PremiumShare Market Close: Indian stock market crashed on Wednesday amid weak global market trends and continuous foreign fund outflows. Sensex and Nifty shed around a per cent each. Metal stocks come under pressure, with almost all sectors trading lower on Wednesday.
The negative sentiment is attributable to US rating downgrade and profit booking by investors on fears of high stock valuations, something flagged by analysts, and mixed global economic data.
India’s overall unemployment rate fell in July as rural areas saw increased demand for agriculture labour with the onset of monsoon rains. The total joblessness rate fell to 7.95% in July, from 8.45% in June, according to data released by private forecaster Centre for Monitoring Indian Economy.
Indian stock indices ended sharply lower on Wednesday tracking weak cues from overnight US markets. US sovereign credit triggered riskoff trades across the board with Sensex and Nifty ending more than a per cent down from their previous day's closing.
Sensex shed 676 points to close at 65,78s, while the broader Nifty 50 closed at 19,526, 102 points lower.
All Nifty sectoral indices ended in the red, with Nifty auto, Nifty metal, Nifty PSU bank, and Nifty private bank declining the most.
Coming to specific stocks, NTPC, Hero Motocorp, Tata Steel, Tata Motors, and BPCL were the top five losers among the Nifty 50 group, while Divis Labs, Nestle India, Hindustan Unilever, Asian Paints, and HDFC Life were among the top gainers.
Asia stocks fell as Fitch Ratings’ downgrade of the US sovereign rating soured risk sentiment following a strong recent run, while further support measures from China failed to reverse the mood.
Tokyo's Nikkei index ended more than 2% lower after reports emerging that a price-fixing scandal at Japan’s biggest casualty insurers is escalating where the suspected collusion is likely to be wider than initially believed.
China and Hong Kong stocks pulled back after a recent rally that was spurred by stimulus hopes as some investors booked profits in the absence of concrete and forceful measures by Beijing to shore up a flagging economy.
China's bluechip CSI300 Index fell 0.7%, while the Shanghai Composite Index lost 0.9%. Hong Kong's Hang Seng Index declined 2.5% in its worst day in nearly four weeks.
European stocks slumped as Fitch’s downgrade of the US sovereign credit triggered riskoff trades across the board, while earnings reports did little to offset the negative sentiment.
UK's FTSE 100 fell over 1% as global risk sentiment took a hit after ratings agency Fitch cut the United States' credit rating, while BAE Systems' shares jumped after the defence company raised its full-year guidance.
Tata Power Renewable Energy Limited (TPREL), a subsidiary of Tata Power, on Wednesday signed two power purchase agreements (PPAs) with Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) for commissioning two solar power projects.
These 200 MW and 150 MW projects will play a crucial role in fulfilling the state’s renewable energy targets, the company said in a statement, adding that these initiatives also mark a significant milestone in the country’s efforts to accelerate renewable energy adoption and combat climate change. (Read More)
Brookfield India Real Estate Trust on 2 August announced that it has completed raising over ₹2,300 crore through Qualified Institutional Placement (QIP) of Units.
The firm further noted that the proceeds from the placement will be directed toward financing the announced acquisition of two large commercial assets from Brookfield Asset Management’s private real estate funds, it said in a stock regulatory filing.
Indian Overseas Bank, a public sector bank based in Chennai, reported a notable 28.4% increase in its net profit, reaching ₹500.35 crore in the June quarter of FY 2023-24. This growth is compared to ₹392.3 crore in the same period last year.
The bank also showed a slight improvement in its Non-Performing Assets (NPA). In the quarter under review, Indian Overseas Bank reported gross NPA at 7.13%, while its net NPA stood at 1.44%.
Additionally, the Net Interest Income (NII) of the bank witnessed a substantial increase, rising by 32.4% to ₹2,322.5 crore during the same quarter. (Read More)
Power transmission developer Sterlite Power on Wednesday said it has successfully acquired Fatehgarh III Beawar Transmission Limited, a special purpose vehicle (SPV) from PFC Consulting Limited (PFCCL).
