PremiumRBI and Fed minutes revealed that they are willing to keep increasing the interest rates as inflation remains a concern. Traders are upping their forecasts for how high the central banks will take interest rates, as well as for how long it will keep them at that level. Meanwhile, Adani stocks continued to struggle on Thursday.
Indian shares remained volatile on Thursday but closed in the red as investors continued to fret over the likelihood that central banks would have to keep raising interest rates to tackle inflation.
The Nifty 50 index shed almost 50 pts but managed to defend the 17,500 mark to close at 17,511. Sensex shed 140 pts to close at 59,605. The volatility index had risen to 15.59 on Wednesday, the highest since Feb 2, the day after the union budget.
While the Federal Reserve's latest minutes, released late on Wednesday, indicated that a majority of the members favoured smaller rate hikes in subsequent meetings, markets, however, declined as a slew of macroeconomic data since that meeting has kept fears of an aggressive rate hike path intact.
Asian Paints started the day in red and remained one of the biggest laggards throughout the day shedding almost 3%. Adani Enterprises and IndusInd Bank also shed more than a per cent. Coal India, Tata Motors, Hindalco, Axis Bank and ITC gained more than a per cent.
Among sectoral indices, Media tanked 1.7% led by Zee Entertainment. Realty also shed more than 1.5%. Consumer Durable also struggled in today's session. PSU Bank, FMCG and Metal ended in the green with marginal gains.
Asian markets were mixed Thursday, with little buying enthusiasm after minutes from a Federal Reserve policy meeting. Tokyo market remained closed for holidays.
South Korean shares closed higher on Thursday, led by heavyweight chipmakers, as the country's central bank held interest rates steady and suggested that the monetary tightening campaign had ended, unless there was a spike in inflation. The benchmark KOSPI ended 0.80% higher after rising as much as 1.32%.
European shares opened higher on Thursday, as chip stocks rose following a positive sales forecast from U.S. semiconductor designer Nvidia. ASM International, BE Semiconductor and Aixtron rose between 1.6% and 3.2%, boosting the European technology sector by 0.9%.
The broader Europe STOXX 600 index rose in the morning after two straight sessions of declines on worries of central banks raising interest rates for longer.
The FTSE 100 index fell on Thursday, as banking and healthcare majors traded ex-dividend, but the losses were limited by a surge in Rolls-Royce after it reported higher profit. The blue-chip FTSE 100 was down in the morning session and was set for its third straight day of declines.
U.S. Treasury Secretary Janet Yellen said on Thursday the United States would resume discussions with China on economic issues "at an appropriate time" but is continuing to warn Beijing of the consequences of violating U.S. sanctions on Russia.
At a news conference ahead of a G20 financial leaders meeting in Bengaluru, Yellen said communication between the United States and China was important for "the sake of the entire globe."
Some engagements between Washington and Beijing have been suspended following the downing of a suspected Chinese surveillance balloon that floated over the continental United States, leaving the timing of previously planned visits to China by Yellen and Secretary of State Antony Blinken unclear.
Yellen said she did not have any details on timing of her visit focused on economic and financial issues, but said: "I believe we will resume at an appropriate time those discussions." (Reuters)
India’s banks and bondholders stand to recover less in insolvency resolutions under a proposed change in law that would apportion more to junior creditors, such as unpaid vendors and the government, according to restructuring and insolvency professionals.
The Indian government seeks to achieve an “equitable scheme of distribution of proceeds," it said in a discussion paper issued in January that recommends other significant changes to the Insolvency and Bankruptcy Code. But secured creditors, who are generally paid out before those with unsecured claims, may be less amenable to the IBC if those changes are ultimately put into effect, insolvency professionals said. (Read More)
Byju’s, which grappled with mounting losses after the pandemic-era boom in online tutoring petered out, is planning to shut down one of its acquisitions, coding platform WhiteHat Jr as part of its cost-cutting measures, according to media reports.
