PremiumAsian stocks ended subdued while European equities were under pressure on Wednesday as investors assessed economic recovery and the risk of a shift in the Fed’s dovish policy projections. Treasury yields held near highest levels in over a year.
Taking cues from global peers and ahead of the outcome of the US Federal Reserve's monetary policy review meeting, the benchmark S&P BSE Sensex ended at 49,802, down a massive 562 points or 1.12%, while the Nifty50 settled at 14,721, down 189 points or 1.27%.
On the Sensex, 26 of 30 stocks tanked, while and 48 of 50 Nifty constituents fell.
Smallcap and midcap indices also declined, falling over 2% each. All sectoral indices ended in the red, with the Nifty PSU Bank slumping 4%, followed by Nifty Realty, Nifty Metal, Nifty Pharma, Nifty Auto and Nifty IT.
On the Nifty, BPCL, ONGC, Tata Motors, Adani Ports & SEZ and Coal India fell the most, while ITC, TCS, Infosys and HDFC gained.
India’s organised apparel market is looking at a better business outlook for FY22 as improved consumer confidence, pick-up in store expansion and prospects of wider vaccine rollout help the sector rebound.
Recovery in apparel segment has seen quarter-on-quarter improvement with sales returning to near 80% of the pre-covid levels during 3QFY21, India Ratings and Research (Ind-Ra) said in an apparel retail outlook note released on Wednesday.
Apparel retailers are expected to close the current fiscal with a 40-45% dip in business. However, they are set to reach FY20 levels in FY22, the agency said.
ICICI Prudential Mutual Fund is launching a new exchange-traded fund of funds, targeted at the 30 least volatile stocks from the Nifty 100 index.
The new fund will open on 23 March and close on 6 April, the AMC said on Wednesday.
ICICI Prudential Nifty Low Volatility 30 index is an open-ended fund of funds that will invest in these stocks, and the underlying ETF replicates the Nifty 100 low volatility 30 index, the fund house said.
It will invest in a portfolio of 30 least volatile large-cap stocks in the Nifty 100 index.
Domestic telecom companies added 9.6 million subscribers in January. Bharti Airtel added 5.89 million users, Vodafone Idea added 1.71 million and Reliance Jio added 1.95 million subscribers.
Need to have a 70% RT-PCR test rate in states, the prime minister added.
Although the government is expected to provide requisite capital support to public sector banks in FY22, the new investment regulations for additional tier 1 (AT1) bonds could lead to a higher recapitalisation burden, rating agency Icra said on Wednesday.
A Securities and Exchange Board of India (Sebi) circular issued last week capped mutual fund (MF) investment in bonds with special features to 10% of scheme assets and 5% for a single issuer. This includes additional tier-1 (AT1) bonds as well as tier-2 bonds issued by banks under Basel III norms. The regulator also laid down valuation norms for such bonds, mandating that AT1 bonds should be valued as if they have a maturity of 100 years.
Oil rose ahead of reports that will provide a snapshot on global demand and the health of the U.S. economy, rebounding after a sustained slide that dragged prices below $65 a barrel.
Futures in New York added 0.7% after losing 1.9% over the past three sessions. A monthly report from the International Energy Agency and a Federal Reserve policy statement are due Wednesday and will follow industry data that showed a drop in U.S. crude stockpiles last week. If confirmed by government figures, it would be the first inventory draw since mid-February.
Franklin Templeton Mutual Fund has said its six shut schemes have received Rs15,272 crore from maturities, coupons and pre-payments since closing down in April 2020.
The fund house had shut six debt mutual fund schemes on April 23 last year, citing redemption pressures and lack of liquidity in the bond market.
The schemes -- Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund -- together had an estimated ₹25,000 crore as AUM.
India and the Philippines are most vulnerable to rising yields in the US, which could trigger disorderly capital outflows from Asia’s emerging markets, rating agency S&P Global Ratings cautioned on Wednesday.
"The effect of $1.9 trillion in stimulus on U.S. inflation and rates remains uncertain. Markets can react in a non-linear way if inflation expectations surge above central bank targets and imminent tightening is priced in. In this case, we may see real yields (rather than inflation expectations) jump and the U.S. dollar appreciate at the same time. In our view, this would trigger disorderly capital outflows from Asia's emerging markets. India and the Philippines are the most vulnerable at the current juncture," the rating agency said in a report.
