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Market Ahead with EZWealth – 8 Oct 2021
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Stocks rallied on Thursday in tandem with global markets as investors took heard from a fall in energy prices and progress over debt-ceiling negotiations in the US. A strengthening rupee, which snapped its three-session losing streak against the US dollar, also bolstered the sentiment. Banks, consumption and auto stocks saw robust buying ahead of RBI’s policy decision
1) Fitch Ratings has cut economic growth projections for India to 8.7 per cent for the current financial year from earlier forecast of 10 per cent due to the impact of second Covid wave. It expected the Reserve Bank of India’s monetary policy committee (MPC) to hold the policy rate until the next financial year as inflation would moderate. MPC would announce its decision on Friday.
The growth rate was lowered even as the rating agency said high frequency indicators point to a strong rebound in the second quarter of 2021-22 as business activity has again returned to pre-pandemic levels. However, it scaled up its forecast for the gross domestic product (GDP) growth for India to 10 per cent for the next financial year from its earlier estimates of 8.5 per cent since “the impact of the second wave was to delay rather than derail economic recovery”.
2) Resolution of the jurisdiction issue between market regulator SEBI and electricity regulator CERC, will further deepen the power market and pave the way for the introduction of longer duration delivery-based contracts on exchanges, the Power Ministry said on Thursday. “10 years long pending jurisdictional issue related to power market between CERC (Central Electricity Regulatory Commission) and SEBI (Securities and Exchange Board of India) resolved by Supreme Court,” the ministry said in a statement.
This will further deepen the power market from the present level of approx. 5.5 per cent of the volume to the targeted volume of 25 per cent by 2024-25.
This has opened the gate for introduction of longer duration delivery-based contracts on the power exchanges which has been currently restricted to only 11 days due to the pendency of the case, the ministry informed. This will enable discoms and other large consumers to plan their short-term power procurement more efficiently. Similarly, the commodity exchanges viz. MCX etc. can now introduce financial products viz. electricity futures etc. which will enable discoms and other large consumers to effectively hedge their risks of power procurement, it stated.
This is a significant development and has the potential to change the landscape of the power market in the country, it added. This will bring newer products in the power/commodity exchanges and attract increased participation from Genco, Discoms, large consumers etc. which will eventually deepen the power market, it said.
3) Piramal Enterprises on Thursday said its board has approved a composite scheme of arrangement providing for the demerger of its pharmaceuticals business and simplification of the corporate structure to create two listed entities in financial services and pharmaceuticals.
The pharmaceuticals business will get vertically demerged from Piramal Enterprises and consolidated under Piramal Pharma, the company said in a regulatory filing.
Following the demerger, Piramal Pharma will become one of the large pharma companies listed on NSE and BSE, it added.
“In consideration of the demerger, Piramal Pharma Ltd (PPL) shall issue 4 fully paid-up equity shares of PPL of Rs 10 each to the shareholders of PEL for every 1 fully paid-up equity share in PEL having a face value of Rs 2 each held by them, in accordance with the Share Entitlement Ratio,” Piramal Enterprises Ltd (PEL) said.
Two operating subsidiaries wholly-owned by Piramal Pharma will also be amalgamated with Piramal Pharma Ltd to further simplify the pharma corporate structure, it added.
4) A coal shortage in India has led to soaring costs for steel producers as they compete with other industrial consumers for supply.
Mills are paying more than four times the normal costs for procuring coal from e-auctions and from mines, according to V.R. Sharma, managing director at Jindal Steel & Power Ltd. Still, there has been no impact on production at most primary steel producers yet as they have adequate supplies and are unlikely to curtail output, he said.
India, which relies on coal for about 70% of electricity generation, is grappling with a shortage after a jump in demand, a squeeze on domestic mine output and surging prices of seaborne supply. The country has been prioritizing the power sector, spurring concerns that other industries may face a shortfall.
“Integrated secondary steel mills or stand alone sponge iron producers may have to face production cuts as they rely on non-coking coal to run operations,” said Jayanta Roy, senior vice president at ICRA. “Aluminum producers too are going to face a problem of availability and price of coal for their captive power plants and, depending on their supply tie-ups or contracts for international purchases, may have to face shortages as the government’s priority remains to the power sector,” he said. However, with the end of the monsoon season and efforts of Coal India to boost production, supplies should improve going forward, Jindal Steel’s Sharma said.
