PremiumEquities worldwide look set for a tumultuous time. Overnight, risk aversion swept away a relief rally after the US Fed raised interest rates by the most since 2000 but pushed back against talk of super-sized increases. Markets will remain volatile until there is a clear picture of Fed rate policy and its trajectory
Indian equity markets closed deep in the red on Friday, in line with global peers, on worries over interest rate hikes and inflation.
Globally, stocks slid as risk aversion and volatility gripped markets beset by inflation and growth fears. U.S. futures dropped, signalling extended losses after Thursday’s slide of more than 3.5% in the S&P 500 index and 5% in the Nasdaq 100 gauge.
Back home, benchmark Sensex fell 866.65 points, or 1.56%, to end the day at 54,835.58, and Nifty was down 271.40 points at 16,411.30.
Among sectors, IT, metal, and realty indices fell 2-3%. BSE midcap and smallcap indices fell 2% each.
Despite volatile demand and raw material prices, it expects margins to remain at the current level in FY23 through price hikes, judicious A&P spend, and cost optimization. Maintain BUY with revised TPD of ₹620 (vs earlier TP of ₹680) as we continue to value it at 49x FY24E, implying an upside of 17% from the CMP.
Online food aggregator and delivery platform Zomato’s co-founder and chief executive officer Deepinder Goyal said he is donating the entire proceeds worth ₹700 crore ($90 million) received after vesting some of his employee stock option plans (ESOPs) to Zomato Future Foundation (ZFF).
Goyal was granted some ESOPs before Zomato went public last year and some of the ESOPs were vested last month, said Goyal in a statement. There’s a minimum one year vesting required as per law.
Commerce and Industry Minister Piyush Goyal on Friday said India will be able to conclude a free trade agreement (FTA) with the European Union by next year.
Speaking at an event organised by the IMC Chamber of Commerce, Goyal said the country has already sealed pacts with the UAE and Australia, and is in negotiations with other countries or blocs including the EU, UK, Canada and Gulf Cooperation Council (GCC).
“By next year, we would be able to conclude an FTA with the EU," Goyal said, adding that a delegation from Italy including its foreign minister is in New Delhi now with which he will be having deliberations.
Europe's stock markets fell on Friday in a global selloff rooted in worries over rising interest rates and surging inflation.
London's benchmark FTSE 100 index dropped 0.5% to 7,467.66 points, one day after the Bank of England hiked interest rates to a 13-year peak and highlighted UK recession risks.
In the eurozone, Frankfurt's DAX index shed 0.8% to 13,793.22 points and the Paris CAC 40 lost 1.2% to 6,293.10.
Russia's Rosneft sold 700,000 tonnes of Urals oil loading from Baltic ports of Primorsk and Ust-Luga in May to Indian Oil Corp (IOC), the country's top refiner, two traders familiar with the matter told Reuters on Friday.
Rosneft allocated seven cargoes of 100,000 tonnes each loading between May 15 and 31 to IOC, according to the traders.
In May IOC will load Rosneft-sourced Urals oil volumes from Baltic ports for the first time. Previously the major buyers of the cargoes were trading firms Vitol and Trafigura.
However, international traders will stop purchases of oil from Rosneft after May 15 as EU sanctions over several Russian companies come into effect.
Last December IOC and Rosneft signed a term contract for supply of up to 2 million tonnes of Urals oil until the end of 2022.
World food prices eased slightly in April after hitting a record high in March, but global food security remained a concern because of the difficult market conditions, U.N. food agency said on Friday.
The Food and Agriculture Organization's (FAO) food price index, which tracks the most globally traded food commodities, averaged 158.5 points last month versus an upwardly revised 159.7 for March.
The March figure was previously put at 159.3.
Angel One expanded its client base to 9.64 million in April, a 118.1% YoY growth. The company’s gross client acquisition for the month stood at 0.44 million, a 41.5% YoY increase. The 66.14 million orders, a 65.7% YoY rise, in April 2022 indicates the high level of client activity on the company’s platform.
Macro Factors & Earnings Continue to Weigh On Market Sentiments:
April has exhibited a rather mixed performance across all sectoral, market cap, and style indices, which indicate some change in the underlying market regime. Though some recovery was seen in the equity market after a major selloff on 24th February, the trend is likely to be range-bound moving forward.