Subscribers of flagship NPS and APY pension schemes grew nearly 22% year-on-year to 4.15 crore as of end of February, government data showed on Wednesday.
"The number of subscribers in various schemes rose to 414.70 lakh by end-February 2021 from 340.34 lakh in February 2020, showing a year- on- year increase of 21.85 per cent," PFRDA said in a release.
The subscribers under National Pension System (NPS) and Atal Pension Yojana (APY) were over 3.43 crore a year ago.
For the near term, 15050-15100 will be seen as immediate resistance while support is placed in the range of 14750-14700. Until we see any breakout from this consolidation phase, traders are advised to avoid any aggressive trades and look for stock specific opportunities on both sides.
The company has been awarded a contract from the Ugandan government, represented by the Ministry of Water and Environment, for supply of solar powered water pumping systems at a contract price of $3,53,00,000.
The Telecom Regulatory Authority of India (Trai) has directed operators to resume new SMS regulations from Wednesday, having suspended them for seven days as implementation of the norms on 8 March caused massive disruption in several online transactions.
The regulator has, however, asked telcos to deliver all messages to avoid any failed delivery of SMS or one-time passwords (OTP) even as the SMS scrubber function will restart.
Nazara Technologies is present in the fast growing segment of interactive gaming, eSports and gamified early learning solutions. After posting a degrowth of 1.4% in FY2019, the company posted strong revenue growth of 45.9% in FY2020 at Rs47.5 cr.
It has has reported a revenue of Rs200 crore in H1FY2021. The company has been reporting losses as they have increased their spending significantly on advertising and promotion from FY2020 onwards which will help drive strong topline growth for the company.
At current levels the stock is trading at EV/Sales of 11.6xFY20 revenues and we recommend a "SUBSCRIBE" rating to the IPO given strong growth potential for the company.
The retail portion of the Nazara Technologies Ltd's initial public offering (IPO) was fully subscribed within the first hour of the issue opening. Overall, the issue got subscribed 50%.
The IPO received 1.65 million bids against the issue size of 2.92 million shares, according to data from stock exchanges. Retail investors placed 1.04 million bids against 0.53 million shares on offer, while the portion reserved for non-institutional investors was subscribed 0.07 times. Qualified institutional bidders were yet to place their bids.
The issue price has been fixed at Rs1,100-1,101 apiece and the offer closes on 19 March.
The firm has raised Rs262 crore from 24 anchor investors.
With fresh cases of covid-19 being reported in states other than Maharashtra, the risk of a second wave in India has risen materially. Economists at Nomura believe that the second wave of the pandemic in India can lead to near-term growth concerns and delay the timing of policy normalisation.
“However, we expect only marginal negative growth effects, because government restrictions are less stringent, the goods sector continues to chug along and households and businesses have adjusted to the new normal," Sonal Varma and Aurodeep Nandi, economists, Nomura said in a note on 16 March.
Shares of SBI Cards and Payment Services Ltd are 50% higher than their listing price a year ago, enabling US private equity firm CA Rovers Holdings to earn an exponential return on its investment made four years ago. The firm, a subsidiary of private equity fund Carlyle will sell 4% in the company through block deals.
The price band is expected to be Rs981.80-1022.10 per share which would value the firm at roughly Rs96,000 crore. The private equity firm will make a return of whopping nine times over its initial investment. While outsized returns cannot be predicted from here on, the company has managed to tide over the pandemic and this should comfort investors.
To its credit, the blow on asset quality has been manageable and SBI Card has kept up its growth rate albeit far lower than what would have been in the absence of a pandemic. (Read here)
Suryoday Small Finance Bank is among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth and had the lowest cost-to-income ratio among SFBs in India in fiscal 2020.
It has over a decade's experience in serving customers in unbanked and under-banked segments in India and promoting financial inclusion. Over the years, it has diversified its loan portfolio to include non-micro banking loans thereby reducing dependence on micro banking business.
Suryoday SFB has posted strong growth in NII of 72.1% CAGR between FY18-20 though 9MFY2021 numbers were hit due to covid-19 pandemic.
