual costs. Some other states are likely to follow. The Gujarat government agreed to buy 1,800 MW power from Tata Power’s ultra-mega power project at ₹4.50 per unit-higher than tariff agreed in its executed contract-for four weeks
Westlife Development share price rose 13 percent in the morning trade on October 14 after the owner and operator of McDonald’s restaurants unveiled a growth plan to mark its 25 years in India. Westlife Development plans to invest Rs 800-1,000 crore in various businesses and open about 200 outlets over the next three-four years.
Apollo Pipes on Thursday announced that its board will meet next week on Friday i.e., October 22 to consider a a proposal for issue of bonus shares on the equity shares of the company. Shares of Apollo Pipes were trading more than 2% higher at ₹1,963 apiece on the BSE in early deals.
Shares of software giant Wipro surged close to 10% in early trading on Thursday after the company recorded a 17% year-on-year jump in consolidated net profit at Rs 2,930.6 crore for the July-September period.
Shares of Zee Entertainment Enterprise shed 0.7% in early trading on Thursday, as the fight for control continued, with the media mogul claiming that major shareholder Invesco’s activities over the past few weeks were motivated and external from any corporate governance issues.[/vc_column_text][vc_column_text]
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