PremiumGlobal equities skidded on Monday as warnings that Russia could invade Ukraine at any time drove oil prices to seven-year peaks, belted the euro and sent investors scuttling back to the safe-haven government bonds they have been dumping all year. Asia slumped, Europe's STOXX 600 share index tumbled 2.5%, Wall Street futures were down 0.6%.
Indian stock markets crashed on Monday amid a global sell-off in equities, fuelled by rising tensions in Ukraine, which spurred demand for safe-havens. Europe’s Stoxx 600 Index plunged to a three-week low, as Asian gauges and U.S. futures declined.
Oil fluctuated, while U.S. and European bond yields declined and the dollar ticked up.
Back home, the Sensex tanked 1,747.08 points, or 3%, to 56,405.84, while Nifty fell 532 points to 16,842.80. About 574 shares advanced, 2,897 shares declined, and 108 shares were unchanged.
JSW Steel, HDFC Life, ITC, Tata Steel and Tata Motors were among the worst hit on Nifty. TCS was the lone stock in the green.
All sectoral indices ended in the red with auto, bank, oil & gas, PSU bank, pharma, FMCG, metal, realty and capital goods indices shed 2-6%. BSE Midcap and Smallcap indices fell 3-4%.
"Indian markets opened in red tracking global cues as investors monitor heightened geopolitical risks in eastern Europe amid Ukraine crisis. During the afternoon session markets further fell as the geopolitical breakdown in eastern Europe also had a bearing on oil prices which is seen further adding to the already high inflation globally and has potential to jeopardize economic recovery."
Margin drag short-term blip; long-term growth visible
· Page Industries (PAGE) Q3FY22 topline was a healthy beat to our and street estimates, EBITDA & PAT were however a slight miss on account of high RM price inflation. Revenues of ₹1190 Crs (our estimates - ₹1095 crs), was up 28.3% YoY led by Volume growth of 5.3% QoQ & 24.6% YoY to 59.8 mn pieces. Gross Margins (GM) came in at 53% below our expectations of 55% ,down ~220bps YoY on account of RM (cotton and yarn prices) inflation. Reported EBITDA at ₹251 Cr (est. ₹256 Cr) was up 10.9% YoY with an EBITDA Margin of 21% (est. 23%) down ~332bps YoY, due to sharp rise in Other Expenses, employee expenses and higher A&P spends besides GM contraction. PAT at ₹175 Cr (our estimate - ₹177 Cr) was up 13.6% YoY on account of better revenue growth and strong operational performance in Q3FY22. Cash and cash equivalents stood at Rs. 556 Crs, up 13% YoY.
· Liquidity continues to remain strong with robust cash flow management. PAGE saw increased momentum in sales across all its product categories driven by portfolio enhancement and distribution expansion. Total MBO coverage is now at 105,200 and EBO network stands at 1,030+ as of December. All channels are now fully functional. Management highlighted that all categories have reported robust growth and there remains scope to grow them further. Mgmt reiterated that it is expanding capacity in line with demand (through in-house & outsourced vendors). Improvement is noted in OOH purchasing and channels like MT/GT
Net profit fell 45.9% to ₹261 crore from ₹482.2 crore a year ago, while revenue declined 9.7% to ₹1,484.5 crore.
G7 finance ministers in a joint statement said - “Prepared to collectively impose economic and financial sanctions which will have massive and immediate consequences on the Russian economy."
Reiterate that in particular any further military aggression by Russia against Ukraine will be met with a swift, coordinated and forceful response.
Stocks fell Monday as geopolitical risks over Ukraine rippled through global markets.
Europe’s Stoxx 600 Index followed Asian gauges lower, while U.S. futures extended declines. All European sectors were in the red, with travel and banks among the worst performing.
Futures on the S&P 500 fell 0.8%, Nasdaq futures declined 0.9%, while futures on the Dow Jones Industrial Average fell 0.8%.
Oil fluctuated after earlier gains. U.S. and European bond yields declined. The dollar ticked up.
