by admin | May 25, 2021 | Economy, Markets, News
By Ravi Dutta Mishra & Rohit Vaid,
Mumbai : Fears over a slowdown in global growth on the back of US-China trade tensions, along with domestic concerns on lower industrial production, spooked investors and led the key Indian equity indices to a negative weekly close.
Even a rebound on Friday triggered by signs of an ease in US-China trade tension as reports said that a US delegation will visit China next week to participate in trade talks failed to enthuse.
Index-wise, the S&P BSE Sensex lost 381.62 points, or 1.05 per cent, to close at 35,695.10, whereas the 50-share Nifty of the NSE declined by 132.55 points, or 1.22 per cent, to settle at 10,727.35.
In the just-concluded week, global markets witnessed volatile trade due to weak US economic data which added to fears of a global slowdown.
The fears over the global slowdown were again supplemented by data showing a contraction in China’s factory activity. Additionally a lowered financial forecast by tech major Apple subdued investor sentiments.
On the domestic front, data showing the Indian manufacturing activity expanded at a slower pace in December acted as a dampener.
“Back at home, the domestic market looked cautious driven by concerns about a global growth slowdown, amid news reports that the government is planning a massive farm relief package that may further worsen the fiscal health of the economy,” SMC Investments & Advisors CMD D.K. Aggarwal said.
Besides, the Indian markets were dented by an outflow of foreign funds, as FIIs sold shares worth over Rs 2,000 crore as against domestic institutional investors, who bought over Rs 500 crore worth of stocks, provisional data on BSE showed.
In contrast, the local currency strengthened by 43 paise to 69.72 against the US dollar from its previous week’s close of 70.15.
“The rupee closed the week stronger… which was a bit surprising on the back of crude moving up by 15 per cent in last week from lows of around $50,” said Sajal Gupta, Edelweiss Securities’ Head of Forex and Rates.
On sector-specific levels, PSU banks, realty and Bank Nifty led the gains this week on the indices, while auto, metal and energy indices dragged.
Stock-wise, the realty sector outperformed the benchmark indices during the volatile week, partly on the expectation that the GST Council at its January 10 meeting will slash tax rate on under-construction housing to 5 per cent from 12 per cent.
“The market breadth was negative in three out of the five trading sessions of the week. The top sectoral gainers for the week were the PSU Banks, realty and Bank Nifty indices. The top losers were the auto, metal and energy indices,” Deepak Jasani of HDFC Securities said.
The top gainers on the BSE and the NSE were Yes Bank which gained 4.38 per cent and Bharti Airtel which was up 2.02 per cent. Sun Pharma, Asian Paints and ICICI Bank gained in the range up to 2 per cent.
In contrast, export-oriented Mahindra & Mahindra lost heavily this week after lower than expected sales figures dragged its shares down 9.59 per cent.
Tata Steel lost 5.06 per cent followed by Hero MotoCorp, which slid by 4.40 per cent, and Maruti Suzuki which declined by 3.46 per cent.
(Ravi Dutta Mishra can be reached at ravidutta.m@ians.in and Rohit Vaid at rohit.v@ians.in)
—IANS
by admin | May 25, 2021 | Opinions
By Taponeel Mukherjee,
Real per capita GDP, stock market indices and consumption trends in India are currently interesting. Even as real GDP at an aggregate and per capita basis have broadly trended higher, equity market valuations have fluctuated. Amidst the noise of market data, it is often easy to forget that some of the best investment opportunities arise when market valuations arent quite at their peak.
The single most significant takeaway is that as real GDP has trended upwards, the equity market, in real terms (inflation adjusted), has moved higher with considerable volatility. What many view as market downturns are opportunities to build and scale value-creating businesses.
Market downturns in public markets (equity markets) invariably compress valuations in private markets as well. One way to generate returns from the growing GDP per capita over the next two decades is through creating a valuable platform company to aggregate assets. Such a strategy is especially relevant when high-quality assets can be acquired in a market downturn.