PFCCL is a wholly owned subsidiary of Power Finance Corporation Limited (PFC), a maharatna company. The project was awarded to Sterlite Power through the tariff based competitive bidding (TBCB) process in March 2023. Under this acquisition, Sterlite Power will undertake the construction, ownership, operation, and transfer of a critical transmission project in Rajasthan for a substantial duration of 35 years. (Read More)
India’s overall unemployment rate fell in July as rural areas saw increased demand for agriculture labor with the onset of monsoon rains.
The total joblessness rate fell to 7.95% in July, from 8.45% in June, according to data released by private forecaster Centre for Monitoring Indian Economy. Rural unemployment rate fell to 7.89%, from 8.73% in June, while urban unemployment rate ticked up, to 8.06% from 7.87% in the same period.
After a slow start, monsoon rains that water nearly half of the nation’s farmlands have picked up pace, potentially bolstering the outlook for agriculture production and economic growth. Rains have been 4% above normal so far this season.
Rural joblessness rate typically falls in July due to increased demand for laborers for farming work. Unemployment rate ticks up again in August after the sowing is done, past data showed. (Bloomberg)
State-owned mining company NMDC reported a significant increase in iron ore production and sales in July compared to the same period in the previous year. The iron ore production for July stood at 2.44 million tonnes, reflecting a growth of 19% from the corresponding period last year. Concurrently, the sales of iron ore also rose by 2.7% to reach 3.03 million tonnes during the same month.
“National Mineral Development Corporation (NMDC), a Navratna miner under the Ministry of Steel, has reported record-breaking production for the period up to July 2023. In July alone, the mining major produced 2.44 million tonne and sold 3.03 million tonne of iron ore, showing a month-on-month growth of 19% and 2.7% in production and sales respectively," the ministry of steel said in a statement. (Read More)
Low-cost carrier SpiceJet is seeking shareholders' approval to issue a 5.91% stake to Carlyle Aviation Partners, the aircraft financing unit of the Carlyle Group. The lessors have valued the airline's shares at ₹48 per equity share, which is slightly higher than the current share price of SpiceJet, which is trading at ₹31 on the stock exchange. Carlyle Aviation Partners has the largest exposure among other lessors and will convert its outstanding dues of over $28 million into equity.
Back in February, SpiceJet had announced that Carlyle Aviation Partners would acquire a 7.5% stake in the airline by converting outstanding dues and also acquiring a shareholding in the cargo business. This move was aimed at helping SpiceJet reduce its debt by $100 million. (Read More)
European stocks slumped as Fitch’s downgrade of the US sovereign credit triggered riskoff trades across the board, while earnings reports did little to offset the negative sentiment.
The Stoxx 600 Index was 1.1% down as of 8:02 a.m. in London, with all the subindexes and 93% of the constituents trading in the red.
The US was stripped of its top-tier sovereign credit grade by Fitch Ratings, which criticized the country’s ballooning fiscal deficits and an “erosion of governance" that’s led to repeated debt limit clashes over the past two decades.
“The US rating cut could be the first and we could see other countries being downgraded as high debt is a common issue for many, but for the US I don’t see this having a big effect on the economy," said Alfonso Benito, chief investment officer at Dunas Capital. (Bloomberg)
Mumbai-based Aeroflex Industries has received approval from the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offer (IPO).
In April, Aeroflex Industries, a subsidiary of Sat Industries, had filed its Draft Red Herring Prospectus (DRHP) with SEBI to raise approximately ₹350 crores through the IPO.
The IPO will consist of a fresh issue of equity shares valued at ₹160 crore and an offer-for-sale (OFS) of up to 1.75 crore equity shares by the promoters, selling shareholders, and promoter group. The face value of each equity share in the offer is ₹2. (Read More)
The automobile industry witnessed a mixed wholesale volume performance in the month of July 2023. The Passenger Vehicle (PV) and Commercial Vehicle (CV) segment across the auto companies saw a decent sales growth, which was in-line with most analysts’ expectations.
On the other hand, two-wheeler volumes in July disappointed with lower domestic as well as exports sales.