Europe's major markets sank heavily at the open on Monday as fears intensified over a potential Russian invasion of Ukraine.
London's FTSE 100 index fell 1.6%, Frankfurt's DAX dropped 2.7% and the Paris CAC 40 dived 2.9% after sharp losses across Asia.
"Worries that an invasion of Ukraine by Russia is imminent have pumped waves of volatility in markets, with investors expecting higher fuel prices and more supply chain bottlenecks as a result of the conflict," said AvaTrade analyst Naeem Aslam.
"President Joe Biden had a conversation with his Russian counterpart, President Vladimir Putin, but their dialogue failed to bear any fruit."
Wall Street fell on Friday.
Fears of a conflict in eastern Europe also sparked a heavy selloff in Asia on Monday, while oil prices have rebounded sharply with Brent crude topping $95 per barrel -- stoking fresh inflationary woes.
India's palm oil imports in January plunged 29% from a year earlier, as a rally in tropical oil prices to a record high prompted refiners to increase buying of rival soyoil and sunflower oil, a leading trade body said on Monday.
Lower purchases by the world's top edible oil importer could cap the rally in palm prices, but may support U.S. soyoil futures and sunflower oil from the Black Sea region.
India imported 553,084 tonnes of palm oil in January, compared with 780,741 tonnes a year earlier and 565,943 tonnes in December 2021, the Mumbai-based Solvent Extractors' Association of India (SEA) said in a statement.
The Indian market witnessed pullback due to Ukraine and inflation concerns. Oil prices can shoot up further if ongoing tussle between Russia-Ukraine escalates or due to any retaliatory sanctions by the US. India will be adversely impacted if crude goes any higher, as India will see higher pressure on its BOP, as well as it will import higher inflation. Market is also anxious that with rising inflation (on crude strengthening), the Fed may act faster than expected on tapering as well as rate hike.
Total revenue ₹14378 crore vs ₹10229 crore a year ago.
PAT ₹211 crore, up from ₹127 crore a year ago.
Non-banks have witnessed significant slowdown in growth since H2 FY2019, following the liquidity crisis, and consequently moderated their disbursements. The impact was more pronounced on wholesale financiers with sizeable real estate exposures compared to their retail counterparts owing to a prolonged period of risk aversion by investors and other stakeholders. Given the fund-raising challenges, real estate oriented non-banks not only limited incremental disbursements to this sector but also attempted to scale down their portfolios through asset sell-down to shore up liquidity, said said Samriddhi Chowdhary, Vice President & Sector Head – Financial Sector Ratings, ICRA.
"ICRA expects an increase of 180-250 basis points (bps) in GNPAs in the real estate segment in FY22. However, players with a diversified credit book across asset classes are likely to witness a relatively lower increase in NPAs. Asset quality would, however, remain dependent on the performance of the restructured book as well as any further disruptions caused by a surge in Covid-19 infections," Chowdhary added.
At the industry level, a large share of the non-bank real estate book has been restructured and/or provided relief through the revision of date of commencement of commercial operations. The performance of the restructured book is a monitorable in the near term, as the scheduled principal amortisation for this book is expected to commence from Q1/Q2 FY2023. This, coupled with the impact of the revision in the income recognition and asset classification guidelines, would have a bearing on the segment’s asset quality going forward.
In the last three trading sessions, shares of temporary staffing company Quess Corp Ltd have declined nearly 11%. This is despite the company reporting robust performance in the December quarter.
Analysts said that the sudden exit of its managing director and chief executive officer Krishna Suraj Moraje has dampened investors sentiment for the stock.
Moraje has been replaced by Guruprasad Srinivasan as executive director and Group Chief Executive of the company for a period of three years, effective 10 February, 2022.
Yet, the stock remains under pressure.
Shares of the company fell around 8% on the NSE intraday on Monday. It should be noted that the overall market mood on Monday was also weak and may have accentuated the pressure on the stock.
