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Mahurat Trading with EZWealth – 04 Nov 2021
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Services PMI rises to over a decade high of 58.4 in October
Activities in services, the biggest sector in India’s economy, accelerated to a 10-and-a-half-year high in October. This comes even as companies increased prices of their final products due to costly raw materials, showed IHS Markit purchasing managers’ index (PMI) survey. Unlike their manufacturing counterparts, services companies hired more hands, resulting in job generation reaching the highest level after the pre-Covid period of February 2020.
The index rose to 58.4 in October from 55.2 in September, which clearly signalled that the third quarter of the current fiscal year may witness high economic growth. PMI numbers, both for manufacturing and services, are the only crucial macroeconomic data that has come for October. Though GST collections of Rs 1.3 trillion are also for the month of October, those basically were for transactions carried out in September. According to respondents of the PMI services survey, ongoing improvements in demand boosted growth of sales, and subsequently, output. New work intakes increased at an accelerated rate, the strongest since July 2011. Companies linked sales growth to better underlying demand and successful marketing. Firms were able to secure a healthy intake of new work despite charging more for their services. Output prices rose at a solid rate that was the strongest since July 2017.
Federal Reserve to start withdrawing its emergency support for the economy
The Federal Reserve concluded a pivotal meeting of its rate-setting body today with a commitment to leave interest rates near zero along with an announcement that later this month, it will start unwinding one one of its biggest and most unprecedented market interventions undertaken in the wake of the pandemic. Wall Street had been awaiting Fed Chairman Jerome Powell’s remarks about the stubbornly persistent inflation that is beginning to create interest rate anxiety on Wall Street.
In his prepared statement, Powell continued to use the word “transitory” to characterize the inflationary climate, although he also acknowledged that the supply chain disruption had created “sizable price increases” in some parts of the economy. Market observers had predicted that Powell would revisit how he characterized the current level of inflation, given that the long duration of higher prices seems to stretch the definition of the term. “If this inflation isn’t transitory, what is it?” said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management.
The backdrop to the conversation around inflation’s staying power is the Fed’s long-awaited taper. Since June 2020, the central bank has been purchasing $120 billion in bonds — $80 billion in Treasuries and $40 billion in mortgage-backed securities — every month to add liquidity and keep the financial system working efficiently. On Wednesday, Powell said that the Fed would begin reducing those purchases by $10 billion and $5 billion, respectively, later this month. The Fed will continue to step down by those increments, though Powell said the bank was “prepared to adjust the pace of purchases if warranted by changes in the economic outlook.”
Petrol, diesel excise duty cut by Rs 5, Rs 10 per litre on Diwali eve; cheaper fuel from today
The Government of India has announced an excise duty reduction on petrol and diesel on the eve of Diwali. The Ministry of Finance, in a notification on Wednesday evening, said the excise duty on petrol will be reduced by Rs 5 and the excise duty on diesel will be reduced by Rs 10 from Thursday, and the prices of petrol and diesel will come down accordingly.
In the press release, the finance ministry stated that crude oil prices have witnessed a global upsurge in recent months. As a consequence, domestic prices of petrol and diesel had increased in recent weeks and these factors were exerting inflationary pressure. The ministry said that the reduction in excise duty on diesel will be double that of petrol and this will come as a boost to the farmers during the upcoming Rabi season. Furthermore, the Centre has urged states to reduce VAT on petrol and diesel to give relief to consumers.
FDA authorizes Pfizer’s Covid vaccine for kids ages 5 to 11
The Food and Drug Administration on Friday authorized the use of Pfizer and BioNTech’s Covid-19 vaccine for children ages 5 to 11, a move that will make the shots available to 28 million kids in the U.S. The Centers for Disease Control and Prevention must sign off before shots can be distributed. It’s scheduled an advisory committee meeting to review the pediatric doses next week and is expected to swiftly clear them for public distribution immediately thereafter.
The FDA clearance – which was expected – came after the agency’s Vaccines and Related Biological Products Advisory Committee voted overwhelmingly Tuesday to back a smaller dose of the Pfizer vaccine for young children. The company said its low-dose vaccine for kids, which is a third of the dosage given to adults, is more than 90% effective in preventing symptomatic infection. It also said the shots were well tolerated in young children, producing side effects comparable with those seen in a study of people ages 16 to 25. Many parents say they are anxious to get their kids vaccinated with schools now open across the U.S. and the delta variant of the coronavirus driving a surge in children’s cases.
IPO-bound Paytm allots Rs 8.2k-cr worth shares to anchor investors
Leading digital payments and financial services platform Paytm allotted Rs 8,235 crore worth of shares to anchor investors as part of its Rs 18,300-crore initial public offering (IPO), which opens on Monday. This is the largest-ever allotment made in the anchor category. The anchor round was subscribed 10 times by 74 investors, according to sources. Paytm’s top eight anchor investors have invested more than any fund has ever done in an Indian IPO anchor round.