5) With the ill-effects of the second wave of the pandemic behind and urgency among consumers to buy insurance before the premium hike, life insurers showed impressive growth in new business premiums (NBP) in September over the same period last year. The NBP of life companies was up more than 22 per cent year-on-year (YoY) in September to Rs 31,001 crore.
While private insurers, 23 in total, saw their NBP go up more than 42 per cent, state-owned insurance behemoth Life Insurance Corporation (LIC) saw a 12 per cent rise. The top three private insurers–SBI Life, HDFC Life, and ICICI Prudential Life – recorded NBP growth of 30.5%, 37.5% and 20.8% in the same period.
6) World food prices rose for a second consecutive month in September to reach a 10-year peak, driven by gains for cereals and vegetable oils, the United Nations food agency said on Thursday. The Rome-based Food and Agriculture Organization (FAO) also projected record global cereal production in 2021, but said this would be outpaced by forecast consumption.
FAO’s food price index, which tracks international prices of the most globally traded food commodities, averaged 130.0 points last month, the highest reading since September 2011, according to the agency’s data. The figure compared with a revised 128.5 for August. The August figure was previously given as 127.4. On a year-on-year basis, prices were up 32.8% in September.
Stocks in the news today:
Mahindra & Mahindra: Mahindra & Mahindra on Thursday opened bookings for the XUV700, and received 25,000 bookings in just 57 minutes. It illustrated the demand for the SUV and also indicated a revival in the auto markets as the festival season kicks in. Mahindra had already said at the launch that the introductory prices were applicable only for the first 25,000 bookings. The prices are likely to be hiked, though, especially with the auto industry struggling with semiconductor supplies. Auto sector was among the top pushers of the indices on Thursday; it could continue its bull run.
Ramkrishna Forgings: Ramkrishna Forgings, a leading supplier of rolled, forged and machined products, on Thursday announced its signing of a Memorandum of Understanding (MOU) with a US-based technology partner for the development of electric vehicle powertrain components for the Indian EV market.
HPCL: Moody’s revised long term issuer default rating outlook of of the company to stable.
NTPC: Power company NTPC signed a Memorandum of Understanding with the French company Électricité de France S.A. (EDF), headquartered in Paris, to explore potential power project development opportunities in West Asia, Asia, Europe and Africa. The two companies will also collaborate for knowledge sharing, research and development, technical services and consultancy assignments globally. The company had earlier showed good gains on the bourses after it had purportedly announced listing three subsidiaries as part of a ₹15,000 crore asset monetization.
JSW Energy on Thursday said it has signed a procurement contract with GE Renewable Energy to receive 810 megawatt (MW) of wind power turbines by the first quarter of FY23. JSW Energy is currently constructing around 2,500 MW of renewable power projects with the aim to achieve a total power generation capacity of 20,000 MW by 2030, when the share of renewables in its total capacity is planned to increase to around 85%.
Dixon Technologies, the country’s largest electronic manufacturing services (EMS) player, has tied up with Taiwanese personal computer (PC) maker Acer for the contract manufacturing of laptops, initially for the domestic market and then possibly for exports
G R Infraprojects: The company incorporated wholly owned subsidiary as special purpose vehicle – GR Amritsar Bathinda Highway Private Limited, to undertake Development of 6-lane Amritsar-Bathinda Greenfield section of NH-754A as a part of Amritsar-Jamnagar Economic Corridor in Punjab on Hybrid Annuity Mode under Bharatmala Pariyojana Phase-I
KPI Global Infrastructure: The company has signed new long-term Power Purchase Agreement (PPA) with GHCL Limited, Bhilad for sale of 1.25 MW solar power for a period of 20 years under Independent Power Producer (IPP) business vertical.
Ratnamani Metals & Tubes: The company has received a new order of Rs 98 crore for supply of carbon steel pipes from domestic oil and gas sector, to be executed in 5 to 12 months.
Winsome Textile Industries: CARE reaffirmed BBB- rating for company’s long-term bank facilities and assigned stable outlook after removing from Credit watch with Negative Implications.[/vc_column_text][vc_separator][vc_column_text]
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