PremiumThe Fed is expected to raise rates by 50 basis points Wednesday and detail plans for the reduction of its balance sheet. Key for markets will be whether Chair Jerome Powell’s commentary contains any hawkish surprises that could stoke concerns about the threat of U.S. slowdown as borrowing costs climb.
Indian stock markets tanked on Wednesday after the Reserve Bank of India stunned the market with an increase in policy rates, citing inflationary pressures.
The Reserve Bank of India's monetary policy committee, in an off-cycle meeting, raised key lending rate by 40 basis points.
Sensex slumped 1,306.96 points to end at 55,669.03 after the RBI rate hike, while Nifty tanked 391.50 points to 16,677.60.
Among sectoral indexes, Nifty bank index dropped 2.5%, while the finance index fell 2.6%. Nifty realty index lost 3.3%, indicating higher rates could potentially hurt the sector.
“The increase in repo rate will likely have an impact on the industry as residential demand has been positively revived in the post pandemic context and needs to be fostered. It also goes without saying that the real estate industry's perennial hope is fixed on lower interest rates as it improves affordability and also provides the required fuel for the growth of the economy along with the real estate sector, which is allied with several other industries," said Ramani Sastri, Chairman & MD, Sterling Developers Pvt. Ltd.
All sectoral indices ended in the red.
BSE Midcap index shed 2.63% and the Smallcap index fell 2.11%.
Mumbai-based real estate developer Godrej Properties Ltd saw record-high sales bookings in the March quarter of financial year 2022 (Q4FY22). Pre-sales rose 23% year-on-year (y-o-y) to ₹3,248 crore, highest ever in a quarter. This robust performance was aided by nine project launches during the quarter. Consequently, it closed FY22 on a strong note with pre-sales at Rs7,861 crore, up 17% y-o-y.
With that, the best of sales performance is over for Godrej Properties, at least for now. Hereon, trajectory of new launches would be a crucial parameter to watch out for, say analysts. (Read here)
Adani Green Energy Ltd (AGEL) on Wednesday reported an over 16% year-on-year rise in its consolidated net profit to ₹121 crore in the March quarter compared to year ago, mainly on the back of higher revenues.
The consolidated net profit of the company was ₹104 crore in the quarter ended on March 31, 2021, a statement showed.
Total income of the company in the March quarter also increased to ₹1,587 crore, from ₹1,082 crore in the same period a year ago.
World shares were mostly lower on Wednesday as investors waited for a decision by the Federal Reserve on interest rates.
Central banks in many countries are raising rates as inflation squeezes businesses and consumers. To counter that, regulators are gradually increasing costs for borrowing that had dipped to record lows during the pandemic.
Fed policymakers are expected to raise the U.S. central bank's benchmark rate by twice the usual amount this week, ramping up their fight against inflation that is at a four-decade high. The Fed already has raised its key overnight rate once, the first such increase since 2018, and Wall Street is expecting several big increases over the coming months.
Germany’s DAX edged down 0.1% to 14,028.26 while the CAC 40 in Paris lost 0.2% to 6,465.03. Britain’s FTSE 100 shed 0.3% to 7,536.42. The futures for the S&P 500 and the Dow industrials both were 0.2% higher.
In Asian trading, Hong Kong’s Hang Seng dropped 1.1% to 20,861.27 while the Kospi in Seoul lost 0.1% to 2,677.57. Australia’s S&P/ASX 200 gave up 0.2% to 7,304.70.
India’s Sensex lost 1% to 56,425.88. Taiwan’s benchmark rose and most other regional markets were closed, including those in Japan and mainland China.
RBI raises Cash Reserve Ratio (CRR) by 50 basis points to 4.50 per cent effective 21 May.
Today's policy decisions are aimed at containing inflation, says Das.
RBI policy stance remains accommodative.
Foreign exchange reserves remain high at over USD 600 billion and debt-to-GDP ratio is low, says Governor.
Global economic recovery is losing momentum: RBI Governor
RBI MPC decided to hold off-cycle meet on 2nd, 3rd May to reassess inflation impact and based on macroeconomic assessment, the MPC unanimously voted to increase repo rate by 40 bps to 4.40% with immediate effect.
RBI hikes benchmark interest rates with a view to contain inflation.