The move comes amid a global tech rout that's prompted layoffs in the thousands, depressed global investment activity and shaved billions off the valuations of once high-flying tech startups. (Read More)
Sonata Software North America Inc, a wholly-owned subsidiary of Sonata Software Ltd, has agreed to acquire Texas-based IT services company, Quant Systems Inc.
Sonata Software will make an upfront cash payment of $65 million, and up to $95 million over the next two years. There will additional payments on achievement of specified targets. The acquisition is expected to be completed within the next 30 days.
The Reserve Bank of India monetary policy committee (MPC) met during February 6-8, 2023 in which it increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.50%.
The MPC members voted on the resolution to increase the policy repo rate to 6.50% in a ratio of 4:2. “Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted to increase the policy repo rate by 25 basis points. Dr. Ashima Goyal and Prof. Jayanth R. Varma voted against the repo rate hike," said the RBI statement. (Read More)
Sri Lanka on Thursday announced that it has approved $442 million wind power project by Adani group's Adani Green Energy. This the first major foreign investment by cash strapped country.
Sri Lanka's Board of Investment said Adani Green Energy, part of the business empire of led by Gautam Adani, will set up two wind farms in the island's north, reported AFP.
"The total investment will reach $442 million and the two plants will be supplying power to the national grid by 2025", the BOI said in a statement. (Read More)
India's exports may see tepid growth this year as the country's major export markets are forecast to decline sharply in 2023, the government said.
Growth of global trade fell in 2022, "and is expected to be still lower in 2023 with a further decline in volume and value of trade on the back of slowing global output," India's Ministry of Finance said in monthly economic report.
High frequency indicators suggest monetary tightening has started weakening global demand, the report said.
"This may continue in 2023 as various agencies have forecasted a decline in global growth," it added.
Besides monetary tightening, uncertainties from the lingering pandemic and ongoing conflict in Europe may further dampen global growth, said the monthly economic report released on Thursday.
While inflation risks look set to diminish in 2023/24, geopolitical tensions and consequent supply chain disruptions may not, it added. (Reuters)
The National Stock Exchange of India has received final approval from the Securities and Exchange Board of India (Sebi) to launch Social Stock Exchange (SSE) as a separate segment of the NSE.
The exchange had earlier received in-principle approval from Sebi to launch the SSE platform and was awaiting the final nod.
The SSE segment will provide new avenue for social enterprises to finance social initiatives, provide them visibility and bring in increased transparency in fund mobilisation and utilisation by social enterprises. Any social enterprise, Non-Profit Organization (NPOs) or For-Profit Social Enterprises (FPEs), that establishes its primacy of social intent can get registered / listed on SSE segment, NSE said in a statement. (Read More)
India Inc is expected to roll out a 10.3% salary hike for its workforce amid market volatility and a recessionary wave. High attrition rates at 21.4% , changing talent strategies and gap in supply chain demand are pushing companies to offer double-digit hikes.
"Rising economic uncertainty and concerns over economic volatility are making salary increase planning especially difficult this year. India Inc. has awarded aggressive salary increases over the last two years, which has some companies grappling with higher wage bills," said Roopank Chaudhary, partner, Human Capital Solutions, India at Aon. (Read More)
The National Stock Exchange or NSE on Thursday restricted members and authorised persons from using names such as advisor, mutual funds, mutual fund services, capital manager, fund advisor, and asset/wealth/portfolio management among others.
The Mumbai-based stock exchange said it creates a wrong impression among investors.
"The name of Trading Member/Authorized Person should reflect the registration held by the entity and should not in any way create an impression of performing a role for which the entity is not registered," the circular read. (Read More)
S Ranganathan, Head of Research at LKP Securities: With the modernisation of our Airport Infrastructure across the country, we are witnessing a value migration in the Aviation Sector as India Today has emerged as the largest buyer of Aircrafts globally and in a capital intensive tough business like Aviation, the profit pool going forward could indeed consolidate in the hands of a few players.
