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Market Today with EZWealth – 09 Nov 2021

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New peak margin norms bring uncertainty for traders, brokers

Brokers said traders are facing uncertainty over how much margins they must bring in at the time of initiating a trade in equity derivatives. This is because the new peak margin norms are leading to intra-day changes in upfront margin requirements, leading to non-compliance of rules in most cases and penalties for brokers.

Brokers said an increase in volatility during the day could lead to spikes in margins and traders must cough up additional money even if they have brought in full upfront margins before the trades. Brokers are said to have approached the Securities and Exchange Board of India (Sebi) and stock exchanges to ease this norm. Some brokers think that industry associations must consider legal options including going to the Securities Appellate Tribunal in case the regulator does not dilute the norm.

The new peak margin reporting rules introduced by the Sebi require brokers to collect full margins in advance from clients, a move aimed at curbing risky intra-day trades. Under this system, exchanges calculate peak margins by taking four trade snapshots at different time points of a trading session. Earlier, margins were calculated based on the positions at the close of trades.

Brokers said the peak margin norms could result in spikes in margins if volatility shoots up. For instance, a trader could have taken a bet on Nifty futures at around 10 AM after bringing in all the full upfront margin. When the exchange updates the Standard Portfolio Analysis of Risk (SPAN) – an upfront margin paid to the broker before placing trades – next, at say 11:30 AM, there is a possibility of margin requirements having shot up if the volatility in the market increases. SPAN margins – used for derivative trades – change as per the market volatility.

Crypto market value tops $3 trillion for first time

The world cryptocurrency market is worth more than $3 trillion for the first time, according to calculations Monday, as mainstream investors increasingly jump on board. The value has reached $3.007 trillion (2.6 trillion euros), said CoinGecko, which tracks prices of more than 10,000 cryptocurrencies. “The crypto market is growing at a mind-blowing speed,” noted SwissQuote analyst Ipek Ozkardeskaya. “A part of it is speculation of course, but a part of it is real,” she told AFP. “Crypto is now making its way to traditional finance and everyone is on board.”

Bitcoin, the world’s biggest cryptocurrency, hit a record-high $66,000 last month after taking another step towards mainstream status. It surged back above $66,000 on Monday close to its all-time peak after a five percent jump. Ethereum, the second biggest cryptocurrency by market value, hit a record high $4,768 on Monday. A bitcoin futures exchange-traded fund, a type of financial instrument, launched on the New York Stock Exchange in October. The ETF is a more accessible vehicle that puts bitcoin within the grasp of even more investors.

Japan service sector sentiment improves in October

Japan’s service sector sentiment index rose 13.4 points to 55.5 in October, a Cabinet Office survey showed on Tuesday, as the government eased state-of-emergency curbs last month and new COVID-19 cases plunged to the lowest levels in more than a year. The index, which was at 42.1 in September, is based on a survey of workers such as taxi drivers, hotel workers and restaurant staff who are called “economy watchers” for their proximity to consumer and retail trends.

Mastercard set to launch crypto-linked Payment Cards in Asia Pacific

Payment card networks Mastercard has partnered with cryptocurrency service providers Amber, Bitkub and CoinJar to launch its first crypto-funded Mastercard payment cards in the Asia Pacific (APAC) region. “Cryptocurrencies are many things to people—an investment, a disruptive technology, or a unique financial tool. As interest and attention surges from all quarters, their real-world applications are now emerging beyond the speculative,” said Rama Sridhar, Executive Vice President, Digital & Emerging Partnerships and New Payment Flows, Asia Pacific, Mastercard.

The announcement comes at a time when some merchants are already accepting payments in digital currencies such as Bitcoin or Ethereum. According to a Mastercard survey, 45 percent of those surveyed in APAC say they are likely to consider using cryptocurrency in the next year. Thailand-based Amber Group and Bitkub, along with Australia-based CoinJar offer cryptocurrency purchase and exchange services in their respective domestic markets. These companies are the first APAC-based cryptocurrency platforms to join Mastercard’s global Crypto Card Program that lets cardholders convert their crypto holdings into a fiat currency.