Inflation will likely rise in April as well, says Governor Das.
LIC public offer, the country's biggest-ever IPO, was subscribed 0.29 times till noon by investors on the first day of bidding on Wednesday.
Of the total, the policyholder portion was subscribed fully while the reserved employees' portion was subscribed 0.49 times, as per the data on stock exchanges.
Qualified Institutional Buyer (QIB) and Non-Institutional Investor (NII) portion has received a tepid response so far.
The LIC initial public offering (IPO), now open for retail and institutional investors, is set to close on May 9.
The government aims to generate about ₹21,000 crore by diluting its 3.5 per cent stake in the insurance behemoth.
LIC has fixed the price band at ₹902-949 per equity share for the issue.
The European Union's chief executive on Wednesday proposed a phased oil embargo on Russia over its war in Ukraine, as well as sanctioning Russia's top bank and banning Russian broadcasters from European airwaves, in a bid to deepen Moscow's isolation.
The plan, if agreed by EU governments, would mark a watershed for the world's largest trading bloc, which is dependent on Russian energy and must find alternative supplies.
But Russia's invasion of Ukraine by land, sea and air on Feb. 24, the renewed Russian offensive in eastern Ukraine and the horrific images of slaughter in Ukrainian towns have overcome reluctance to deliver the toughest sanctions so far.
Kotak Mahindra Bank on Wednesday reported a 65% year-on-year (YoY) rise in standalone net profit to ₹2,767 crore in the March quarter. Net Interest Income (NII) for the quarter rose to ₹4,521 crore from ₹3,843 crore a year ago. Net Interest Margin (NIM) was at 4.78%.
The Reserve Bank of India said its governor will make an unscheduled statement on Wednesday, sending bond yields surging on speculation of a rate hike.
Governor Shaktikanta Das will address the public at 2 p.m. local time via You Tube, the central bank’s official Twitter account said, without providing more details. Yields on the benchmark 10-year bond jumped as much as nine basis points to 7.21%, while the benchmark stock index extended losses to 1.1%.
Britannia Industries Ltd’s shares rose to a high of ₹3596 a piece during early trading hours on Wednesday on the NSE. That represents a jump of 10% over the previous closing price. Subsequently, the stock gave up the gains and was trading about 5% higher. (Read here)
ICICI Bank; Bajaj Auto; Tech Mahindra; Maruti Suzuki India; State Bank of India; Bharti Airtel; Cipla; Federal Bank; Varun Beverages; Ashok Leyland; National Aluminium Company; Bata India; Krishna Institute of Medical Sciences; Equitas Small Finance Bank; Praj Industries; CCL Products (India)
Earnings momentum is the key; We maintain a Nifty target of 20200: We continue to hold a positive long-term outlook on the market, supported by the emerging favourable structure as increasing Capex spending is enabling banks to improve credit growth. Moreover, the overall expenditure boost in the Union Budget 2022-23 will help deliver a broad-based growth in FY23. Nifty Q4FY22 earnings till now were largely in line with the expectation and Automobiles, Private Banks, and consumer-facing companies have reported better than expected results (though some margin pressure was seen in the IT and Cement sectors). Overall, the Indian market has entered into an upcycle of earnings with the expectation of a 20% Nifty EPS CAGR over FY21-24 against a single-digit 7% growth it reported over FY09-21. In the near time, the market performance is likely to be volatile and range-bound, largely due to global factors and most of the CY22 returns are expected to be back-loaded. We believe H2CY22 is likely to be less volatile than H1CY22. We maintain our Dec’22 NIFTY50 target of 20200, valuing it at 22x FY24E earnings and will review our estimates post Q4FY22 earning season once again.
Trading services on Kotak Securities Ltd's platform were hit by technical issues on Wednesday with customers finding it difficult to log in to its page. Customers were also anxious as the mega IPO of Life Insurance Corporation opened today. (Read here)
Oil prices bounced on Wednesday ahead of an announcement by the U.S. Federal Reserve and further sanctions on Russia by the European Union, offsetting demand worries in top importer China.
Brent crude futures had risen $1.46, or 1.4%, to $106.43 amid thin trading volume, with China and Japan closed for holidays. West Texas Intermediate crude futures rose $1.59 , or 1.6%, to $104.00 a barrel.