At a fundamental level, a platform company would be one that uses acquisitions to build a business. Capital allocation is the principal function of any company, and in the case of a platform structure, the capacity to inorganically grow the business through meaningful acquisitions is the core objective.
Two fundamental factors determine the success of the platform. Firstly, the pricing environment needs to be one that is in some way a “buyer’s market”, i.e. valuations provide for attractive acquisitions. Market downturns are usually such an environment that is conducive to attractive pricing for deals. The ability of the platform structure to make attractive acquisitions is vital.
It is important to note that the platform company making purchases provides sellers with liquidity in a market downturn, thereby creating liquidity in relatively volatile market conditions. Even in situations without a market downturn, attractive deals are available through sourcing in the private markets or acquiring assets from companies with impaired capital structures.
The second most important factor for a platform structure is to get access to relatively low-cost capital for a longer duration. A healthy balance sheet for the parent business and focus on cash-flow rich businesses is critical in this regard.
A platform business in India has the advantage of one of the fastest-growing economies in the world. To leverage the growth in the economy it will be critical to choose products or services where the product or service meets two main criteria. One, extremely low-risk of substitution; and, two, low technology risk in the product.
Low-risk of substitution is that the need for the product will not disappear in the near term. For example, pharmaceutical products to manage chronic diseases will be a requirement for the foreseeable future. While technology as a backbone will be crucial to scaling the business, low-technology risk implies that the product by its very inherent nature isn’t at risk of technological obsolescence. An example would be the demand for baby foods in the FMCG space.
Using successful templates from other economies, the products and services offered for a platform structure can be for both B2C and B2B businesses. Such platforms usually work better in relatively fragmented markets. The ability to acquire relatively smaller firms from both private and public markets provides an opportunity to scale a business to command a higher valuation multiple relative to a smaller company.
Besides operational efficiency, the strategy that a platform company adopts in India will be dependent on factors such as whether the acquisitions are for regional expansion or a broadening of the product and service suite offered by the platform company. The critical determinant being: How the sum of the parts adds up to create more value than the individual components.
For instance, a successful consumer credit company in one region can create a platform for growth in other regions utilising the existing successful business model. Alternatively, a company selling baby food can generate greater value by acquiring companies that sell products related to baby care.
At a fundamental level, capital allocation through mergers and acquisitions is the cornerstone of creating a successful platform structure. In the Indian context, public market valuation volatility that compresses valuations provides long-term investors with entry points to develop platform companies to leverage the India growth story.
(Taponeel Mukherjee heads Development Tracks, an infrastructure advisory firm. Views expressed are personal. He can be contacted at taponeel.mukherjee@development-tracks.com or @Taponeel on Twitter)
—IANS
by admin | May 25, 2021 | Economy, Markets, News
Mumbai : Weak global cues coupled with profit booking and caution ahead of the April derivatives expiry pulled the key Indian equity indices lower on Wednesday.
According to market observers, a weak rupee, along with recent surge in crude oil prices and heavy selling in banking, consumer durables and capital goods stocks weighed heavy on the key indices.
Index-wise, the wider Nifty50 on the National Stock Exchange closed at 10,570.55 points, down 43.80 points or 0.41 per cent from the previous close.
Similarly, the barometer 30-scrip Sensitive Index (Sensex) of the BSE closed in the red. It opened at 34,593.17 points, closed at 34,501.27 points, down 115.37 points or 0.33 per cent.
The Sensex touched a high of 34,631.27 points and a low of 34,400.56 points during the day. The BSE market breadth was bearish with 1,794 declines and 867 advances. Market breadth on the NSE too was bearish on Wednesday.
In the broader market segment, the S&P BSE mid-cap index closed lower by 0.52 per cent and the small-cap index by 0.72 per cent.
“Markets ended lower on Wednesday as selling was seen through the day. The recent rise in crude oil prices and cautiousness ahead of April derivatives expiry due on Thursday, 26 April, 2018 seemed to have affected investors,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.