Lava becomes first Indian brand to launch 5G smartphone

Home-grown mobile phone company Lava International has become the first Indian brand to launch 5G smartphones for domestic consumers. The smartphone launched under the brand name ‘Agni’ has been developed by Lava in India and is getting manufactured at its plant in Noida, Uttar Pradesh.

“The purpose of launching Agni is to give Indian consumers the choice of a made in India 5G smartphone for Indians by an Indian company. We wanted to establish before people that there can be an Indian brand which is technology oriented. “We are second in the world to launch a 5G smartphone on Mediatek Dimensity 810 chipset,” Sunil Raina, President & Business Head, Lava International told PTI on the sidelines of the launch. He said that the price of Agni has been kept at Rs 19,999 which is competitive, compared to Chinese brands that dominate the Indian market at present.

HSBC exceeds China wealth hiring targets, explores India private banking re-entry

HSBC Holdings is ahead of its hiring targets for its Chinese retail wealth management business and is exploring re-entering India’s private banking business, senior executives said, as part of its plan to make Asia and wealth key pillars of growth. Under a strategy spearheaded by Group CEO Noel Quinn, HSBC is ploughing $3.5 billion into its wealth and personal banking business, in line with its ambition to become Asia’s top wealth manager by 2025.

Asia is the biggest region for HSBC, and the wealth and personal banking unit contributed 44% or $22 billion to London-headquartered HSBC’s adjusted global revenue last year. The bank is looking to boost its mobile wealth planning service, HSBC Pinnacle, in China by having about 700 personal wealth planners by the year-end instead of the 550 originally planned, Matos said. HSBC is exploring whether to re-enter onshore private banking in India, where the ranks of the super rich are growing fast and record high stock markets have created a string of billion dollar start-ups. HSBC exited the Indian private banking business in 2015 as part of a group strategy. The lucrative but very competitive Indian market has few foreign players.

Domestic air passenger traffic rises 67% to around 88 lakh in October: ICRA

Domestic air passenger traffic grew by a whopping 67 per cent year-on-year at around 87-88 lakh in October, on the back of festive season demand amid continuous fall in the number of COVID-19 infection cases, says an ICRA report. According to credit ratings agency ICRA, domestic passenger volume in October 2020 was at 52.71 lakh.

The growth in domestic passenger traffic, on a sequential basis, was nearly 24-25 per cent higher compared to 71 lakh, as per ICRA. Moreover, domestic carriers operated 46 per cent more flights at 72,000 during the month under review over 49,150 departures logged in October 2020, ICRA said, adding, on a sequential basis, the number of departures in October 2021 were higher by around 18 per cent, as COVID-19 infections demonstrated a downward trajectory.

However, higher aviation turbine fuel (ATF) prices continue to pose a near-term challenge with price seeing a sequential increase of 13.9 per cent in November 2021, it stated.

UK to add Covaxin to approved list from November 22

The UK government has said that India’s Covaxin will be added to its list of approved COVID-19 vaccines for international travellers from November 22, meaning that those inoculated with the Bharat Biotech-manufactured jab will not have to self-isolate after arrival in England.

The move follows the World Health Organisation’s (WHO) Emergency Use Listing for Covaxin, which is the second most used formulation in India. Covishield, the India-manufactured Oxford-AstraZeneca COVID-19 vaccine, was added to the UK’s approved list last month. Besides Covaxin, China’s Sinovac and Sinopharm, both on the WHO Emergency Use Listing, will be recognised by the UK government as approved vaccines for inbound travel, benefitting fully vaccinated people from the United Arab Emirates and Malaysia. These fully vaccinated passengers will not be required to take a pre-departure test, day-8 test or self-isolate upon arrival.

