PremiumAdani Group companies plunged up to 20% and hit their lower circuits in the wake of a short-seller attack on the conglomerate, which also dragged down financials.
Indian banks' exposure to the Adani Group is within manageable limits, said brokerage houses CLSA and Jefferies, as the group fend off an attack from well-known short-seller Hindenburg Research, as per a report by Reuters.
The U.S. short-seller said it held short positions in the Indian conglomerate, accusing it of improper use of offshore tax havens and flagging concerns about high debt that eroded $11 billion in investor wealth on Wednesday.
"While we watch for developments here, we don't see material risk arising to the Indian banking sector," brokerage firm Jefferies said in a note dated Jan. 26.
According to the brokerage, the group's debt accounts for 0.5% of total loans across the Indian banking sector. For public sector banks (PSU), the debt is at 0.7% of total loans and for private banks, it is at 0.3%.
European shares were muted on Friday as investors refrained from placing aggressive bets ahead of a slew of central bank meetings next week, while luxury goods makers slid after weak earnings from sector bellwether LVMH.
The pan-European STOXX 600 was flat as losses in retail and healthcare stocks offset gains in the energy sector.
Shares of LVMH fell 1.1% as some analysts expressed an element of disappointment over the company's margins, which took some of the shine off its fourth-quarter figures.
Reliance Jio added net 1.43m mobile users in November: Trai
Bharti Airtel added net 1.06m mobile users in November: Trai
Vodafone Idea lost 1.383m mobile users in November: Trai
India’s market regulator has increased scrutiny of deals by the Adani Group over the past year and will study a report issued by short-seller Hindenburg Research to add to its own ongoing preliminary investigation into the group’s foreign portfolio investors, according to two sources aware of the matter.
On Wednesday, the U.S. short-seller said it held short positions in the Indian conglomerate, accusing it of improper use of offshore tax havens and flagging concerns about high debt, leading to a massive sell-off of India-listed shares of the conglomerate's companies.
“SEBI has been increasingly examining all the transactions that Adani Group has been undertaking in the listed space," said the first of the two sources, who declined to be identified as the matter is confidential. SEBI has been increasingly asking for disclosures that it ordinarily does not.
We cut our FY24E/25E EBITDA by 6%/3% to factor in lower US sales given recent OAI status to its Indrad unit along with higher interest cost. Torrent Pharma’s (TRP) 3QFY23 EBITDA was largely in line, however PAT was below our estimate led by forex loss and higher interest cost. TRP has ₹70bn (75% of total sales) worth of highly profitable branded formulation sales spread across India, Brazil and RoW markets. In the near term, Curatio acquisition will increase the company’s net debt and we see this acquisition as EPS dilutive. Also historically TRP has successfully managed to integrate Unichem and Elder acquisition which gives us comfort. We expect 17% EBITDA CAGR over FY23-25E. Maintain‘ BUY’ rating at TP of ₹1,820/share, 17x EV/EBITDA to Dec 2024E.
The index started the session on a subdued note and gradually inched southward as intraday pullbacks were sold into. The downward momentum accelerated on the breach of past five session’s low of 18016. The daily price action formed a sizable bear candle carrying a lower high-low formation, indicating a corrective bias. As a result, the index approached 80% retracement level of last week’s up move (17761-18183)
The index has been consolidating in the broader range of 18300-17800 over past five weeks. Going ahead, prolonged consolidation with stock specific action would prevail amid progression of earning season. Only a decisive close below lower band of consolidation (placed at 17800) would lead to extended correction towards 17500. Else pullback option towards 18300 would remain open. In the process, volatility would remain high ahead of the Union Budget coupled with US Fed meet outcome. Our constructive stance is based on following observations:
- Dollar index has been sustaining below 102 and continued to form a lower high-low on the weekly chart. Hence, it confirms inherent weakness. Historically, a weak dollar leads to higher foreign inflows and positive for Indian equities structurally
- Dollar/rupee pair has been trading below the year long trend line breakdown area, signalling end of upward momentum for dollar and further appreciation for rupee in coming weeks
- India VIX trading below 15 levels for a fifth week in a row, indicating low risk perception by market participants
Bajaj Auto on Wednesday reported a 3% year-on-year (YoY) rise in its December quarter consolidated net profit to ₹1,473 crore, aided by robust sales in the domestic market.
Revenue from operations rose to ₹9,319 crore during October-December from ₹9,022 crore in the year-ago period.
The company said its total sales across domestic and export markets stood at 9,83,276 units in the third quarter compared with 11,81,361 units in the same period last fiscal.
In 3QFY23, Tata Motors’ (TTMT) consolidated revenue surprised at ₹885bn (+11% QoQ) led by better-than-expected average realizations at JLR (+9% QoQ) and CV business (+11% QoQ). Product mix at JLR improved sequentially driven by increase in mix of Defender, New Range Rover (RR) and RR Sport.
We maintain positive stance on TTMT as (1) Volume ramp-up at JLR is expected to help revenues, profitability and drive FCF generation aided by strong order book. Domestic traction looks good led by 1) CV segment benefits from ongoing upcycle, operating leverage and tailwinds from lower commodity costs & discounting and (3) Strong momentum in market share in PV segment (14.1% vs 6.9% in FY19) led by revamped portfolio, customer preference for SUVs and rising EV penetration.
Adani Group's listed companies fell on Friday, adding to losses from Wednesday when New York-based Hindenburg Research flagged concerns in a report about debt levels and the use of tax havens at the conglomerate.