Abhijeet Dey, Senior Fund Manager, Equities, BNP Paribas Mutual Fund said: “Recent firmness in crude prices, rising bond yields in the US and the expiry of derivatives contracts this week, all contributed to the volatility in the markets.”
“Asian stocks tumbled across the board while US stocks witnessed selling pressure after the 10-year US Treasury yield briefly touched the psychologically important three per cent level for the first time in four years,” he said.
Dhruv Desai, Director and Chief Operating Officer of Tradebulls said: “Markets traded lower as global markets were in negative territory and investors booked profits amid weakened global sentiment.”
Sector specific trade, saw IT stocks’ rise due to a weak rupee which fell by 53 paise to 66.91 against the US dollar on Wednesday from its previous close at 66.38.
In terms of investments, provisional data with the exchanges showed that FIIs sold scrip worth Rs 304.79 crore, while the domestic institutional investors purchased stocks worth Rs 435.98 crore.
Sector-wise, the S&P BSE IT index rose by 163.05 points, followed by Teck (technology, media and entertainment) index by 71.36 points and telecom stocks which inched up by 9.26 points.
On the other hand, the S&P BSE banking index declined by 301.59 points, cosumer durables index by 270.76 points and capital goods index by 231.99 points.
The major gainers on Sensex were: Bharti Airtel, up 3.37 per cent at Rs 419.80; Tata Consultancy Services (TCS), up 2.43 per cent at Rs 3,467.90; Mahindra & Mahindra (M&M), up 1.88 per cent at Rs 854.25; Infosys, up 0.61 per cent at Rs 1,160.90; and Power Grid, up 0.58 per cent at Rs 207.20 per share.
The top losers were: Tata Steel, down 2.01 per cent at Rs 586.20; ICICI Bank, down 1.86 per cent at Rs 278.90; ONGC, down 1.67 per cent at Rs 179.55; Tata Motors (DVR), down 1.65 per cent at Rs 185.15; and Dr. Reddy’s Lab, down 1.46 per cent at Rs 2,124.75 per share.
—IANS
by admin | May 25, 2021 | Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : The Indian stock markets during the upcoming week are expected to take directions from domestic macro-economic data points slated to be released from March 12 onwards.
Apart from the data, developments on the global trade front, along with the direction of foreign funds, will also determine the course of key Indian equity indices, said market observers.
“Market participants will keep a close eye on domestic macro-economic data releases. The government will announce inflation data based on consumer price index (CPI) for February and industrial production data (Index of Industrial Production, IIP) for January on March 12,” D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, told IANS.
“Besides, global macro-economic data, developments in the Budget session of Parliament, trends in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will continue to dictate the trend on the bourses next week,” he said.
During March 5-9, figures from the National Securities Depository (NSDL) revealed that FPIs invested in equities worth Rs 1,384.36 crore, or $212.98 million.
Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold-off scrips worth Rs 280.74 crore, while DIIs purchased scrips worth Rs 131.07 crore during last week.
On technical levels, if the NSE Nifty50 trades and closes above the 10,288-level in the upcoming week, then it is likely to test 10,375 to 10,463-10,565 levels, as per Arpit Jain, Assistant Vice President at Arihant Capital Markets.
“However, if the Nifty trades and closes below 10,165 level, then it can test 10,077 to 9,990-9,888 levels,” Jain told IANS.
“Broadly, the weekly trend is down, hence at higher levels, we are likely to witness selling pressure,” he added.
Last week, the Indian equity markets were engulfed by bears as global trade war fears following US President Donald Trump’s proposal to impose tariff on import of metals, along with the turmoil in the domestic banking sector, continued to erode the risk-taking appetite of investors.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE shed 739.8 points or 2.17 per cent to close at 33,307.14 points.
The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,226.85 points — down 231.5 points or 2.21 per cent from its previous week’s close.
“With global uncertainty over the US trade war and its reaction, all eyes are also on the proposed meeting of North Korean Leader Kim Jong Un and President Trump in the coming months,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
According to Vinod Nair, Head Of Research at Geojit Financial Services, absence of major triggers to maintain the upward trend is keeping investors on the sidelines.