Indian industrialists Mukesh Ambani and Gautam Adani have been the biggest losers in terms of wealth in the world's richest list in 2023 so far. As per the data by the Bloomberg Billionaires Index, Adani has witnessed his wealth eroded by over $78 billion in year-to-date (YTD) terms whereas Ambani's net wealth has declined by more than $5 billion, with their combined loss of over $83 billion.
Earlier this month, Ambani surpassed Adani to take over as the richest Indian in the world. As per the index, Mukesh Ambani's net worth stands at $81.5 billion with the 12th spot in the world's top billionaires list, as of 23 February 2023. Meanwhile, another Indian Gautam Adani's wealth stands at $42.7 billion, who has slipped to the 29th spot in the index, falling from the ranks of the world's second richest last year. (Read More)
IT, FMCG and Metal stay strong, while Media and Realty tumble
The two-wheeler industry is witnessing a sequential uptick in demand after a severe downturn over the past few years. In the entry-level segment, enquiries in February are being led by wedding-related demands, show channel checks conducted by JM Financial Institutional Securities.
Though there has been a pick-up in demand, the pace of growth has been varied across segments indicating the premiumization trend. “Demand trends are relatively better in the urban region," said the JM Financial report. Also, scooters performed relatively better than motorcycles, they added. (Read More)
Low-cost carrier SpiceJet Ltd is likely to sell 5% stake in the airline to its largest lessor US-based Carlyle Aviation Partners, people aware of the development said.
The airline had been in discussions with strategic investors since last year for a stake sale to bring in funds, two people said on the condition of anonymity.
Under the proposed deal, Carlyle is expected to convert over $100 million of outstanding dues into equity in SpiceJet and compulsorily convertible debentures (CCDs) in the cargo arm SpiceXpress, Mint has learnt. (Read More)
ResGen, a sustainable solution provider for plastic waste company, is all set to launch its initial public offering (IPO). The IPO is set to open on 28 February, 2023 and the three-day initial share sale is scheduled to conclude on March 2, 2023. The shares of the company are expected to list on BSE SME.
ResGen IPO is priced at ₹45 – 47 per share based on a face value (FV) of ₹10, with an issue size of ₹28.20 crore. It is entirely a fresh issue. The SME platform of the exchanges is intended for small and medium-sized companies. (Read More)
Intel Corp on Wednesday cut its dividend payout to its lowest in 16 years and decided to scale back big investments to save cash amid slowing demand for its chips used in personal computers and data centers.
Once a leading chipmaker, Intel is now racing to catch up with rivals such as Taiwan Semiconductor Manufacturing Company Ltd on manufacturing technology, while looking to grow its foundry business at the cost of lower margins. (Read More)
Zee Entertainment on Thursday was down by nearly 7 per cent after NCLT admits insolvency plea filed by IndusInd Bank against the company.
The shares of the company were down by 7.58 per cent to ₹190.30 on BSE at the time of writing the story.
The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday admitted an insolvency petition media company Zee Entertainment Enterprises Ltd (ZEE) filed by its financial creditor IndusInd Bank, under Section 7 of the Insolvency and Bankruptcy Code (IBC).
Hong Kong stocks rose on Thursday as investors weighed policy support from both Hong Kong's Financial Secretary Paul Chan and Chinese Premier Li Keqiang, bolstering recovery expectations.
** China's blue-chip CSI300 Index and the Shanghai Composite Index were little changed by the lunch break.
** Meanwhile, Hong Kong's Hang Seng benchmark rose 0.5%, and the Hang Seng Tech Index jumped 2.1%.
** Hong Kong's Financial Secretary Paul Chan on Wednesday unveiled policies aimed at reviving the COVID-hit economy. (Reuters)
The rupee gained 11 paise to 82.77 against the US dollar in early trade on Thursday as the American currency retreated from its elevated levels.
At the interbank foreign exchange, the domestic unit opened at 82.78 against the dollar and marginally rose to 82.77, registering a rise of 11 paise over its previous close.