The gains came on the back of news from Tuesday that the European Union would slap new sanctions on Russia for waging war on Ukraine.
India is trying to get deeper discounts on Russian oil to compensate for the risk of dealing with the OPEC+ producer as other buyers turn away, according to people with knowledge of the matter.
The South Asian nation is seeking Russian cargoes at less than $70 a barrel on a delivered basis to compensate for additional hurdles such as securing financing for purchases in high level talks between the two countries, said the people, asking not to be identified as discussions are confidential. Global benchmark Brent is currently trading near $105 a barrel.
Both state and private refiners in the world’s third-biggest oil importer have bought more than 40 million barrels of Russian crude since the invasion of Ukraine in late February, the people said. That’s 20% more than Russia-to-India flows for the whole of 2021, according to Bloomberg calculations based on trade ministry data.
Hero MotoCorp Ltd. reported subdued performance in 4QFY22 with EBITDA margin coming in at 11.2% as against our estimate of 12.5%.
# Revenue decreased by 15% YoY and 6% QoQ to Rs74.2bn, in line with our estimate of Rs74.1bn. Revenue de-growth was primarily led by a volume decline of 24% YoY and 7% QoQ to 11,88,884 units while ASP rose by 12.7% YoY (up 1% QoQ) to Rs62,426 in line with our expectation of 12.5% YoY increase.
# It recorded a PAT of Rs6.3bn (down 28% YoY and down 9% QoQ), 6% below our estimate of Rs6.7bn due to lower operating margins, while lower tax rate (tax credit of Rs375mn) boosted its PAT.
Our View: We expect near term volume pressure for domestic two-wheeler industry, while expect strong revival in 2HFY23E. On the back of likely revival in urban markets, improvement in rural sales from current low level over next 2 years, HMCL’s strong market position to capitalize on the demand recovery and attractive valuation, we maintain our BUY on HMCL. We would revisit our estimates and TP in our detailed note, post management’s con-call.
Gold prices fell on Wednesday, as higher U.S. Treasury yields and a looming interest rate hike announcement by the Federal Reserve dented demand for zero-yield bullion.
Spot gold was down 0.2% at $1,864.61 per ounce. U.S. gold futures fell 0.4% to $1,863.50.
Benchmark U.S. 10-year Treasury yields firmed ahead of a widely expected interest rate hike from the Fed as it attempts to contain soaring U.S. inflation.
The ₹20,557 crore initial public offering (IPO) of Life Insurance Corp. of India (LIC) opened for subscription today. The issue is entirely an offer for sale of about 22.13 crore equity shares by the government of India, which owns 100 per cent stake in the insurer. It will offload only 3.5 per cent stake in the company.
Ahead of the IPO, unlisted shares of LIC were quoting at a GMP of ₹85 per share.
LIC was the largest asset manager in India as of December 2021, with an AUM .d to cover linked liabilities) of ₹40 trillion on a standalone basis.
The insurer garnered over ₹5,627 crore from the anchor investors by allotting them 5.92 crore shares at ₹949 per share.
Mumbai International Airport Limited, a step-down subsidiary of Adani Enterprises, has raised $750 million by way of US dollar denominated Senior Secured Fixed Rate Bonds with tenure of 7.25 years in accordance with Regulation S of the US Securities Act, 1933, as amended and applicable Indian regulations.
Indian shares erased opening gains and traded lower on Wednesday, ahead of the country's biggest IPO and an expected rate hike by the U.S. Federal Reserve as it seeks to tame surging inflation.
At 10am, the benchmark Sensex was down 140.55 points, or 0.25%, at 56,835.44, and Nifty fell 45.30 points or 0.27% to 17,023.80. About 1,572 shares advanced, 1291 declined, and 113 were unchanged
Nifty started the week on a flat note and traded with extreme volatility on either side throughout the week. Nifty closed at 17110 with a loss of 69 points on a weekly basis
Bank Nifty started the week with a downward gap and selling pressure throughout the week led the index to end on a positive note. Bank Nifty closed at 36064 with a gain of 43 points on a weekly basis
Ami Organics has a buy call at range 1120-1100. Holding period is 3 to 4 weeks.
HBL Power Systems has a buy call at range 85-80. Holding period is 3 to 4 weeks.