At the higher end of the price band the stock would be trading at P/BV of 2.25x fully diluted post issue book value of Rs136 per share. While we believe that valuations are reasonable asset quality will be an issue in the near to medium term and hence have a NEUTRAL rating on the issue.
Nazara Technologies is India’s first online gaming company to list on the bourses, and that in itself should be enough to see its initial public offering (IPO) sail through. “Since companies such as Dream11 (backed by Tencent) are not listed, Nazara will get a scarcity premium," said an analyst with a multinational broking firm, requesting anonymity.
The Nazara IPO is an offer for sale, wherein existing shareholders are selling shares worth about ₹580 crore. (Read here)
Global Institutional investors are well past worrying about the coronavirus pandemic. The latest survey of global fund managers by BofA Securities showed that for the first time since February last year, covid-19 is no longer the biggest tail risk for the markets.
Higher than expected inflation is the top most concern, majority of the respondents said. A net 93% of fund managers expect higher inflation in the next 12 months, up 7% from the prior month’s survey and an all-time high, said the survey report. That was followed by a tantrum in the bond market.
However, some market experts feel that concerns about inflation making a massive comebackare overdone, at least for now.
Shares of Dalmia Bharat Ltd rose in early deals on Wednesday as investors cheered positive development related to its mutual fund units. On Tuesday, the Supreme Court passed an interim order directing restoration of mutual
fund units to Dalmia Bharat from the depository and clearing agent IL&FS Securities Services.
Investors would reckon that in financial year 2019, certain mutual fund units of Dalmia Bharat were fraudulently transferred by its broker Allied Financial Services to its own account. These units, which were valued at Rs344 crore, were then used by Allied and its directors as margin with IL&FS Securities Services for F&O trades.
The markets are still in a sideways patch. We need to either get past 15300 on the upside or break 14700 on the downside. Until then, we will witness choppy trading and lacklustre sessions. Traders need to exercise extreme caution in these times as the risk reward ratio is skewed in favor of risk.
Indian state refiners are planning to cut oil imports from Saudi Arabia by about a quarter in May, in an escalating stand-off with Riyadh following OPEC's decision to ignore calls from New Delhi to help the global economy with higher supply.
Two sources familiar with the discussions said the move was part of the government's drive to cut dependence on crude from the Middle East.
Indian Oil Corp, Bharat Petroleum Corp., Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd are preparing to lift about 10.8 million barrels in May, the sources said on condition of anonymity. (Read here)
Anil Agarwal-led Vedanta Resources Plc on Tuesday raised the open offer price for buying shares in its flagship Indian firm to Rs235 per share. In January, Vedanta Resources had offered to buy up to 10% in Vedanta Ltd at Rs160 apiece.
It also raised the offer size to 651 million shares representing 17.5% stake in Vedanta Ltd, the company said in a filing to the Singapore stock exchange.
If successful, the transaction will cost Rs15,298.5 crore.
The price announced is at a nearly 4% premium to Tuesday's closing of Rs226.55 on the BSE.
MUMBAI: Indian stock markets will likely consolidate further on Wednesday, with trends in SGX Nifty suggesting a flat start to domestic benchmark indices. On Tuesday, the BSE Sensex ended at 50,363.96, down 31.12 points or 0.06%. The Nifty closed at 14,910.45, down 19.05 points or 0.13%.
Asian stocks were mostly lower on Wednesday following a sell-off in US stocks, as investors await the outcome of the Federal Reserve’s meeting on whether the central bank will maintain near-zero interest rates amid the economy’s post-pandemic recovery.
Finance Minister Nirmala Sitharaman on Tuesday informed Parliament that the Reserve Bank of India was taking measures to strengthen its regulatory and supervisory capacity, and expressed hope that the steps will ensure no regulatory mishaps take place in the future.
"We have been engaging with the RBI to ensure that the regulatory functions and supervisory function of the RBI are strengthened. I am assured by the RBI Governor that internally an institutional mechanism is being further strengthened," Sitharaman said during Question Hour in the Rajya Sabha.
She was responding to a query asked by SAD leader Naresh Gujral that if the government is contemplating taking additional steps to strengthen the regulatory regime if banks have to thrive and people to be protected, given the recent banking frauds.
