Weekly Market Analysis: Dalal Street ends higher on positive global cues; RIL, TCS, Future Retail and Paytm in news

Benchmark indices closed higher for the week, boosted by investors’ optimism and as the US central bank raised its key interest rates by 25 basis points, in-line with expectations. The buying was widespread across all sectors. For the week, the Sensex closed 4.16% and the Nifty ended 3.95% higher.

Top gainers among Nifty sectoral indices were Auto [5.98%], Bank [5.45%], Realty [4.78%], PSU Bank [3.32%] and FMCG [3.28%]. 

FIIs selling in the cash segment declined during the week compared to previous weeks and they turned net buyers. FIIs were net buyers for Rs 578 crore and DIIs were net buyers for Rs 2977.8 crore.

Oil prices were volatile in the beginning of the week, but steadied later. Brent crude was trading at $107.93 per barrel and the US crude was $104.7 per barrel.

Company News

Reliance Industries Ltd (RIL): Reliance New Energy Ltd, a subsidiary of Reliance Industries Ltd (RIL), will acquire assets of Lithium Werks BV for $61 million, as it builds technology and material wherewithal for its new energy foray. The assets include the patent portfolio of Lithium Werks, manufacturing facility in China, key business contracts and hiring of existing employees. It has 200 MWh annual production capacity including coating, cell and custom module manufacturing capability

In other news, RIL is among a few firms that won bids to get incentives under India’s $2.4 billion battery program, reported Reuters citing people it did not identify. Reliance has won incentives for 5 Gwh capacity, the sources said. Four firms have won out of the ten bids submitted for a combined capacity of 130 gigawatt hours.

Tata Consultancy Services (TCS): The company’s TCS BaNCS has been selected by Singapore Exchange (SGX) to power the NSE IFSCSGX Connect (Gift Connect), its program to connect to NSE IFSC Limited (NSE International Exchange), for trade execution and clearing of Nifty products on behalf of its members in Singapore and globally. This will enable international investors to access Indian capital markets and create a larger liquidity pool of international and domestic participants, according to its regulatory filing.

Future Retail Ltd: Talks between the US e-commerce giant Amazon.com and India’s Future Retail to resolve an ongoing dispute over Future’s retail assets sale to Reliance Industries have failed, lawyers for the companies told the Supreme Court. Amazon.com gave advertisements in leading newspapers, alleging Reliance Industries and Future retail group of doing fraud.

Meanwhile, the company said in a regulatory filing that FRL and its board remain committed to take all necessary action to seek value adjustments and reversal of takeover of the stores (leases) by Reliance Group. It also said that FRL and its Board is taking steps to arrive at a feasible solution which will be in the interests of all stakeholders.

Paytm: The company’s Payments Bank may have violated rules by allowing data to flow to servers abroad and did not properly verify its customers, Bloomberg reported. Paytm Payments Bank was required to maintain a service-level agreement with its technology vendor that would ringfence the entity from its owners.

Meanwhile, brokerage firm Macquarie has further cut the target price on Paytm parent One97 Communications to Rs 450 from Rs 700 while retaining an underperform rating.

Indian Oil Corporation Ltd (IOC): The state-owned oil refinery company has bought about 3 million barrels of crude oil that Russia had offered at a steep discount to prevailing international rates, sources said.

In other news, the oil refiner has approved an investment of Rs 7,282 crore for the development of city gas distribution network in the nine geographical areas awarded to the company by Petroleum & Natural Gas Regulatory Board (PNGRB) in the latest round of bidding. The company will now have its presence in 26 geographical areas (GAs) on its own and a further 23 GAs through its joint venture companies. The project is expected to be operational by 2025.

Tata Motors: The automaker is planning to invest Rs 15,000 crore in the EV segment in the next five years, a top company official has said. The company is also planning to develop around 10 more new offerings in the segment, President for Passenger Vehicles Business of Tata Motors Shailesh Chandra said.