On Wednesday, the rupee closed at 82.88 against the US currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.23 per cent to 104.34.
Brent crude futures, the global oil benchmark, advanced 0.48 per cent to USD 80.99 per barrel.
"US Federal Reserve officials in their most recent Federal Open Market Committee (FOMC) meeting on February 1 indicated that there are signs inflation is coming down but not enough to counter the need for more interest rate hikes," Mitul Shah, Head of Research – Institutional Desk at Reliance Securities, said. (PTI)
Tata Motors is reportedly planning to raise $1 billion to strengthen its electric vehicle business in the country. According to a report by Reuters, citing Economic Times, the automaker has begun to talk with sovereign wealth funds and private equity investors to raise funds via stake sale.
The funds and investors include the UAE-based Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company, the Saudi Arabia-headquartered Public Investment Fund, Singapore's Temasek Holdings, and KKR and General Atlantic. (Read More)
Indian companies are likely to replace their dollar-denominated debt with local bonds or bank loans in the near term, as conditions in the onshore markets turn favourable, the managing director and head of debt capital markets with HSBC India said.
Rupee loans from Indian banks are cheaper by 100-150 basis points (bps), prompting companies to look for local credit to replace overseas debt coming due.
"For an Indian corporate with access to both the domestic and international bond markets, cost of borrowing from the international bond market has gone up by 275-375 bps in dollar terms but has gone up by only 150 bps in the onshore bond market," HSBC's Vinod Venkatesh told Reuters in an interview.
"The economics are therefore more in favour of borrowing from the onshore bond markets rather than the offshore markets." (Reuters)
Tesla CEO Elon Musk has announced that he would establish the global engineering headquarters of the posh car in California.
During an event with California Governor Gavin Newsom, Musk said, " This is I think the poetic transition from the company that founded Silicon Valley to Tesla".
He said California should still be cautious about taxes and regulations. (Read More)
“India as a whole gives me hope for the future," Microsoft co-founder BIll Gates has said while mentioning that the country has managed to “tackle big challenges". Gates has praised India for eliminating polio, reducing HIV transmission, lowering infant mortality, reducing poverty and improving access to financial and sanitation facilities.
The commentary on India, which is about to surpass China as the world’s most populous country, comes from the Bill & Melinda Gates Foundation co-chair through his blog "Gates Notes". (Read More)
India's equity market will rise less this year than thought a few months ago mainly due to expectations of higher interest rates, according to equity strategists polled by Reuters, who also said the chances of a correction in the near-term were low.
Against a better economic growth outlook for this year and next compared to many major rivals, the benchmark BSE Sensex Index gained over 4% in 2022, making it one of the best performers among peers that mostly saw double-digit losses. (Read More)
Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services: The market which has been trading within the range of 17750 -18150 has taken a turn for the worse by breaking the lower band decisively. Yesterday’s sharp cut of 927 points on the Sensex was caused by a combination of factors: weak US cues, the continuing rout in Adani stocks and concerns of the Adani crisis impacting the banking system. The US/global factor stems from concerns that the Fed will have to raise interest rates perhaps by 25bp thrice to weaken the economy and contain inflation. FOMC minutes reveal the fact that some have even argued for a 50 bp rate hike. This is the biggest near-term negative for equity markets globally. The situation can change if the disinflation trend in the US accelerates. The fact that Bank Nifty is down by 7% this year indicates the fears of the market regarding the impact of the Adani crisis on the banking system and also the concerns that the margins of the banks will be impacted by the rising deposit rates. Investors may wait for the current turbulence to settle before taking a view. Of course, for long-term investors, corrections are opportunities to slowly accumulate high-quality stocks. Stocks remaining firm amidst the sharp correction like Bajaj Auto, ITC and Divi’s Labs indicate buying interest.