In the passenger vehicle segment, industry growth was driven by strong demand in Utility Vehicles (UV) with the entry-level segment declining notably. Overall, PV volume increased by around 5% on a year-on-year (YoY) basis and 10% sequentially. (Read More)
Asia by acquiring a majority stake in LEAP India, a pallet pooling platform in India. The company made this announcement on Wednesday, revealing that the funds managed by KKR will now hold the majority stake in LEAP India.
The completion of the transaction is expected to take place in the third quarter of 2023, provided that all customary pre-closing and closing conditions are met as per the schedule.
This deal will be beneficial for KKR as it aligns with its Asia infrastructure strategy. In the past, KKR has also invested in various other infrastructure projects, including Serentica Renewable, which aims to provide clean energy solutions for energy-intensive and hard-to-abate industries. Other investments include Hero Future Energies, Highways Infrastructure Trust, Virescent Infrastructure, and IndiGrid. (Read More)
Investors who applied for the Khazanchi Jewellers IPO can check the share allotment status on Wednesday, August 2. The IPO shares will be listed on the BSE SME on Monday, August 7.
To check the Khazanchi Jewellers IPO allotment status, investors can visit the registrar's portal, which is Cameo Corporate Services Ltd.
If you have applied for the shares and want to know your allotment status, you can follow the instructions provided on the registrar's portal to check the same. This will allow you to see whether you have been allotted the shares in the IPO. (Read More)
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services: The downgrade of the US credit rating by a notch is sentiment negative for global markets. The US 10-year bond yield spiking above 4% and the dollar index rising to 102 are near-term negative for emerging markets. But it is important to note that the downgrade doesn’t say anything that the market doesn’t know. So, the negative knee jerk reaction will be short lived. Globally equity markets have been rising on the US economy’s soft landing narrative. The downgrade doesn’t alter tha
Chintan Mehta CEO-Commodity, Abans Group: The strong US labor market has recently bolstered the greenback. However, the US dollar index is struggling to sustain levels above 102.5 after its recent gains. Despite the rally in the US Dollar and crude oil prices putting pressure on the Indian Rupee, the USDINR pair seems to face resistance at 82.5 levels. There might be strength in the Indian currency, leading the USDINR to embark on a downward journey toward 81.8 levels.
According to two sources familiar with the matter, the Warren Buffet-backed Chinese automaker BYD is currently facing investigation in India over allegations of underpaid taxes on imported parts used in the assembly and sale of its cars in the country.
The investigation, led by India's Directorate of Revenue Intelligence (DRI), alleges that BYD did not pay 730 million rupees ($9 million) in taxes. Although BYD has deposited this amount following the DRI's preliminary findings, the investigation is still ongoing. There remains a possibility of further tax charges and penalties as the probe continues. (Full Report)
As per the Union Finance Ministry, the top-50 loan defaulters in India collectively owe ₹87,295 crore to banks and financial institutions. Among these defaulters, Gitanjali Gems, the company associated with fugitive Mehul Choksi, tops the list with an outstanding debt of ₹8,738 crore to banks. The next in line is Era Infra Engineering Limited, owing ₹5,750 crore, followed by REI Agro Limited with ₹5,148 crore, ABG Shipyard Limited with ₹4,774 crore, and Concast Steel and Power Limited with ₹3,911 crore.
Other notable wilful defaulters include Rotomac Global Private Limited with ₹2,894 crore, Winsome Diamonds and Jewellery Limited with ₹2,846 crore, Frost International Limited with ₹2,518 crore, Shri Lakshmi Cotsyn Limited with ₹2,180 crore, and Zoom Developers Private Limited with ₹2,066 crore. These defaulters collectively represent a significant amount of outstanding debt in the Indian banking system. (Read More)
Rahul AGARWAL and Harshit SARAWAGI of Incred Equities comments on Thyrocare Technologies: 1Q P&L below estimate but B/S improves
HOLD - Downgrade | INR590 tp:INR615
■ Revenue loss from the API Group, government contract and one-off taxes led to 1Q revenue/PAT miss vs. our estimate. Pathology margins held up well.