Primarily, base effect has resulted in higher inflation. Have factored in 6% CPI inflation, said governor Shaktikanta Das, adding that all possible scenarios in oil price range taken for CPI projection.
Working on the borrowing target, too early to comment on it, Das said after RBI board meet.
Price stability of utmost importance, said Das.
Overall health of banks has improved, says Finance Minister Nirmala Sitharaman
Beauty and fashion e-tailer Nykaa E-Retail Pvt Ltd has taken up 27,128 sq ft of office space in south Mumbai's Prabhadevi, as the company looks to ramp up both online and offline presence after its public listing last year.
The transaction entails a rental payout of about ₹41.92 crore for a five-year lease tenure, according to documents accessed by real estate analytics firm CRE Matrix. The lease period begins from 1 April, while the rent payout commences on 1 July.
Nykaa has taken up the new space at Cnergy IT Park, in Old Standard Mill Compound, where it already has about 13,000-14,000 sq ft of existing office space on a different floor. The company will get access to 27 car parks. The office space has been leased to the company by Naveen and Sangeeta Khandelwal, who are both directors in Devesh Functional Foods Pvt Ltd.
Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world's top producer in an already tight market.
Brent crude futures was at $95.61 a barrel, up $1.17, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014. U.S. West Texas Intermediate (WTI) crude rose $1.41, or 1.5%, to $94.51 a barrel, hovering near a session-high of $94.94, the loftiest since September 2014.
Comments from the United States about an imminent attack by Russia on Ukraine have rattled global financial markets.
Oil and Natural Gas Corporation Ltd (ONGC) posted a strong performance for the quarter ended December. The better-than-expected performance and crude prices at multi-year highs, following geopolitical tensions, helped the ONGC stock hit fresh 52-week highs of ₹176.35 apiece on Monday.
Brent prices averaged at $79.6 a barrel in 3QFY22, up 8% sequentially and 80% year-on-year, according to Motilal Oswal Financial Services Ltd (MOFSL) data. This boosted ONGC's crude oil realisations as well. Realisations from its nominated oil fields jumped 75.3% year-on-year to $75.73. The rise in domestic gas prices by a sharp 62% to $2.90 per MMBtu (million British thermal units), effective 1 October, and in line with rising international gas prices, also helped ONGC.
World’s largest alternative asset manager, Blackstone, has acquired a majority stake in ASK Investment Mangers Ltd (ASK), an asset and wealth management companies, from Advent International and other sellers. The companies didn’t disclose the amount of stake sold.
ASK caters to clients across Asia, the Middle East, Africa, and Europe, and manages more than $10.6 billion in assets as of 31 December.
Nomura acted as the exclusive financial advisor to ASK and Advent on the transaction. KPMG and AZB & Partners acted as advisors to ASK. BCG, Ernst & Young, Moelis, Simpson Thacher & Bartlett, and Trilegal acted as advisors to Blackstone.
Shares of Ashok Leyland Ltd fell about 5% in opening deals on Monday. The reason was simple. The company’s results for the three months ended December (Q3FY22) have been disappointing, especially on the margin front. Earnings before interest, tax, depreciation and amortization (Ebitda) fell by 12% year-on-year to Rs224 crore. This was a dampener as it came below analysts’ expectations. For instance, Q3 Ebitda was 46% lower than Jefferies India Pvt. Ltd’s estimates on lower-than-expected gross margin.
Ebitda margin contracted 123 basis points (bps) y-o-y to 4% due to rising commodity costs and supply chain inefficiencies. One basis point is one-hundredth of a point. However, margin performance was better, sequentially. “Gross margin contracted 120bp QoQ but operating leverage benefit drove 100bp QoQ expansion in Ebitda margin to 4.0%," said Jefferies' analysts in their first cut note.
Axis Bank Ltd. is nearing a deal to buy Citigroup Inc.’s India retail banking business in a transaction that could be valued at about $2.5 billion, people familiar with the matter said.