Coronavirus Update: Daily rise in COVID-19 cases in country lowest in 266 days

India logged 10,126 new coronavirus infections, the lowest in 266 days, while the active cases dipped to 1,40,638, the lowest in 263 days, according to the Union Health Ministry data updated on Tuesday. With the fresh cases, the country’s total tally of COVID-19 cases climbed to 3,43,77,113. The death toll climbed to 4,61,389 with 332 fresh fatalities, according to the data updated at 8 am. The daily rise in new coronavirus infections has been below 20,000 for 32 straight days and less than 50,000 daily new cases have been reported for 135 consecutive days now.

The active cases settled at 1,40,638 comprising 0.41 per cent of the total infections, the lowest since March 2020, while the national COVID-19 recovery rate was recorded at 98.25 per cent, the highest since March 2020, the ministry said. A decrease of 2,188 cases has been recorded in the active COVID-19 caseload in a span of 24 hours.

Germany hits record Covid-19 tally as pandemic rebounds across Europe

Germany kept Covid-19 infection rates relatively low this past summer—a feat experts say might be driving a record surge in infections in the country that has prompted fears that hospitalizations and deaths could spiral in the colder months ahead. Infections are rising again in Europe, as colder temperatures and the fading of vaccine-induced immunity drive renewed case loads.

Even so, Germany and some of its smaller Central and Eastern European neighbors stand out with a far steeper rise in infections than neighboring France, Italy and Spain. Germany registered over 37,000 new cases on Friday, the highest daily number on record, according to government figures, as the seven-day incidence of coronavirus rose to over 200 in 100,000 people. Experts blame Germany’s figures on the German population’s relatively low exposure to the virus after the country dodged a summer swell of infections that afflicted its Western and Southern neighbors. That resulted in low natural immunity among the population.[/vc_column_text][vc_column_text css=”.vc_custom_1636456998260{border-top-width: 1px !important;border-right-width: 1px !important;border-bottom-width: 1px !important;border-left-width: 1px !important;background-color: #e2e2e2 !important;border-left-color: #070707 !important;border-left-style: solid !important;border-right-color: #070707 !important;border-right-style: solid !important;border-top-color: #070707 !important;border-top-style: solid !important;border-bottom-color: #070707 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”]

Stocks in the news

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Britannia Industries shed more than 4 percent in the early trade on November 9 a day after the company reported its second quarter earnings. Bakery products and biscuit maker Britannia Industries on November 8 reported a 22.9 percent year-on-year decline in Q2FY22 profit, dented by weak operating performance due to higher input costs. Its consolidated profit fell to Rs 381.8 crore in the quarter ended September 2021 from Rs 495.2 crore a year ago. Consolidated revenue from operations, however, grew 5.5 percent year-on-year to Rs 3,607.4 crore.

TVS Motor Company share price touched a 52-week high of Rs 783.40 and was locked in 10 percent upper circuit in the morning trade on November 9 as the company evaluates fund-raising for its electric vehicle (EV) business. There were pending buy orders of 41,092 shares, with no sellers available. On October 21, the board of the south India-based two-wheeler maker had given the nod for the creation of a new arm to house its electric mobility business.

Aurobindo Pharma Ltd impressed the Street with a good recovery in sales in the US during the September quarter. The US revenue in the quarter increased by 6.9% YoY to ₹2,967.6 crore, accounting for 50% of consolidated revenue. The stock saw gains of more than 6% in morning trade on Tuesday. US sales had remained soft in Q1 keeping Street concerns elevated on increasing pricing pressure. Analysts at Yes Securities said US revenues growth was aided by the acquisition of brands and abbreviated new drug applications (ANDAs) in Q1.

A company court restrained Future Group from calling shareholders’ meetings to seek approval for its proposed ₹24,713 crore asset sale to Reliance Industries Ltd, in a legal setback for the cash-strapped group. Following a hearing on Monday, the National Company Law Tribunal (NCLT) changed its earlier stance by stopping Future Group companies from holding the meetings.