■ Management gave guidance of consol. sales growth of 12-14% yoy & EBITDA margin of 29-31% for FY24F. Franchisees and new products to drive growth.
■ Stock has done well (+25%) since our last update in May 2023. Revenue growth & promoter financial health stability to aid returns. Downgrade to HOLD.
According to a report by the Economic Times, India is considering the possibility of allowing foreign vendors, especially those from China, who collaborate with Tesla, to manufacture essential components in the country. However, the government is not inclined to provide specific exemptions solely for any particular company.
This move holds significance because India currently heavily relies on imports from China for critical components, such as battery cells used in electric vehicles. (Read More)
On Wednesday, the share price of Sula Vineyards experienced a significant decline of over 6% in trading. This drop came after the company received an excise duty notice of ₹116 crore from the Maharashtra excise department on Tuesday. The trading day began with the share price opening at an intraday high of ₹496.65 per share on the Bombay Stock Exchange (BSE).
As per an exchange filing by the company, it was stated that the State Excise Revenue Minister has vacated the interim order that was previously granted. This decision was in response to the decision dated September 19, 2019, which had been issued by the State Excise Revenue Minister, Government of Maharashtra. (Read More)
Krishan Parwani of JM Financial Institutional Securities Limited views on Navin Fluorine: All growth levers still intact; maintain BUY
BUY INR 5,665
Navin Fluorine’s (NFIL) 1QFY24 EBITDA missed our and consensus estimates by ~28% primarily on account of issues at the HFO plant in Jun’23. However, the management says that the lost volume will be majorly recovered over the next 2 quarters. On the CDMO front, the management remains hopeful of achieving ~20%YoY growth and probably higher growth in FY25 with increased offtake. Besides, the new contract with Fermion for multiple late-stage pharma molecules has increased the company’s visibility from CDMO beyond FY25/26. On the specialty chemicals business front, the quarterly run-rate seems on track to achieve our annual forecast. There, however, will be some challenge from the R-22 side amid the weak summer. Further, we build in some price decline in R32, sales for which are on track to commence from 2QFY24. Hence, to factor in 1QFY24 results and commentary, we have marginally cut our FY24/25/26 EBITDA estimates by ~2%. We maintain BUY with a revised Sep’24 TP of INR 5,665 (from Jun’24 TP of INR 5,495) based on 36x Sep’25E EPS (DCF implied). As highlighted in our recent sector report (click here), Navin has the pathway in place to take advantage of HF capacity expansion and continue the strong growth momentum beyond FY25/26.
In the quarter ending June 2023, Ambuja Cements, the cement manufacturer under the Adani Group, reported a standalone net profit of ₹644.88 crore. This figure represents a decline of 38.5% from the net profit of ₹1,048.78 crore recorded in the same period of the previous year.
However, the company's revenue from operations in Q1FY24 experienced growth, increasing by 18.4% to ₹4,729.7 crore from ₹3,998.26 crore in the previous year.
Regarding operational performance, the earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 38.3% during the quarter, reaching ₹948.8 crore from ₹686 crore in the same period last year. Additionally, the EBITDA margin showed improvement, increasing by 290 basis points (bps) to 20.1% from 17.2% in the previous year. (Read More)
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services: The major news after market close yesterday is the rating agency Fitch’s downgrade of US sovereign rating from AAA to AA+. This has impacted bond and currency markets with the US 10-year yield rising above 4%. Paradoxically, during uncertainties dollar’s safe haven status improves even when the downgrade is that of the US credit rating. This has happened in the past also.
The impact on the stock markets is likely to be negative but not large since the US economy is now headed for a soft landing and not a recession, as markets feared earlier.
US 10-year yield rising above 4% and the dollar index appreciating to 102 are negative for emerging markets. Also, indicators like PMI from the Euro Zone and China suggest slowdown in these economies. In brief, the economic backdrop is negative. Investors may wait and watch for the dust to settle before jumping to buy on dips.