During the month, Commodities, Energy, Auto and FMCG indices performed well while IT and Media indices reported a significant decline. While Small Caps suffered the most, they also recovered from the 24th Feb’22 bottom rather swiftly. Nifty 50 has recovered 5% since the 24th Feb’22 sell-off. On a positive note, the broader market witnessed a much faster recovery over the same period with Mid and Small Caps recovering by 11% and 13% respectively.
The prevailing geopolitical developments are likely to continue being at the centre stage for some more time before it concludes in a more concrete direction. The market will also continue to eye on rising Covid-19 cases and the impact of lockdown in China. Consequently, its performance is likely to be range-bound in the near term.
We believe most of the CY22 returns are expected to be back-loaded and H2CY22 is likely to be less volatile than H1CY22. Keeping these developments in perspective, we value it at 22x FY24E earnings and maintain our Dec’22 NIFTY50 target of 20200 unchanged.
State-owned Oil and Natural Gas Corporation (ONGC) has won 18 of 21 areas offered for finding and producing oil and gas in the sixth bid round under Open Acreage Licensing Policy, according to upstream regulator DGH.
Oil India Ltd (OIL) walked away with two blocks and Sun Petrochemicals Pvt Ltd got one block, the Directorate General of Hydrocarbons said announcing the winners of the OALP-VI round.
The 21 blocks or areas offered for exploration and production of oil and gas in Open Acreage Licensing Policy (OALP) Bid Round-VI attracted just three bidders at the close of bidding on 6 October 2021.
Of the 21 blocks on offer, 18 got a single bid and the remaining 3 blocks had two bidders.
Gold prices were subdued on Friday and looked set for a third straight weekly loss as the U.S. dollar and Treasury yields rallied on a hawkish U.S. Federal Reserve stance, with investors awaiting U.S. jobs data due later in the day.
Spot gold fell 0.2% to $1,873.75 per ounce, while U.S. gold futures were steady at $1,875.60.
The dollar was headed for a fifth winning week as benchmark U.S. Treasury yields held near their highest levels since November 2018.
India’s markets regulator is investigating a case of serious violations in the running of Axis Mutual Fund. Axis mutual fund has in turn briefed the board of Axis Bank that it has removed the two fund managers from managing any of its funds pending investigations, two people with direct knowledge of the matter said.
TVS Motor Co. Ltd has beaten peers Bajaj Auto Ltd and Hero MotoCorp Ltd on revenue growth and Ebitda margins in the March quarter (Q4FY22). Ebitda is earnings before interest, tax, depreciation and amortization. (Read here)
State-owned Canara Bank on Friday reported a 65% year-on-year jump in its standalone net profit at ₹1,666.22 crore for quarter ended March.
Total income during the January-March period rose to ₹22,323.11 crore from ₹21,040.63 crore a year ago.
The bank's gross non-performing assets (NPAs) or bad loans fell to 7.51% of gross advances at the end of March 2022, as against 8.93% a year ago.
India has evoked an emergency law in a bid to start generation at some idle power plants running on imported coal which are not producing power because of financial stress or due to high international prices of coal, the government said on Friday.
India is facing its worst power crisis in over six years, and officials have been scrambling to arrange supply for power plants whose pre-summer inventories are at over nine year lows and as power demand is set to rise at the fastest pace in at least 38 years.
Over 43% of the plants fired by imported coal, which have a total capacity of 17.6 gigawatts (GW) and account for 8.6% of India's total coal power capacity, are currently idle. Officials have also decided to invoke an emergency clause in the country's electricity law to allow the plants to run.
Asian shares tumbled to their lowest in seven weeks on Friday and the dollar stood tall as investors globally shunned riskier assets over fears that higher U.S. interest rates and China's reinforcement of its zero-COVID policy could hit growth hard.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 2.65% on Friday and fell to its lowest level since March 16, the day when Chinese vice premier Liu He boosted shares by pledging to support markets and the economy.
The benchmark is down 3.8% from last Friday's close, which would be its worst week since mid-March. Japan's Nikkei bucked the trend, rising 0.56% on its return from a three-day holiday.
Chinese blue chips shed 2%, the Hong Kong benchmark lost 3.44%, and China's yuan tumbled to an 18-month low in both onshore and offshore markets.
India Inc has seen a 38% year-on-year (y-o-y) in hiring for April with travel and hospitality showing triple-digit growth in manpower additions.