Mahindra and Mahindra Ltd on Tuesday reported consolidated net profit jumped to ₹1,929 crore in quarter ended-September, up around 214% from ₹614 crore year-on-year (YoY). The significant rise in M&M’s second quarter profit comes on the back of a one-time charge taken by the company in the year-ago quarter. The automaker’s consolidated revenue from operations rose nearly 12% to ₹21,470 crore for Q2 as against ₹19,227 crore in the corresponding quarter of the previous fiscal. M&M operating margin 12.5% despite rising commodity prices and shortage of semi-conductors, it said.

ITC Ltd’s fast moving consumer goods (FMCG) business has turned cash-flow positive and has been making good progress in recent years, according to the company’s Chairman and Managing Director Sanjiv Puri. Margins in the ₹15,000-crore FMCG segment, which accounts for 31 per cent of ITC’s turnover, are rising even as the company is aggressively expanding into newer categories in foods and personal care. The company has been panned by analysts for burning cash spewed out by its lucrative cigarettes business in the low-margin FMCG and capital-intensive hotels segments. The cigarettes business accounts for 42 per cent of ITC’s turnover but pulls in over 80 per cent of its earnings before interest and tax. In comparison, the FMCG segment contributes just under 6 per cent to earnings and has absorbed a major share of the company’s investments in the last several years along with the hotels business.

Tata Motors has signed a five-year Memorandum of Understanding (MoU) with Equitas SFB, to bring financial solutions to its customers. These benefits will be applicable across the Tata Motors small commercial vehicle (SCV) range. Tata Motors will leverage Equitas SFB’s network across the country, spanning 861 branches and 550+ CV customer touchpoints, to make these solutions accessible for customers.

EID Parry: Net Sales at Rs 6,978.41 crore in September 2021 up 19.57% from Rs. 5,836.21 crore in September 2020. Quarterly Net Profit at Rs. 243.84 crore in September 2021 down 23.27% from Rs. 317.80 crore in September 2020. EBITDA stands at Rs. 772.65 crore in September 2021 down 13.11% from Rs. 889.22 crore in September 2020. EID Parry EPS has decreased to Rs. 13.77 in September 2021 from Rs. 17.95 in September 2020.

Pricol: Net Sales at Rs 407.13 crore in September 2021 up 4.42% from Rs. 389.89 crore in September 2020. Quarterly Net Profit at Rs. 14.67 crore in September 2021 down 70.38% from Rs. 49.52 crore in September 2020. EBITDA stands at Rs. 51.15 crore in September 2021 down 9.6% from Rs. 56.58 crore in September 2020. Pricol EPS has decreased to Rs. 1.20 in September 2021 from Rs. 5.22 in September 2020.

Action Construction Equipment: Net Sales at Rs 360.90 crore in September 2021 up 34.5% from Rs. 268.32 crore in September 2020. Quarterly Net Profit at Rs. 22.92 crore in September 2021 up 57.03% from Rs. 14.60 crore in September 2020. EBITDA stands at Rs. 36.93 crore in September 2021 up 41.71% from Rs. 26.06 crore in September 2020. Action Const EPS has increased to Rs. 2.01 in September 2021 from Rs. 1.29 in September 2020.

Balrampur Chini: Net Sales at Rs 1,213.83 crore in September 2021 down 5.89% from Rs. 1,289.80 crore in September 2020. Quarterly Net Profit at Rs. 83.10 crore in September 2021 up 6.13% from Rs. 78.30 crore in September 2020. EBITDA stands at Rs. 139.25 crore in September 2021 up 5.25% from Rs. 132.31 crore in September 2020. Balrampur Chini EPS has increased to Rs. 3.96 in September 2021 from Rs. 3.66 in September 2020.

KRBL: Net Sales at Rs 1,053.69 crore in September 2021 down 7.02% from Rs. 1,133.20 crore in September 2020. Quarterly Net Profit at Rs. 136.22 crore in September 2021 down 9.07% from Rs. 149.81 crore in September 2020. EBITDA stands at Rs. 203.76 crore in September 2021 down 8.8% from Rs. 223.43 crore in September 2020. KRBL EPS has decreased to Rs. 5.79 in September 2021 from Rs. 6.36 in September 2020.

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