STOCK IN FOCUS
Indus Towers (CMP 165): In view of better business prospects, likely increase in infra spend by telecom operators, bigger opportunity from 5G roll out and attractive dividend yield of ~5-6%, we have BUY on Indus Towers with a Target Price of Rs175, valuing the stock at a P/E multiple of 8.5x FY25E earnings.
Intraday Picks
BERGEPAINT (PREVIOUS CLOSE: 566) BUY
For today’s trade, long position can be initiated in the range of ₹560-
563 for the target of Rs. 579 with a strict stop loss of ₹550.
GAIL (PREVIOUS CLOSE: 95) BUY
For today’s trade, long position can be initiated in the range of ₹94-95
for the target of Rs.98 with a strict stop loss of ₹93.
TCS (PREVIOUS CLOSE: 3431) SELL
For today’s trade, short position can be initiated in the range of ₹3470-
3500 for the target of Rs. 3380 with a strict stop loss of ₹3550.
On account of the strong US dollar, US Fed officials' hawkish stance on interest rate hikes and renewed fear of US inflation, global market sentiments continued to remain negative for the fourth straight session on Wednesday. The dollar index gained further strength after regaining 104 levels and put gold prices under pressure. Signalling a relief rally in early morning deals on Thursday, SGX Nifty today opened higher and made a high of 17,634 as the US bond yield and dollar index witnessed some profit booking in the early morning session on Thursday.
Here we list out the top factors that may dictate the stock market today: (See the list)
Tata Steel on Wednesday announced that it has acquired shares amounting to ₹300 crore in Neelachal Ispat Nigam Ltd, which is an indirect subsidiary of the company.
Tata Steel on February 21, 2023, has subscribed to 4,68,75,000 equity shares of Rs10 each at a premium of ₹54 per share, amounting to ₹300 crore, which is the Tranche 1 investment by it in Neelachal Ispat Nigam Ltd.
“On February 21, 2023, the Company has acquired 4,68,75,000 equity shares of face value of ₹10 each at a premium of ₹54 per share of NINL for an aggregate value of ₹300 crore, being Tranche 1 of the investment in the equity shares of NINL.," said the company in its regulatory filing. (Read More)
Sanofi India, KSB, and Mideast Integrated Steels will be among the stocks in focus as they will declare their December quarter earnings today. (Read More)
Only one stock has been put under the ban for trade on Thursday, February 23, 2023 under the futures and options (F&O) segment by the National Stock Exchange (NSE). The counter has been put on ban under the F&O segment as it has crossed 95% of the market-wide position limit (MWPL), as per the NSE.
Debt-ridden telecom operator Vodafone Idea (Vi) stock continues to be the one that remains the part of the F&O ban list ban by the stock exchange for today. The NSE updates the list of securities in F&O ban for trade every day.
Members of the Reserve Bank of India’s monetary policy committee (MPC) agreed to raise the repo rate by 25 basis points in February as it felt a pause would be premature in its fight against runaway prices, showed minutes of the meeting published on Wednesday.
Inflation measured by the consumer price index (CPI) has moderated primarily due to lower vegetable prices, governor Shaktikanta Das said, adding that core inflation—CPI excluding food and fuel—is, however, elevated and sticky at around 6%. (Read More)
Orient Cement, part of CK Birla group, on Wednesday said that a non-binding memorandum of understanding (MoU) with Adani Power Maharashtra Limited (APML) for exploring the possibility of establishing a cement grinding unit (CGU) at Tiroda, in Maharashtra, stands cancelled.
Orient Cement said, “APML has requested the Company not to pursue this venture further as they are not able to obtain the required MIDC clearances for sub-leasing the parcel of land required for the CGU, due to some legal issues." Also, the timelines as agreed upon as per MoU have crossed, said Orient cement in its filing to the exchanges. (Read More)
The UK has surpassed India as the world’s sixth-largest equity market for the first time in almost nine months as a weaker pound boosted the appeal of heavyweight exporters trading in London and Adani Group-led jitters weighed on stocks in Mumbai.