BlackRock (Rs 1,045 crore), Canada Pension Plan Investment Board (Rs 938 crore), Birla MF (Rs 555 crore), and GIC (Rs 533 crore) were the biggest investors in the round. With this, Paytm has already secured 45 per cent of its total IPO issue size. The IPO, which will be the largest ever in India, comprises a fresh issue of Rs 8,300 crore and a secondary share sale worth Rs 10,000 crore. The price band for the IPO is Rs 2,080-2,150 per share. The top three global mutual funds – BlackRock, Vanguard, and Fidelity participated in the round. The largest emerging markets dedicated investors like Standard Life Aberdeen, UBS, RWC, too, took part.
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Stocks in the News
[/vc_column_text][vc_column_text]Zee Entertainment on Wednesday announced November 11 as board meeting date to announce earnings. The company, which has been immersed in a legal battle with its largest shareholder, had cancelled October 27 board meet citing lack of quorum. “Zee Entertainment Enterprises has informed BSE that the meeting of the board of directors of the company will be held on November 11, inter alia, to consider and approve the unaudited financial results of the company both on standalone and consolidated basis for the 2nd quarter and half year ended September 30, 2021,” the company said in a stock exchange filing.
Bharti Airtel has stressed on the need to raise its average revenue per user (ARPU) to Rs 200 in the near term and Rs 300 in the long term. Further, Airtel CEO Gopal Vittal on Wednesday reiterated the need to increase tariffs. The company hopes to see greater adoption of smartphones with its cashback offer as it looks at different ways to increase data consumption along with ARPU.
RattanIndia Power on Wednesday reported widening of consolidated net loss to Rs 463.95 crore for September quarter 2021-22. In the year-ago period, it incurred a loss of Rs 461.27 crore, a BSE filing stated. Total income stood at Rs 828.83 crore in the quarter as against Rs 280.79 crore in the same period a year ago.
Shoemaker Bata India on Wednesday reported a consolidated net profit of Rs 37.18 crore for the second quarter ended September 2021 helped by an increase in sales from its retail outlets, e-commerce platforms and expansion drive of the company. The company had posted a net loss of Rs 44.31 crore in July-September period a year ago, Bata India said in a BSE filing. Revenue from operations was up at Rs 614.12 crore during the quarter under review as against Rs 367.87 crore in the corresponding quarter last fiscal.
Drug firm Pfizer Ltd on Wednesday reported an 8.81 per cent rise in net profit to Rs 142.95 crore for the quarter ended September 30, 2021. The company had posted a net profit of Rs 131.37 crore for the corresponding period of the previous fiscal, Pfizer Ltd said in a filing to the BSE. Revenue from operations stood at Rs 636.26 crore for the quarter under consideration, as against Rs 595.41 crore a year ago, it added.
Eicher Motors Ltd (EML) on Wednesday reported 9 per cent rise in consolidated profit at Rs 373.2 crore for September quarter 2021-22 boosted by growth in commercial vehicles segment amid semiconductor shortage affecting sales of Royal Enfield motorcycles. The company had posted a consolidated profit after tax of Rs 343.34 crore in the same quarter last fiscal year, EML said in a regulatory filing. Total revenue from operations during the quarter stood at Rs 2,249.56 crore as against Rs 2,133.6 crore in the year-ago period. During the second quarter, group firm two-wheeler maker Royal Enfield sold 1,23,515 motorcycles, a decline of 17.2 per cent from 1,49,120 motorcycles sold over the same period in 2020-21, it said. VE Commercial Vehicles (VECV)– the company’s joint venture with Volvo — recorded overall sales volume of 15,134 units in second quarter against 8,167 units in the same period last year, a growth of 85 per cent, it added.
IT services major Infosys on Wednesday announced strategic collaboration with Shell Global Solutions International BV (Shell) as the commercialisation partner of the ‘Shell Inventory Optimizer’ solution. Through this collaboration, Shell and Infosys will launch ‘Shell Inventory Optimizer’ as the first product offered to its energy customers, a statement said. The solution leverages artificial intelligence (AI) that enables companies to optimise warehouse inventory levels based on historical consumption, it added.
Adani Group has applied for a licence from the Reserve Bank of India to open an asset reconstruction company (ARC) that will acquire distressed assets in infrastructure and real estate, two people familiar with the matter said.
The much talked about, third generation of JioPhone, and the first smartphone from Reliance Jio, makes its debut today on Diwali in the Indian market. JioPhone Next is jointly developed by Reliance in association with Google and Qualcomm. For the first time, a new OS is also being introduced with JioPhone Next. The budget segment smartphone will retail at ₹6,499 and will be available at all leading offline outlets along with Jio’s own web portal.
Mahindra has crossed over 70,000 bookings for XUV700. The company has also delivered over 700 Mahindra XUV700 till now. The SUV is making news for its association with Olympians such as Neeraj Chopra and Sumit Antil. They were among the first owners of the Javelin Gold Edition of XUV700. Mahindra XUV700 crossed 65,000 bookings in the first two week of its launch in October.[/vc_column_text][vc_column_text]
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