An agreement for the consumer unit may be announced as soon as the next few weeks and is contingent on approval from the Reserve Bank of India, the people said, asking not to be identified as the information is private. The deal would include a cash component of less than $2 billion, accounting for the consumer business’s liabilities, the people said.
The Indian lender emerged as the buyer after beating out rivals, with factors such as job security for current Citigroup employees and competition concerns being taken into account, one of the people said. Axis Bank will need around six months to merge its consumer business in the country with Citigroup’s, a different person said.
While talks are advanced, as with all deals, an agreement could be delayed or fall apart. Representatives for Axis Bank and Citigroup declined to comment.
For Citigroup Chief Executive Officer Jane Fraser, the planned India retail sale is part of a restructuring to simplify the U.S. lender, do away with its retail banking operations in 13 countries across Asia and Europe, and focus on high-growth businesses such as wealth management. Axis Bank, India’s third largest private sector lender, has been trying to boost retail loans to tap pent-up demand after the first two waves of Covid-19.
Axis Bank, based in Mumbai, said in January that quarterly profit more than tripled on robust earnings from lending and its non-core business including fees and trading, as the easing of the coronavirus pandemic helped a revival in consumer demand.
Capital good company ABB India Ltd's December quarter earnings were a mixed bag. While revenue growth was ahead of expectations, operating performance disappointed, hurt by higher raw material and logistics costs hurt. On a year-on-year basis, Ebitda margins contracted 270 basis points to 8.8%. Ebitda is short for earnings before interest, tax, depreciation and amortization. One basis point is one hundredeth of a percentage point.
In a post earnings conference call, the ABB management said, they expect margins to stabilise going forward. The commodity and forex volatility risk which the business faces, will be mitigated by focusing on improving supply chains and hedging forex, it added.
But the bright spot according to analysts is ABB's outlook for calendar year 2022. It should be noted that ABB India follows a January-December accounting year.
"17000-17800 is the range for the index. While it is a wide range, traders should exercise extreme caution at the current juncture. Stop losses are large and whipsaws cannot be ruled out. Hence it is better to wait for a close below 17000 to re-evaluate the trend. Closing below 17000 is imperative for a bearish view to get activated. On the upside 17400 is the current resistance level."
India has banned 54 Chinese apps in a new order citing security concerns, according to a local newspaper report, in the latest instance of tensions between the two neighbors locked in a protracted border dispute impacting business dealings.
The South Asian nation’s ministry of electronics and IT has banned apps including those belonging to large China tech firms such as Tencent, Alibaba and NetEase, that are re-branded versions of apps already banned by India in 2020, the Economic Times reported Monday.
A spokesman for the Home Affairs ministry did not immediately comment on the matter.
The latest move comes as a long-running dispute between the two nuclear-armed nations remains unresolved, after boiling over in a bloody 2020 skirmish that left soldiers from both sides dead, and drew tougher laws in India for investments from China, including the original app ban.
India and China share an unmarked 3,488 km (2,170 miles) long border along the Himalayas, where thousands of troops, tanks and artillery guns from both countries have been massed since then. Tensions remain between the two countries remain, with India’s army chief citing the risk of Chinese aggression as recently as last month.
Amid allegations of delay in filing of complaint against the country's biggest bank fraud totaling ₹22,842 crore, State Bank of India (SBI) on Sunday said it has been diligently following the ABG Shipyard fraud case with the CBI following the forensic audit report, the Press Trust of India reported. The Central Bureau of Investigation (CBI) recently booked ABG Shipyard Limited, its former chairman and managing director Rishi Kamlesh Agarwal and others for allegedly cheating a consortium of two dozen lenders led by ICICI Bank.
ABG Shipyard fraud is much higher than the one perpetrated by Nirav Modi and his uncle Mehul Choksi, who allegedly cheated the Punjab National Bank (PNB) of around ₹14,000 crore through issuance of fraudulent Letters of Undertaking (LoUs).