The combined market capitalization of primary listings in the UK, excluding ETFs and ADRs, reached about $3.11 trillion on Tuesday, some $5.1 billion higher than their Indian equivalents, according to data compiled by Bloomberg. That hasn’t happened since May 29. (Read More)
Extolling the virtues and the indispensability of artificial intelligence (AI)-based applications, the Comptroller and Auditor General of India (CAG) on Wednesday said that the "most significant risk associated with AI implementation in the public sector is the potential for bias."
Addressing a seminar themed "AI and Data Analytics" on Wednesday, the national auditor Girish Chandra Murmu said in his address: "AI technologies while being exciting also bring a certain degree of risk with them. The most significant risk associated with AI implementation in the public sector is the potential for bias."
He said, AI algorithms learn and improve themselves through identifying pattern in training data and the entire algorithm would be vulnerable to similar bias. "Another risk of AI implementation in the public sector is privacy concerns for the individuals." (ANI)
The rupee depreciated by 9 paise to settle at 82.88 against the US dollar on Wednesday, as intense selling pressure in domestic equities and a strong greenback overseas dented the sentiment.
However, a sharp decline in crude oil prices in the international market restricted the rupee's fall, forex traders said.
At the interbank foreign exchange market, the rupee opened flat at 82.79, and it moved in a tight range of 82.89 to 82.79 during the session.
It finally closed at 82.88 against the US dollar, registering a fall of 9 paise over its previous close of 82.79.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12 per cent higher at 104.23 ahead of the release of the Federal Open Market Committee meeting minutes later in the day. (PTI)
Vaishali Parekh of Prabhudas Lilladher has recommended three buy or sell stocks for today's session, here we list out full details in regard to those intraday stocks:
1] VIP Industries: Buy at ₹665, target ₹688, stop loss ₹656;
2] Persistent Systems: Buy at ₹5039, target ₹5170, stop loss ₹4960; and
3] IPCA Lab: Buy at ₹820, target ₹855, stop loss ₹807. (Read More)
Federal Reserve officials continued to anticipate further increases in borrowing costs would be necessary to bring inflation down to their 2% target when they met earlier this month, though almost all supported a step down in the pace of hikes.
“Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time," according to the minutes of the Jan. 31-Feb. 1 gathering released in Washington on Wednesday. (Read More)
The Adani Group stocks got an eye-opening jolt on Wednesday that saw destruction of ₹51,294.04 crore of investor wealth. All the Adani Group's 10 listed firms have together lost ₹11,62,030.29 crore in market valuation as selling pressure intensified.
Post the release of US-based short seller Hindenburg's bombshell report on 24 January, the shares of Adani Group shares have lost 60% of their value.
Adani Group's flagship Adani Enterprises Ltd was one of the major losers on the Nifty. Shares of the ports-to-power conglomerate's flagship entity closed 11.05 per cent lower at ₹1,397.50 apiece on the NSE. (Read More)
Stocks stalled in mixed trading on Wednesday, a day after falling to their worst loss since December, as Wall Street prepares for interest rates to stay higher for longer.
The S&P 500 dipped 0.2% after drifting between small gains and losses throughout the day. The Dow Jones Industrial Average slipped 84 points, or 0.3%, while the Nasdaq composite edged up by 0.1%.
After leaping at the start of the year, stocks hit a wall in February on worries that inflation may not be cooling as quickly or as smoothly as hoped. That has Wall Street upping its forecasts for how high the Federal Reserve will take interest rates, as well as for how long it will keep them at that level.
High rates can help drive down inflation, but they raise the risk of a recession because they slow the economy. They also hurt investment prices.
That recalibration by Wall Street, which earlier was betting that easing inflation would soon get the Fed to take it easier on interest rates, has caused yields in the Treasury market to shoot higher this month.
The yield on the 10-year Treasury is near its highest level since November. It pulled back a bit from its surge on Tuesday, dipping to 3.92% from 3.95%. That helped take some pressure off stocks on Wednesday. (AP)
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