“Though the long-term outlook for the domestic economy continues to be strong, issues like global trade headwinds, NPA (non-performing assets) issues and US Federal Reserve’s rate-hike trajectory are adding volatility to the market,” said Nair.
“Market participants are cautiously awaiting the CPI and IIP data next week. Inflation is expected to come down to 4.74 per cent in February which will ease bond yield in the near term. IIP is expected to show some moderation,” he added.
(Porisma P. Gogoi can be contacted at porisma.g@ians.in )
—IANS
by admin | May 25, 2021 | Banking, Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : The bears, tracking weak global cues, under-performance by banking sector stocks and outflow of foreign funds, ruled the Indian equity markets during the week ended Friday which saw the BSE Sensex and Nifty50 indices dropping over 2 per cent.
Fears of a global trade war following US President Donald Trump’s proposal to impose tariff on import of metals, along with the turmoil in the domestic banking sector, continued to erode the risk-taking appetite of investors.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE shed 739.8 points or 2.17 per cent to close at 33,307.14 points.
The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,226.85 points — down 231.5 points or 2.21 per cent from its previous week’s close.
“The week gone by saw the Nifty resuming its intermediate downtrend after a minor loss witnessed last week. There were no sectoral gainers, while the top losers were metal, PSU bank, pharma and infra indices,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.
According to D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, domestic market closed the week in red tracking weak global cues.
“Actually, market participants across the globe reacted to President Donald Trump’s decision to impose tariffs on metal imports,” Aggarwal told IANS.
“Oil prices fell for a second consecutive week as the dollar strengthened and concerns over rising US crude production continued to mount on signs of an inventory build-up at a key US storage hub,” he added.
On the currency front, the rupee closed flat at 65.17 against the US dollar.
“Markets continued to trade lower even though economy growth numbers been positive. The Punjab National Bank fraud (PNB) has taken a big toll on the markets and has resulted in a sell-off in almost all the banks stocks,” said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.
Desai pointed out that the country’s IT sector has emerged as an outperforming sector in the recent correction witnessed in the markets.
“The S&P BSE IT index rose nearly 10 per cent compared to a one per cent fall seen in the S&P BSE Sensex so far in the year 2018,” Desai told IANS.
Vinod Nair Head Of Research at Geojit Financial Services, said: “Market continued to be under pressure on concerns impending global trade war, extension of PSU NPA (non-performing assets) worries and rise in bond yields.”
PSU Bank index — the key underperformer — declined by 5 per cent during the week, Nair said.
“FIIs (foreign institutional investors) are pulling out money given negative cues from both domestic as well on global front. The introduction of Long Term Capital Gains, scam in PNB, repeated signals from the US Fed to hike interest rates rapidly and possibility of downgrades of India weightage from MSCI index are the key factors which is turning FIIs cautious on domestic market,” he added.
Provisional figures from the stock exchanges showed that FIIs sold-off scrips worth Rs 280.74 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs 131.07 crore during the week.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors invested in equities worth Rs 1,384.36 crore, or $212.98 million, during March 5-9.
The top weekly Sensex gainers were: Asian Paints (up 0.73 per cent at Rs 1,127.75); NTPC (up 0.55 per cent at Rs 163.90); HDFC (up 0.32 per cent at Rs 1,818.45); Infosys (up 0.27 per cent at Rs 1,163.40); and Hero MotoCorp (up 0.21 per cent at Rs 3,587).
The losers were: Tata Steel (down 10.32 per cent at Rs 605.60); Tata Motors (down 7.86 per cent at Rs 341.70); Tata Motors (DVR) (down 7.34 per cent at Rs 192.60); Adani Ports (down 6.95 per cent at Rs 377.30); and Bharti Airtel (down 5.81 per cent at Rs 401.95).
(Porisma P. Gogoi can be contacted at porisma.g@ians.in)
—IANS
