Indian share markets plunge amid weak global cues and a possibility of rate hikes by the Federal Reserve from March
Asian stock markets fell sharply today, tracking losses across Asia and Wall Street after Federal Reserve chief Jerome Powell confirmed the bank will lift interest rates in March.
The Nikkei plunged 2.9% while the Hang Seng fell 2.4%. The Shanghai Composite is trading lower by 0.9%.
In US stock markets, Wall Street indices retreated Wednesday, erasing strong gains, after the Federal Reserve signaled an interest rate hike could be coming soon.
The Fed indicated it is likely to raise US interest rates in March, as has been widely expected, and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings.
The Dow Jones fell 0.4% while the Nasdaq Composite ended on a flat note.
Back home, Indian share markets are trading on a negative note. In line with weak global cues, benchmark indices opened sharply lower today.
In intraday trade, the Sensex fell over 1,100 points while the Nifty dipped to 16,920 levels.
The added volatility comes as domestic investors reacted to the US Federal Reserve reaffirming its stance on a tighter monetary policy starting from March 2022.
Market participants are tracking shares of Indus Towers, PNB, Canara Bank Coforge, and Laurus Labs as these companies will declare their December quarter earnings today.
The BSE Sensex is trading down by 861 points. Meanwhile, the NSE Nifty plunged 248 points.
ONGC and Maruti are among the top gainers today. Titan and Tata Steel, on the other hand, are among the top losers today.
The BSE Mid Cap index is down 1.8% while the BSE Small Cap index fell 0.6%.
All sectoral indices are trading in red with stocks in the realty sector and IT sector witnessing most of the selling.
Shares of TV18 Broadcast and Maruti Suzuki hit their 52-week highs today.
The rupee is trading at 75.17 against the US$.
Gold prices are trading down by 1.2% at ₹48,273 per 10 grams.
Meanwhile, silver prices are trading down by 1.3% at ₹63,248 per kg.
Crude oil prices fell today as investors cashed in profits from the 2% gains in the previous session. Supply concerns stemming from tension between Russia and Ukraine saw prices touch highs not seen since 2014.
In latest developments from the IPO space, boAt, a Delhi-based consumer electronics brand, is likely to become the first Indian D2C brand to file for an initial public offering (IPO).
The D2C firm plans to file the DRHP with market regulator this week in order to raise around ₹20 bn through its IPO.
The IPO offer would include a primary issue of shares worth ₹10 bn and an offer for sale (OFS) worth the same amount. The audio-focused brand is likely to seek a valuation between US$1.5-2 bn in the IPO.
Warburg Pincus is expected to be among the key investors who would liquidate shares for ₹7-8 bn to shrink its stake below 25% as boAt prepares to go public as a professionally managed firm. Warburg Pincus currently owns about 36% of boAt.
Co-founders Aman Gupta and Sameer Mehta, who control around 56% of the company, are expected to offload a minor portion of their stake.
boAt was last valued at over ₹22 bn when it secured ₹500 m in funding from Qualcomm Ventures in April last year. The consumer electronics brand is now pushing for a valuation of about 5-6 times its revenue for this fiscal year, according to reports.
Ahead of the IPO, boAt’s parent company Imagine Marketing has turned to a public company.
boAt has emerged as a renowned domestic D2C brand that has undermined market leaders in the audio and wearables space. It manufactures earphones, speakers, headphones, True Wireless Stereo (TWS), soundbars, premium rugged cables, travel chargers, among other products.
The company had a spectacular year in fiscal 2021, with revenue exceeding ₹15 bn while its profit jumped 61% to ₹786 m.
Moving on to news from the energy space, Bharat Petroleum Corporation (BPCL) will invest ₹100 bn over the next five years in setting up city gas distribution networks in the cities for which it secured licenses in the latest bidding round.
BPCL recently won licenses to retail CNG to automobiles and piped natural gas for cooking purposes in six geographical areas or GAs bid out in the latest 11th bidding round of Petroleum and Natural Gas Regulatory (PNGRB).
With this, the commercial gas distribution (CGD) footprints of BPCL, along with its JVs, will extend to 48 GAs covering 94 districts in 18 states across India. Currently, with presence in 63 districts, BPCL along with its JVs together hold 33% market share in the CGD sector in the country.
Of the 61 GAs that received bids, Megha Engineering and Infrastructures got 15 licences, Adani Total Gas got 14 and state-owned Indian Oil Corporation (IOC) high potential 9 GAs.
Note that the government wants to more than double the share of natural gas use, raising its share in the primary energy basket of the country from 6.2% at present to 15% by 2030.
BPCL, where the government is selling its entire near 53% shareholding, entered into gas business through Indraprastha Gas - the joint venture firm with GAIL for city gas operations in the national capital.
BPCL share price is currently trading down by 1.3%.
Speaking of PSUs, have a look at the chart below which shows the performance of BSE PSU index compared to BSE Sensex over the past few years.
As can be seen from the chart above, over the last decade, ₹100 invested in BSE PSU index would have eroded to ₹80, compared to almost 3x gains for the Sensex.
Here's what Richa Agarwal, lead Smallcap Analyst at Equitymaster, wrote about PSU stocks in one of the edition of Profit Hunter:
However, it will be folly to paint all PSUs with the same brush. There are some exceptions in this space, which put their private peers to shame.
In an editorial, I shared an opportunity in a PSU stock that is riding and enabling an irreversible megatrend - digitisation.