“According to the Naukri JobSpeak Apr’22 Index, hiring activity in India recorded 38% Y-O-Y growth and the index stood at 2,863 at the beginning of the new financial year," said the job portal’s report on Friday. (Read here)
Resilient performance on growth and margin fronts, valuations also in favour:
Revenue 5% growth in domestic business with 1% volume growth, 12% CC growth in international business driving 7.4% consolidated revenue growth (2-yr CAGR of 20%); market share gains of 170bps in Parachute rigids and 90bps in VAHO. Gross margin improved 40bps/80bps YoY/QoQ. Higher gross margin QoQ indicates superior product mix. EBIDTA margin came in at 16% with higher A&P and other expenses. However ad spends lower by 9% QoQ. We maintain our BUY rating with revised PT of ₹603 based on 45x FY24E EPS.
India is looking to boost its coal output by 75-100 million tonnes in the next two-to-three years by restarting closed mines, the country's coal secretary A K Jain said on Friday.
India, the world's second largest producer, importer and consumer of coal, produced 777.2 million tonnes of the fuel during the year ended March 2022 and burnt over a billion tonnes.
State-run Coal India, the world's largest coal miner, which produces 80% of India's coal, plans to increase annual output to 1 billion tonnes by 2024, from 622.6 million tonnes currently.
Indian shares dropped nearly 2% on Friday and were set for their worst week since November, as investors fretted that fast-paced interest rate hikes to tame surging inflation would slow global economic growth.
At 1115am, the benchmark was Sensex was at 54,669.77, down 1,032.46 points, 1.85%, while Nifty fell 314.05 points to 16,368.60.
The benchmark indexes were on track for a fourth straight weekly drop, shedding more than 6%, weighed down by a surprise interest rate hike by the Reserve Bank of India, foreign fund outflows and mixed corporate earnings results.
So far this week, foreign investors have net sold Indian equities worth $635 million, compared with $881 million offloaded in the same period last week, according to Refinitiv data.
An Indian court has put on hold a federal enforcement agency's decision to seize $725 million from local bank accounts of China's Xiaomi Corp for suspected violations of foreign exchange laws, two sources told Reuters on Friday.
The Enforcement Directorate last week seized the bank assets of Xiaomi Technology India Private Limited, saying it had found the company illegally remitted funds to three foreign-based entities, including one Xiaomi group entity, "in the guise of royalty" payments.
Xiaomi had denied any wrongdoing, saying its "royalty payments and statements to the bank are all legit and truthful". It later filed a challenge against the Indian financial crime fighting agency's decision in the High Court of the southern Karnataka state.
Standing firm – reiterate as preferred bet among two wheelers
TVSL 4QFY22 were largely in-line to our/street estimates. EBITDA margins over last few quarters (ex of 1Q) have been strong at >10% despite multiple headwinds. With volume recovery over low base, we expect margins to expand by 80bp/30bp at 10.2%/10.5% for FY23E/24E. TVSL currently trades at 23x/19x of FY23/24 EPS (v/s HMCL at ~15x/12.9x and BJAUT of 17x/14.5x). We believe it should continue to trade at a premium as we expect EPS CAGR of ~31% over FY22-24E. EV focus continues to intensify with more capex/investments towards the same. We believe sustained market share gains in domestic EV 2Ws led by aggressive product pipeline, scope of external investments in to EV vertical and NBFC TVS credit are additional re-rating triggers. We re-iterate TVS as our preferred pick among 2W names with BUY and TP of Rs779 (v/s Rs789) with FY23/24 estimates tweaked marginally.
The volatility was clearly on the higher side and the way we concluded the weekly expiry, certainly does not bode well for the bulls. But we reiterate, that we would avoid getting carried away by this; because we believe markets are a bit oversold and the last two days’ move could be a deceptive one. Hence, rather than jumping into this, we would stay on the sidelines and would assess the situation for the next 2 – to 3 days.
As far as levels are concerned, 16600-16500 are to be treated as immediate supports, while 16900-17000 has now become a sturdy wall.
Indian equity markets fell over 1% on Friday, tracking a decline in Asian peers as U.S. stocks fell sharply overnight on worries the Federal Reserve's interest rate hike this week may not be enough to help fight surging inflation.
All sectoral indices were in the red, with IT, metal, realty indices down 2% each.
At 10am, Sensex was down 838.13 points, or 1.50%, at 54,864.10, Nifty fell 259.70 points to 16423. The benchmark indexes looked set to fall for a fourth straight week.