On Wednesday, the Indian rupee started 12 paise lower against the US dollar, following the trend of other Asian currencies, and due to weakened risk appetite after rating agency Fitch downgraded the US credit rating. The local currency opened at 82.38 against the dollar, compared to the previous day's close of 82.26.
Asian currencies experienced a drop while the dollar index rose to 102.16. Additionally, the 10-year US yield fell during the Asian trading session.
As a result of Fitch's decision to downgrade the US long-term foreign currency ratings from AAA to AA+, citing potential fiscal deterioration over the next three years and ongoing debt ceiling negotiations, Asian markets declined, and US equity futures also traded lower.
The equated monthly instalments (EMIs) which have already increased significantly last May, will go up further as the banks have started hiking lending rates. Many borrowers are likely to feel the pinch of such an increase in EMIs.
ICICI Bank, Punjab National Bank, and Bank of India have revised their marginal cost-based lending rate (MCLR) on loans . The revised interest rates are effective from 1 August, as per the bank websites. (Read More)
Coal India Limited (CIL) reported an impressive 13.4% rise in production during July 2023 compared to the same month in 2022, reaching a production of 53.6 million metric tons (MTs). Furthermore, the company's overall production for the current financial year until July 2023 has reached 229.1 MTs, achieving 99% of its target.
CIL is well on track to meet its growth objectives for the year. The company aims to produce 780 MTs in the fiscal year 2024, targeting a growth rate of 10.9% over the previous fiscal year. With its current performance, CIL is making strides towards achieving this desired growth rate. (Read More)
The market capitalization (m-cap) of the Adani Group soared 7.04 per cent at ₹71,032 crore in July driven by robust quarterly performances from its entities, each contributing significantly to the overall increase in the market value. The m-cap of the leading conglomerate rose from ₹10,09,075 crore on June 30 to ₹10,80,107 crore on July 31, according to a statement shared by the company.
The group’s focus on growth and operational performance has been a key driver for the stocks in the past month. "There's no denying that the performance of Adani Group stocks has been good with Q1 results underscoring impressive growth so far. The allegations from the Hindenburg episode have been thoroughly dismissed by the market, and investors are shifting their attention to the improving valuations amid strong growth prospects for the group. The Q1 results not only reflects the rising growth but also improving operational efficiency of its companies," said a market strategist at a domestic brokerage house. (Read More)
Maruti Suzuki sales up 6% in July, Ambuja Cements to acquire stake in Sanghi Industries, Adani Total Gas net profit rises 9%, Hero MotoCorp sales decline 12%, RBI imposes fees on ONGC, IOC, Gail, and Oil India, Cholamandalam Investment net profit rises 28%, Coal India production increases 13.4%, Bharti Airtel launches marketing communications platform, PVR INOX reports net loss, Escorts Kubota reports record net profit. (Read More)
Karnataka's Minister for Commerce & Industries, Infrastructure, MB Patil, announced on Tuesday that the International Battery Company (IBC) has signed an investment agreement with the state worth 80 billion rupees ($971.89 million) to establish a battery manufacturing facility.
According to the report by Reuters, the manufacturing facility is planned to cover an area of 100 acres within the state, as mentioned in a post made by MB Patil on the social media platform X.
Bloomberg News also reported on Tuesday that the company's manufacturing facility will be focused on producing lithium-ion cells. (Read More)
The GST Council, headed by Union Finance Minister Nirmala Sitharaman, is scheduled to hold a virtual meeting on Wednesday, August 2nd. The meeting's agenda includes a crucial decision regarding the taxation of the online gaming industry.
In the previous meeting, the GST Council had decided to impose a uniform 28% tax on the full face value for online gaming, casinos, and horse racing. However, this decision has been met with opposition from major online gaming companies and their CEOs, who have expressed concerns about its potential negative impact on the growth of new-age startups.
