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Asian share markets are trading on a mixed note today amid a mood of caution as traders evaluated spiking coronavirus cases and a weekend pledge of greater economic support from China's central bank.

The Hang Seng and the Shanghai Composite are trading up by 0.1% and 0.2%, respectively. The Nikkei is trading down by 0.3%.

US stock markets were closed on Friday in observance of Christmas.

On Thursday, Wall Street indices closed higher in a holiday-shortened week as investors digested economic data and developments related to the Omicron variant's spread.

The Dow Jones Industrial Average rose 197 points, or 0.6%, while the S&P 500 gained 29 points, or 0.6% and the Nasdaq Composite added 132 points, or 0.9%.

Back home, Indian share markets opened deep in the red today. Markets have recovered some losses but are still trading in negative territory.

Sentiment was dampened as several states such as Delhi, Karnataka, Maharashtra enforce new restrictions in view of rising Covid-19 cases.

Meanwhile, HP Adhesives, the adhesive and sealant company, made a decent Dalal Street debut today. The company raised 1.25 bn via its primary offering between 15-17 December as the company sold its share in the range of 262-274 apiece.

The BSE Sensex is trading down by 206 points. Meanwhile, the NSE Nifty is trading lower by 63 points.

Power Grid is among the top gainers today. IndusInd Bank and Asian Paints, on the other hand, are among the top losers today.

The BSE Mid Cap index is down 0.4%. The BSE Small Cap index is trading on a flat note.

Sectoral indices are trading mixed with stocks in the realty sector, metal sector and banking sector witnessing most of the selling.

Financial stocks are in focus today after the RBI accepted the recommendation of an internal working group to allow non-promoters to hold up to 15% in private sector banks.

Shares of La Opala RG and KPIT Technologies hit their 52-week high today.

The rupee is trading at 75.08 against the US$.

Gold prices are trading up by 0.2% at 48,203 per 10 grams.

In global markets, gold inched higher today, staying above the key US$1,800 per-ounce level, as slightly weaker US Treasury yields offset an uptick in the dollar.

Crude oil prices are mixed today, with Brent edging up while US crude futures slipped after airlines called off thousands of flights in the US over Christmas holidays amid surging Covid-19 infections.

In news from the banking sector, RBL Bank is among the top buzzing stocks today.

Private lender RBL Bank held a press conference at 4:00 pm on 26 December, Sunday, a day after two significant developments took place at the bank.

The bank announced that the Reserve Bank of India (RBI) has appointed Yogesh Dayal, the chief general manager in charge of the department of communication, as an additional director on the board of RBL Bank.

Meanwhile, the bank also said its board has approved the request of its MD and CEO Vishwavir Ahuja to proceed on leave with immediate effect.

Vishwavir Ahuja joined RBL Bank in 2010. Prior to that, he was the MD and CEO of Bank of America, India from 2001 to 2009.

In the press conference, RBL Bank said its business fundamentals were intact with scope for tremendous improvement, a day after its top executive stepped down.

In recent months, reports had emerged that some employees of the bank sought the finance ministry's support to oversee operations as they believed regulatory frameworks were being ignored by the bank's top management.

Rajeev Ahuja, the company’s interim MD and CEO said that the MFI sector is likely to always face challenges, so the bank will have to be careful and diversify.

Here’s an excerpt:

Don’t anticipate the MFI book to impact our numbers going ahead. We are cautiously growing our MFI book in pockets and other engines of bank will pick up slack until MFI picks up. Don't see the need for any capital raising over the next 8-12 months.

Note that an industry trade union – the All India Bank Employees Association (AIBEA) has written to finance minister Nirmala Sitharaman asking the government to protect the interests of depositors at RBL Bank and consider merging it with a state-owned one.

Action for RBL Bank is important in light of the problems encountered by private lenders like Yes Bank and Lakshmi Vilas Bank last year.

RBL’s total advances have doubled in the last few years. From about 290 bn in 2017, advances have crossed 580 bn now, AIBEA said.

There are also reports that RBL Bank has been over indulging in retail credit, micro-financing and credit cards and consequently has burnt its finger resulting in weakening the financials, AIBEA added.

Shares of RBL Bank are presently trading down by 20%.

Moving on to news from the engineering sector, the board of Kabra Extrusion met on Saturday to discuss the raising of funds via debt and equity for the expansion of its future technologies brand Battrixx.

Battrixx, part of Kabra Extrusion, provides advanced lithium-ion battery packs with smart battery management systems to power the growth of India's transition to green energy storage and electric mobility.

The promoters and other investors have shown the confidence to infuse more capital in Battrixx, which will be used to further the growth of the brand in the Electric Mobility sector.

A total 1.1 bn will be raised initially through issuance of warrants to promotors and foreign investors. As per reports, these funds will enable Battrixx to enhance its annual production capacity in phases from existing 100,000 battery packs to 700,000 by end of fiscal 2024 to meet the growing demand in electric vehicles (EV) industry and other energy storage applications.

The company’s board also approved to raise necessary additional working capital up to 2 bn from financial institutions.

Anand Kabra, Vice Chairman & Managing Director, Kabra Extrusion, said:

We are upbeat about the business, especially what we are doing in the electric vehicle (EV) space. We have clear goals and will use the funds to enhance capacity, upgrade machinery and further research and development. We look forward to being part of the EV revolution.

Note that the lithium-ion battery market size in India is estimated to increase from 2.9 GWh in 2018 to 800 GWh by 2030. In India, the Central Government has approved Phase-ll of its FAME scheme with an outlay of 100 bn over three years starting 1 April 2019, with 86% of the budget allocated for incentives to create a demand for EVs.

We will keep you updated on the latest developments from this space. Stay tuned.

Kabra Extrusion share price is trading up by 7.9%.

Speaking of EVs, have a look at the chart below which shows the massive opportunity in the two-wheeler EVs.Here’s what lead Smallcap Analyst at Equitymaster, Richa Agarwal wrote about this in a recent edition of Profit Hunter:

In the last five years, two-wheeler sales in India were around 2 crore units per year. Now the sector is cyclical and has been in the downturn for some time. So let's consider a moderate 5% growth for the next 10 years.

By 2030, we are looking at 2-wheeler sales of 3 crore units. Even if one third of this is EV sales, that's 1 crore electric 2-wheelers per year.

In the last 2 years, average electric 2-wheeler sales were 1.5 lakh units. From 1.5 lakh to 1 crore, that's a 66x opportunity in 2-wheeler EVs.

Electrical two-wheeler volumes.
View Full Image
Electrical two-wheeler volumes.

This is an annual growth rate of 52% over next 10 years. It's an almost vertical growth opportunity.

As per Richa, this is like a gold rush. But like in any gold rush, the winners will just be a few.

(This article is syndicated from Equitymaster.com)

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