U.S equities ended higher on healthy corporate earnings. The S&P 500 gained 0.48%, the Nasdaq gained 0.21%, while the Dow Jones rose 0.17%. The yield on 10-year Treasury note close to its multi-year high levels and ended at 2.957%. The Fed is also likely to approve plans to begin shrinking its $9 trillion asset portfolio starting in June, at a much faster pace than previously expected.
The much-awaited biggest IPO of LIC will open for subscription today. GST has peaked to an all-time high of Rs1.68 lakh crore in April 2022. For FY22 as a whole, total GST collections amounted to Rs14.83 lakh crore, up 30%. For equities, inflation remains a key overhang, coupled with the multi-sided impact of Russia’s lingering war with Europe and strict lockdowns in Shanghai. Meanwhile, markets await on the next batch of quarterly results in the coming weeks. The Indian economy has shown signs of growth and recovery across the board, despite elevated input and labour costs and ongoing supply chain disruptions. Moreover, trend in global stock markets and the movement of rupee and crude oil prices, will dictate market trend in the near-term.
Indian stock markets are likely to see gap down opening, SGX nifty is largely flat compared to Monday’s spot Nifty closing. Asian markets trading in red with Nikkei is down 0.1%, while Hang Seng is down 1.2%.
Oil prices rose at the start of Asian trade on Wednesday after industry data showed drawdowns in U.S. crude and fuel stockpiles, raising supply concerns.
The gains come on the back of news from Tuesday that the European Union is working on new sanctions against Russia for waging war on Ukraine that will target Moscow's oil industry.
European Commission President Ursula von der Leyen is expected to spell out the plans on Wednesday, officials said.
Brent crude futures rose 90 cents, or 0.9%, to $105.87 a barrel in Asian deals. WTI crude futures rose $1.00, or 1%, to $103.41 a barrel.
Shares of Tata Steel, Titan, Future Retail, SpiceJet, Kotak Mahindra Bank, among others, will be in focus today.
Kotak Mahindra Bank, Tata Consumer Products, Adani Green Energy, CarTrade Tech, Adani Total Gas, Equitas Small Finance Bank, Havells India, Rain Industries, EIH, IIFL Wealth Management are among the key companies scheduled to announce quarterly earnings today
The initial public offering (IPO) of Life Insurance Corp. of India will open for retail and institutional investors today and will close on 9 May.
The government aims to rake in as much as ₹21,000 crore in total at the upper end of the price band of the offering - India's biggest till date.
LIC has fixed the IPO price band at ₹902-949 per equity share for the issue.
Retail investors and eligible employees will get a discount of ₹45 per equity share and policyholders will get a discount of ₹60 per share.
Nifty futures on the Singapore Exchange rose 86.50 points, or 0.5%, to 17,071 on Wednesday, indicating a positive start for Indian benchmark indices.
On Monday, the Sensex fell 84.88 points, or 0.15%, to end the day at 56,975.99, while Nifty fell 33.40 points to 17,069.10.
Asian markets were cautious as investors braced for the biggest Federal Reserve interest rate-hike since 2000 and awaited more clues on how pugnaciously it will tackle inflation.
S&P 500 and Nasdaq 100 contracts pushed higher after a second straight daily advance in U.S. shares during a choppy Tuesday. Stocks wavered in Asia amid a slide in Chinese technology firms in Hong Kong. Japan and China are closed.
Half-point Fed moves are fully priced in by swaps traders for June, July and September -- the most aggressive trajectory in three decades. Any indications that a bigger, 75-basis-point increase is a possibility could roil markets.
The latest U.S. data showed record levels of job openings and workers quitting in March, pointing to the prospect of higher wages feeding into price pressures.
S&P 500 futures rose 0.3% while Nasdaq 100 futures rose 0.4%.
Australia’s S&P/ASX 200 Index rose 0.1%, South Korea’s Kospi index added 0.1%, and Hong Kong’s Hang Seng Index fell 0.7%.
Overnight on the Wall Street, stocks eked out modest gains after a choppy day of trading investors wait to find out how aggressively the Federal Reserve will raise interest rates at its latest policy meeting on Wednesday.
The S&P 500 ended 0.5% higher after briefly slipping into the red earlier in the day. The Dow Jones Industrial Average rose 0.5% and the Nasdaq inched up 0.2%.
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