Adani Transmission Ltd tumbled 19.2% and Adani Total Gas sank 19.1% in their biggest daily drop since mid-March 2020, while Adani Green Energy sank 15.8%.
Billionaire Gautam Adani's flagship Adani Enterprises Ltd will kick off a record ₹20,000 crore secondary share sale for retail investors on Friday.
This follow on public offer comes days after New York-based Hindenburg Research flagged concerns in a report about debt levels and the use of tax havens at the conglomerate.
Adani Group has dismissed the report as baseless.
Tata Motors Ltd widely surpassed Street expectations as the parent of Jaguar Land Rover (JLR) swung to its first quarterly net profit in two years.
The Mumbai-based automaker posted a consolidated net profit of ₹2,597.71 crore in the three months ended 31 December, compared with a loss of ₹1,516.14 crore a year earlier. Analysts polled by Bloomberg had estimated the company to deliver a ₹1,060 crore net profit during the quarter.
The homegrown passenger and commercial vehicle maker last made a net profit in the third quarter of fiscal year 2021. (Read here)
Air India will on Friday seal half of an order worth billions of dollars for some 495 jets with Boeing and engine suppliers General Electric and CFM International, Reuters reported citing two industry sources, as its new owner seeks to revive the airline and compete with much larger rivals.
After months of closely-guarded, tough negotiations, Air India is set to place an order for 190 Boeing 737 MAX narrowbody planes as well as some 20 Boeing 787s and 10 Boeing 777X on a day marking one year since Tata Group took control of the former state-run carrier.
STOCK IN FOCUS
Hero MotoCorp (CMP 2,785)
In view of likely rural revival, focus on premium segment, HMCL’s market leadership position to capitalize on the demand recovery and attractive valuation, we have BUY rating on HMCL with a 1-Year Target Price of Rs3,000.
Intraday Picks
BHARTIARTL (PREVIOUS CLOSE: 777) BUY
For today’s trade, long position can be initiated in the range of Rs768- 773 for the target of Rs790 with a strict stop loss of Rs758.
ONGC (PREVIOUS CLOSE: 152) BUY
For today’s trade, long position can be initiated in the range of Rs149-151 for the target of Rs156 with a strict stop loss of Rs147.
HCLTECH (PREVIOUS CLOSE: 1,123) SELL
For today’s trade, short position can be initiated in the range of Rs1130- 1135 for the target of Rs1104 with a strict stop loss of Rs1145.
Oil prices edged marginally higher on Friday, extending gains for a second session on strong U.S. economic data and strengthening hope that the reopening of the Chinese economy would boost demand.
Brent futures gained 30 cents, or 0.3%, to $87.66 a barrel, while U.S. crude rose 21 cents to $81.22 per barrel.
Both benchmarks had gained more than 1% on Thursday. Brent was on track to post its second weekly rise if gains held.
Improving gross domestic product and inflation data in the United States provided hope that the U.S. Federal Reserve could slow its pace of interest rate hikes, reducing fear of curtailment in economic activity and consequent oil demand.
Tata Sons Ltd may invest $1.5-1.8 billion in the proposed airline behemoth created by the merger of Air India and Vistara, two people aware of the development said.
On 29 November, Singapore Airlines and Tata Sons said they plan to merge Air India and Vistara, with Singapore Airlines holding 25.1% of the merged entity. The merger is expected to be completed by March next year. (Full story here)
Adani Enterprises, Bajaj Finance, Maruti Suzuki, Tata Motors are among the key stocks likely to be in focus in today's trade.
Bajaj Finance, Vedanta, Aarti Drugs, Aditya Birla Sun Life AMC, CMS Info Systems, Glenmark Life Sciences, Godfrey Phillips India, Sterlite Technologies, Zenotech Laboratories, and AIA Engineering are scheduled to announce their earnings today.
Nifty futures on the Singapore Exchange traded 71.50 points higher at 18,025.00, indicating a positive start for Indian indices.
On Wednesday, the Sensex tanked 774 points to 60,205, while the broader Nifty fell 226 points to 17,892.
Stocks in Asia are set to follow US equities higher Friday after a rally in tech shares helped investors shake off mixed economic data that suggested a path to a soft landing, but the risk of recession persists.
Equities rose in Japan, South Korea and Australia, where trading resumed after Thursday’s holiday. Futures for Hong Kong also gained. India’s equity market also reopens after a holiday break, while mainland China remains closed for the Lunar New Year holiday.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.53% to almost nine-month highs of 561.99. The index, which fell nearly 20% last year, is up about 11% in the month and is on course for its best ever January performance. Japan's Nikkei rose 0.20%.
Hong Kong's Hang Seng Index opened 0.2% higher after surging more than 2% on Thursday.
Wall Street ended a choppy session higher on Thursday as investors grappled with an onslaught of economic data and a string of mixed corporate earnings, all while eyeing the clock as it ticks down toward next week's Federal Reserve monetary policy meeting.
The S&P 500 closed at the highest level in more than a month, reflecting a jump in tech stocks. The Nasdaq 100 rose 2% to the highest level since September, led by an 11% gain for Tesla Inc. as Elon Musk teased potential for the carmaker to produce 2 million vehicles this year.
In commodities, oil was set to end the week little changed as concerns of an economic slowdown were tempered by optimism over Chinese demand. Gold was steady.
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