Strong Growth and market share gains in core business in tough environment
Aggressive towards expansion/innovation via ecommerce
We are maintaining our EPS estimate of 11.5/13.8 for FY23/24 on expectations of strong growth in drinks, beverages and foods, IBD & increasing share of e-commerce innovations. We expect near-term growth pressures given input cost inflation, slowdown in rural demand & overall decline in discretionary consumption. However, we remain positive on long term outlook given 1) Innovation led growth strategy, 2) Increasing share in foods & beverages category 3) LUP Innovations allowing DABUR to leverage its distribution 4) Cost saving initiatives and 6) Strong rural distribution coverage of 90k villages (30k added in FY22) 7) 4-5% incremental sales every year from ecommerce innovations. Dabur remains a formidable play on recovery in rural demand in coming quarters. Dabur trades at 38.2x FY24 EPS with 16% EPS CAGR over FY22-24 and 24% ROE and 50% dividend payout. Retain accumulate with 12 month DCF based target price of Rs603 (unchanged).
Packaged-goods companies Dabur India and Marico Ltd pointed to weak rural demand in the March quarter as consumers downgraded to cheaper packs and brands in categories such as toothpaste to hair oil and shampoos as surging inflation chipped away at their spending power. (Read here)
The initial public offering of Life Insurance Corp. of India got fully subscribed on the second day of the share sale, as attractive pricing, and discounts to policyholders and retail investors boosted demand.
On Wednesday, the first day of the share sale, investors bid for 67% of the shares on offer. The LIC share sale is on till 9 May, longer than other IPOs, which remain open for three days. Subscriptions will also be open on Saturday. LIC will list on the stock exchanges on 17 May. (Read here)
Shares of Reliance Industries Ltd., M&M, banks, Wipro, Tata Power, TVS Motor, among others will be in focus today.
Reliance Industries, Canara Bank, Sundaram-Clayton, Tata Power, CSB Bank, Federal Bank, Bajaj Consumer Care, Shipping Corp. of India, Reliance Home Finance are among the companies scheduled to release their earnings today.
Lenders have taken special measures to help Life Insurance Corp. of India’s (LIC’s) employees and customers subscribe to the mega initial public offering (IPO). State Bank of India (SBI), for instance, is offering a personal loan of up to ₹20 lakh, or 90% of the purchase price of shares, whichever is lower, to the employees of LIC, at a special rate of 7.35%, lower than the three-year marginal cost of lending rate (MCLR) of 7.4%. (Read here)
Oil prices dipped at the start of Asian trade on Friday as worries about an economic downturn that could dampen demand for crude vied with concerns over new sanctions from the European Union against Russia, including an embargo on crude oil.
Brent futures fell 37 cents, or 0.3%, to $110.53 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 33 cents, or 0.3%, to $107.93 a barrel.
The Bank of England warned Thursday that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates to their highest since 2009, hiking by quarter of a percentage point to 1%.
Wall Street stocks tumbled, meanwhile, as investors shed risky investments, worried the Fed might hike rates more this year to tame inflation.
Nifty futures on the Singapore Exchange fell 268 points, or 1.6%, to 16,423.00 in early deals on Friday, indicating a lower start for Indian benchmarks.
On Thursday, the benchmark Sensex rose 33.20 points to end the day at 55,702.23, and the Nifty was up 5.10 points at 16,682.70.
Stocks slid with bonds Friday and the dollar rose as inflation, rising borrowing costs and China’s Covid lockdowns depressed sentiment.
An Asia-Pacific share index shed over 1%, sapped by the technology sector amid drops in Hong Kong and China and mixed performance in Japan. Regional losses were smaller than Thursday’s slide of more than 3.5% in the S&P 500 index and 5% in the Nasdaq 100 gauge. U.S. equity futures declined.
Elevated commodity prices are feeding into rising costs. West Texas Intermediate crude remains near $108 a barrel on supply concerns stemming from a European Union proposal to sanction Russian oil.
S&P 500 futures fell 0.3%, Nasdaq 100 futures shed 0.4% and Euro Stoxx 50 futures were down 0.3%
Japan’s Topix index added 0.2%, Australia’s S&P/ASX 200 index fell 2.4%, South Korea’s Kospi index lost 1.5%, Hong Kong’s Hang Seng index fell 2.6%, and China’s Shanghai Composite index declined 1.5%.
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