As a result, on Wednesday's meeting, the Group of Ministers will discuss and make a final decision on the proposal to levy 28% GST on online gaming, casinos, and horse racing. This decision holds significance for businesses involved in the online gaming sector. (Read More)
Apple is expected to face a decline in iPhone sales for the April-June quarter due to cautious consumer behavior in a slow economy, likely because customers are anticipating the launch of a new model. As the tech giant prepares to release its earnings report, analysts are keen to see how the company utilizes artificial intelligence (AI) to drive growth.
Being the world's most valuable company, Apple is projected to experience a 1.6% decrease in total quarterly revenue, which would be its sharpest drop in third-quarter revenue since 2016, as reported by Refinitiv.
In particular, iPhone sales are anticipated to have declined by over 2% during this period, based on a survey of 24 analysts conducted by Visible Alpha. This decline contrasts with the nearly 3% increase in sales during the same quarter last year and the 1.5% rise in the preceding quarter (January-March). (Read More)
Vaishali Parekh, Vice President — Research at Prabhudas Lilladher suggests these stocks for day trading:
Rites: Buy at ₹465, Stop Loss: ₹459, Target: ₹484
Mahindra & Mahindra: Buy at ₹1,493, Stop Loss ₹1,475, Target: ₹1,540
Eicher Motors: Buy at ₹3,415, Stop loss: ₹3,360, Target: ₹3,530 (Read More)
PVR Inox, the multiplex chain operator, faced a net loss of ₹44.1 crore in the quarter ending June 2023, which is in stark contrast to the net profit of ₹68.3 crore reported in the same period of the previous year.
However, there is some improvement as the company's net loss narrowed sequentially from ₹285.7 crore in the previous quarter.
On a positive note, PVR Inox's revenue from operations in Q1FY24 witnessed a 31.7% increase, rising to ₹1,266.6 crore from ₹961.5 crore in the same quarter of the previous year. (Read More)
According to two sources familiar with the matter, the Reserve Bank of India (RBI) has imposed late submission fees (LSF) totaling ₹2,000 crore on ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd, GAIL (India) Ltd, and Oil India Ltd. The penalty has been imposed due to the delayed reporting of their overseas investments.
As a result of this action, there are concerns that the overseas work commitments of these four state-run energy companies may be impacted. To address the situation, the companies are making efforts to seek an extension from the RBI. The late submission fee levied on each of the four firms amounts to ₹500 crore. (Read More)
Reuters reported that Adani-owned Ambuja Cements is making efforts to strengthen its position in the cement industry through the acquisition of a majority stake in the operations of Sanghi Industries.
According to sources cited by Reuters, an official announcement of the deal is expected to be made by both companies on Wednesday. However, as of now, the exact percentage of stake being acquired and the transaction amount remain undisclosed.
On Tuesday, the shares of Ambuja Cements closed at ₹461.60 apiece on the BSE, showing a 0.25% decrease. Year-to-date, its value has declined by 12.32%, and over the past year, the decrease stands at 22.99%. (Read More)
Wall Street took a step back from its big rally so far this year, and most stocks fell Tuesday following a mixed set of earnings reports from U.S. companies.
The S&P 500 lost 12.23, or 0.3%, to 4,576.73, coming off its fifth straight winning month. The Nasdaq composite sank 62.11, or 0.4%, to 14,283.91. The Dow Jones Industrial Average squeezed out a gain of 71.15 points, or 0.2%, to 35,630.68 even though most of the stocks within it weakened.
Travel-related stocks helped drag the market lower after they gave up some of their big gains from earlier in the year. Norwegian Cruise Line lost 12.1% despite reporting stronger profit and revenue for the spring than expected. Expectations have been high for it and rivals after its stock soared 80% for the year through Monday.
Worries have been broadly rising that expectations have built too high for the entire U.S. stock market after the S&P 500 surged more than 19% so far this year. Stocks had leapt to a 16-month high on hopes inflation is cooling enough to get the Federal Reserve to stop hiking interest rates. That in turn could allow the economy to avoid a long-expected recession.
While inflation has indeed come down since the summer and the economy has remained remarkably resilient, critics say it’s no guarantee inflation will continue to cool at the same rate. They say stock prices have risen too far, too quickly. (AP)
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