Weekly Market Analysis 16-10-2021

Benchmark Indian equity indices closed at record highs as a good start to Corporate India earning and positive global cues lifter investor sentiments. For the week, the Nifty rose 3.1% to 18338.55 and the Sensex closed 2.7% higher at 61305.95. Nifty crossed the important psychological level of 18000, while Sensex crossed 61000 range.

The Foreign Institutional Investors were net buyer at Rs 1037.4 crore and Domestic Institutional Investors were net sellers at Rs 3296.8 crore. Overall, both put together, institutional investors were net sellers at Rs 2259.4 crore. Despite heavy selling by institutional investors, the Nifty and Sensex hit new highs.

Nifty PSU Bank (8.3%) was the top gainer among sectors, follwed by Nifty Auto (7%). Nifty Metal was up 6.4%, BSE Power rose 5.9%. BSE Utilities and Industrials gained 5.9% each. BSE Telecom (-0.8%) and BSE Teck (-0.5%) were the laggards.

Company News

Reliance Industries: The company said that its subsidiary, Reliance New Energy Solar Ltd (RNESL), will buy a 40 per cent stake in Sterling & Wilson Solar through a combination of primary investment, secondary purchase and open offer for around Rs 2,850 crore. The acquisition is expected to help RIL meet its renewables targets faster. In addition, RNESL will buy preferred shares of German firm NexWafe worth $29 million. The investment by Reliance will accelerate product and technology development for NexWafe, including completion of the commercial development of NexWafe’s solar photovoltaic products on prototype lines in Freiburg.

Tata Motors: The company has raised Rs 7500 crore for its electric vehicle business from TPG Rise Climate and Abu Dhabi’s ADQ at a valuation of up to $9.1 billion. The automaker is expected to invest more than Rs 16,000 crore over next five years. Under the agreement, TPG Rise Climate along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated, the company said in a statement. Meanwhile, the automaker has reported a 24% increase in group global wholesales to 2,51,689 units in September quarter of FY22 over the year-ago period. Global sales of JLR stood at 78,251 vehicles in the September quarter which comprised 13,944 units of Jaguar and 64,307 units of Land Rover, the company said.

Airtel and Vodafone Idea: Telecom tribunal TDSAT asked the Department of Telecom (DoT) to put on hold the encashment of bank guarantees in the penalty case of Bharti Airtel and Vodafone Idea till the next date of hearing. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) bench headed by Justice Shiv Kirti Singh listed the matter for hearing on October 26. According to DoT, companies are required to pay the penalty by October 21.

Infosys: The IT bellwether beat street estimates as it reported a 4.3% sequential rise in its consolidated net profit to Rs 5,421 crore in the second quarter of FY22. The net profit was up 11.9% year-on-year. The company reported a 6.1% quarter-on-quarter growth in consolidated revenues to Rs 29,602 crore for the reported quarter, from Rs 27896 crore in the previous quarter. The consolidated revenue saw a growth of 20.5% compared with the corresponding period last year that stood at Rs 24570 crore. The company’s board also approved an interim dividend of Rs 15 per share.

Wipro: The IT major reported a 9.6% sequential decline in consolidated net profit for the Jul-Sep quarter to Rs. 2,930.7 crore. The company’s consolidated revenue for the quarter climbed 7.7% quarter-on-quarter to Rs. 19,667.4 crore. The decline in the company’s bottom line in the quarter was driven by higher tax payments and a sharp rise in costs.

Tata Chemicals Ltd: The company said in an exchanges filing that CARE Ratings has reaffirmed the credit ratings of the company and reduced the rated amount based on the company’s request. The company said that the rating agency maintained CARE AA+ Stable (Double A Plus; Outlook: Stable) on the Long Term Bank Facilities for an amount of Rs 1,300 crore (Rs 1,897 crore earlier). The credit rating on the Short Term Bank Facilities of Rs 2,000 crore has been reaffirmed as CARE A1+ (A One Plus).

Tata Power: The company’s subsidiary, Tata Power Solar Systems, has received a ‘Letter of Award’ to build 100 Mega Watt of solar projects for Energy Efficiency Services Ltd. Tata Power in an exchange filing said that the total order value is Rs 538 crore and the commissioning date of projects is 12 months.

Economy News

India’s retail price inflation rate, which is based on Consumer Price Index, declined to 4.35% in September of 2021 from 5.3% in August. The decrease in inflation was due to a decline in food inflation. Food inflation continued to ease and further fell to 0.68% in September, from 3.11% in August.

India’s inflation based on wholesale price index (WPI) rose 10.66% in September 2021 compared with 1.32% in September 2020. WPI advanced 11.39% in August 2021, while the July’s WPI was 11.57%.

India’s industrial production rose 11.9% in August, compared with 11.5% rise in July, according to the government data. The manufacturing sector, which constitutes 77.63% of the Index of Industrial Production (IIP), grew 9.7% in August, mining sector output rose 23.6% in August, while power generation increased 16%.

Global Markets

In the US markets, the stock indices closed higher on positive signs of economic recovery and strong quarterly earnings by big banks. However, investors remain cautious on rising oil and energy prices due to supply shortage in Europe. There was also unexpected increase in retail sales for September and retailers struggled to fill inventories ahead of the holiday season. Data showed that there was heavy buying demand for merchandise amid supply shortage due to production constraints. Meanwhile, transportation industry like airlines and cruise ship had some good news as the US government said it will ease travel restrictions for fully vaccinated foreign nationals. For the week, the Dow rose 1.58%, S&P 500 advanced 1.83%, the Nasdaq jumped 2.20%.

In Asian markets, Japan’s equity indices closed higher as investors were hopeful that the new Prime Minister will continue to the economic policies of his predecessor. In addition, many Japanese companies raised their earnings forecast for this year. Stocks related to semi-conductor industry rose as Taiwan’s TSMC said it plans to build a chip-making factory in Japan and start its operation by 2024. Japanese currency yen fell against the US dollar, boosting export-oriented stocks. For the week, Nikkei closed 3.64% higher and Topix jumped 3.16%.

Chinese markets were mixed as the large-cap CSI 300 Index edged up 0.04% and the Shanghai Composite Index dipped 0.55% ahead of the country’s quarterly GDP report next week. Energy crisis continued to grip the country and investors were spooked because of power utilities struggling with coal shortage that pushed fuel prices higher. Further, higher oil and natural gases weighed on the markets as China is a net importer of these commodities.