Markets regulator Sebi on Tuesday put in place a uniform policy to streamline the reconciliation process among intermediaries with regard to initial public offers as well as a new mechanism to compensate investors.
The new framework would address issues related to delay in receipt of mandate by investors for blocking of funds due to systemic issues at intermediaries and failure to unblock the funds in cases of partial allotment by the next working day from the finalisation of Basis of Allotment (BOA), Sebi said in a circular. (Read here)
The Union cabinet on Wednesday approved the setting up of a development finance institution (DFI) to fund infrastructure projects, finance minister Nirmala Sitharaman said.
The DFI will be fully owned by the government initially, but the shareholding will gradually be pared to 26%, Sitharaman told reporters after the cabinet meeting. “We are not thinking below that."
The government had allocated ₹20,000 crore in the FY22 budget to capitalize the institution and expects it to create a lending portfolio of at least ₹5 trillion in about three years. The finance ministry will soon table a draft law in Parliament to set up the new institution.
Oil was steady in Asian deals on Wednesday after an industry report pointed to shrinking US crude and gasoline stockpiles as the market took a breather following a sustained slide that dragged prices below $65 a barrel.
Futures in New York fluctuated after losing 1.9% over the past three days. The American Petroleum Institute reported crude inventories dropped by 1.05 million barrels last week, according to people familiar with the figures. If confirmed by government data on Wednesday, it would be the first draw since mid-February and snap a run of large gains following the U.S. cold blast.
Mobile gaming company Nazara Technologies, backed by Rakesh Jhunjhunwala, has raised ₹261.31 crore from 43 anchor investors, ahead of its initial public offering (IPO) that opens today.
The company informed exchanges that under anchor investors' (AIs) portion in the public issue of Nazara Technologies, 23,73,395 equity shares have been subscribed at ₹1,101 per equity share.
Marquee investors who received shares via anchor book included Government of Singapore, Abu Dhabi Investment Authority, Aberdeen Standard Asia Focus, Fidelity Funds, Nomura, Goldman Sachs, Franklin Templeton, Hornbill Orchid India Fund, Steadview Capital Mauritius, Eastspring Investments, Mentor Capital, Cohesion MK Best and Elara India Opportunities Fund.
Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities, said, "We believe that the markets would remain on the sidelines until the Fed meeting is completed. Keep an eye on the 14750/49800 and 15100/51000 range. Long positions should be bought between the levels of 14750/14800 (49800/50000) with a stop loss of 14700/49600 in the near future. We are likely to see trending activity after the Fed meeting. "
State Bank of India, SBI Card, BPCL, aviation stocks, among others will be in focus today.
Indian equity benchmarks ended lower for the third consecutive session on Tuesday due to concerns over rising bond yields and inflation. The Sensex fell 0.06% to end at 50,363.96, while the Nifty closed 0.13% lower at 14,910.45.
Asian stocks edged lower at the open Wednesday as investors weigh the strength of the economic recovery in anticipation of the Federal Reserve’s policy statement. Benchmark Treasury yields hovered near their highest levels in over a year.
Equity benchmarks headed lower in Japan, Australia and South Korea. U.S. equity futures fluctuated. The S&P 500 closed lower after three sessions of record-breaking gains, as the energy and industrials sectors weakened. Apple Inc. and Microsoft Corp. lifted the tech-heavy Nasdaq 100, while the Dow Jones Industrial Average also fell from a record high.
S&P 500 futures were little changed as of 9:03 a.m. in Tokyo. The S&P 500 Index declined 0.2%. Topix index slipped 0.5%. Australia’s S&P/ASX 200 Index fell 0.4% and South Korea’s Kospi index dipped 0.1%.
Having neared all-time highs as investors bet the Federal Reserve and other central banks meeting this week will retain policies supporting a post-pandemic recovery, US stocks retreated later in the day on Tuesday.
The Nasdaq shed more than 1%, as yields on longer-maturity U.S. Treasury bonds ticked up, nipping investor enthusiasm for tech-stocks that are high growth but wary of rising inflation.
On Wall Street, the Dow Jones Industrial Average fell 0.19%, the S&P 500 gained 0.07% and the Nasdaq Composite added 0.36%.
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