Mukesh Ambani-owned Jio Platforms Ltd, and Luxembourg-based SES, a leading global satellite-based content connectivity solutions provider, on Monday announced setting up a joint venture – Jio Space Technology Ltd. – to deliver next generation scalable and affordable broadband services in India leveraging satellite technology.
In a filing to the exchanges, Reliance Industries, parent of Jio, said JPL and SES will own 51% and 49% equity stake in the joint venture, respectively. The joint venture will use multi-orbit space networks that is a combination of geostationary (GEO) and medium earth orbit (MEO) satellite constellations capable of delivering multi-gigabit links and capacity to enterprises, mobile backhaul and retail customers across the length and breadth of India and neighbouring regions.
Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world's top producer in an already tight market.
Brent crude futures was at $95.56 a barrel, up $1.12, or 1.2%, after earlier hitting a peak of $96.16, the highest since October 2014. U.S. West Texas Intermediate (WTI) crude rose $1.28, or 1.4%, to $94.38 a barrel, hovering near a session-high of $94.94, the loftiest since September 2014.
Comments from the United States about an imminent attack by Russia on Ukraine have rattled global financial markets.
Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday.
TVS Supply Chain Solutions Ltd on Sunday filed draft papers with the market regulator for an initial share sale through which the logistics arm of diversified TVS group will seek to raise ₹2,000 crore of fresh capital, while some existing shareholders will also pare their stakes.
TVS Supply Chain Solutions is part of the TVS Mobility Group that comprises four business verticals—supply chain solutions, manufacturing, auto dealership and aftermarket sales and service. It offers customized solutions to customers to enable agile and efficient supply chains at large scale. The company operates in more than 25 countries, catering to more than 60 ‘Fortune Global 500 2021’ clients in the first half of this financial year through March, according to the draft initial public offering (IPO) document.
The IPO will consist of a fresh issue of equity shares totalling up to ₹2,000 crore and a secondary share sale of up to 59.48 million shares.
Gold prices held their ground on Monday near a three-month high touched in the previous session, as lingering concerns surrounding Ukraine kept the metal's safe-haven appeal intact.
Spot gold was steady at $1,859.16 per ounce on Monday. In the previous session, bullion prices hit the highest since November 19 at $1,865.15, in their biggest daily gain since mid-October.
U.S. gold futures rose 0.9% to $1,859.00 per ounce.
The government aims to raise about ₹75,000 crore by selling a 5% stake in Life Insurance Corp. of India (LIC) through India’s largest-ever initial public offering, in what is expected to test investor appetite amid a volatile market.
According to the draft IPO documents filed with the Securities and Exchange Board of India (Sebi), the government will sell 316.25 million shares through an offer for sale (OFS). (Read here)
Shares of SBI, Coal India, Future Retail, Eicher Motors, telcos, will be in focus on Monday.
Coal India, Eicher Motors, Grasim Industries, SpiceJet, Adani Enterprises, Adani Wilmar, Future Retail, Jet Airways, Manappuram Finance, PC Jeweller, Spandana Sphoorty Financial are among the 989 companies that will announce their quarterly earnings on 14 February.
SGX Nifty futures were down 216.50 points or 1.25% at 17,137.50 in early deals on Monday.
Stocks slid Monday and crude oil extended a rally as geopolitical risks over Ukraine rippled through global markets, spurring demand for havens such as sovereign debt.
An Asia-Pacific equity index fell over 1%, with markets from Japan to China and Hong Kong -- which is grappling with a Covid outbreak -- in the red. Energy stocks bucked the trend, climbing as oil added to an eight-week winning run.
S&P 500 and Nasdaq 100 futures wavered after sharp Wall Street losses Friday.
Japan’s Topix index fell 2%, Australia’s S&P/ASX 200 Index added 0.1%, South Korea’s Kospi was down 2.1%, Hang Seng lost 1.5%, and Shanghai Composite Index declined 0.4%.
Download the App to get 14 days of unlimited access to Mint Premium absolutely free!