Punjab National Bank (PNB): The public-sector lender has reported a fraud of Rs 2,060.14 crore in IL&FS Tamil Nadu Power Company Ltd at a corporate branch in Delhi. The bank has already made provisions amounting to Rs 824.06 crore, according to RBI norms.

Vodafone Idea ltd (VIL) and Nazara Technologies: The telecom operator has joined hands with Nazara Technologies to foray into the online gaming segment. VIL sees gaming as a highly monetizable segment with a significant growth potential. He said the company plans to launch e-sports in the next couple of weeks followed by social gaming in next 3-4 months.

Persistent Systems: The company has acquired Princeton, New Jersey-based MediaAgility, a global cloud transformation services provider with expertise building scalable, cloud-based solutions as a Google Cloud Premier Partner for a consideration of $71.71 million (around Rs 545 crore). This acquisition will expand Persistent’s ability to execute cloud-based digital transformation journeys for its global clients.

Bank of Baroda: The state-run lender has partnered with BNP Paribas Asset Management to form ‘Baroda BNP Paribas Mutual Fund’ and leverage their respective strengths in the asset management business. Suresh Soni has been appointed as the CEO of the merged entity. The lender will hold 50.1% stake in the new firm while BNP Paribas will own the rest.

Voltas: The company will enter into a joint venture arrangement with Highly International (Hong Kong), a wholly-owned subsidiary of Shanghai Highly (Group) Company, according to its regulatory filing.

Jindal Poly Films Ltd: The company signed an agreement to sell 25% stake in packaging films business to Brookfield Asset Management. Under the deal, Brookfield will invest Rs 2,000 crore in Jindal Poly Films through its investment program. The deal is expected to close in the first half of FY2022-23.

Oil India Ltd: The company said subsidiary Numaligarh Refinery will invest Rs 6,555 crore for implementation of petrochemical project at Numaligarh, Assam. The board of directors also approved formation of a joint venture company between Assam Gas Company (AGCL) and Oil India (OIL) for the three geographical areas offered by Petroleum and Natural Gas Regulatory Board [PNGRB].

Economy News

A few economic data was released by various ministries of the Indian government.

India’s retail inflation based on consumer price index rose to 6.07% in February 2022 from 6.01%in the previous month, according to Ministry of Statistics and Programme Implementation. The consumer food price index also rose to 5.85% in February 2022, from 5.43% in January 2022.

Inflation based on wholesale price index (WPI) in February 2022 rose to 13.11% as prices of crude oil prices and non-food items increased, despite softening of food articles, according to Ministry of Commerce & Industry. As per the government data, the WPI inflation remained in double digits for the 11th consecutive month beginning April 2021. Inflation last month stood at 12.96%, while it was 4.83% in February 2021.

Inflation in manufactured items group was 9.84% in February 2022, against 9.42% in January 2022. Inflation in food articles segment, however, eased to 8.19% in February 2022 from 10.33% in January 2022. In the fuel and power basket, inflation stood at 31.50% in February, compared with 32.27% in January.

The government also released export and import numbers for February 2022. Overall exports (trade merchandise and services) rose to $57.03 billion in February 2022, from $45.48 billion in the year-ago period. Overall imports jumped to $ 69.35 billion during February 2022, from $51.13 billion in the corresponding period last year. The trade deficit increased to $12.32 billion in February from $ 5.65 billion in the same period last year.

Global Markets

The US markets advanced for the second week in a row after oil prices steadied, investors digested the outcome of the Fed’s monetary policy decision and gains in technology stocks. For the week, S&P 500 rose 6.16%, Dow Jones index rose 5.5% and the Nasdaq rose 8.18%.

The Fed raised its key short-term lending rate by 25 basis points at its recent monetary policy meeting, moving the fed funds target rate from near zero to a range of 0.25% to 0.50%. The FOMC also said in a release that they expect raising interest rates seven times in 2022 and they also updated economic forecast. They downgraded their forecast for economic growth, while their revised inflation projections were upwards.

Japan’s stock markets registered gains with the Nikkei 225 ending the week 6.62% higher and the broader Topix climbing 6.10%. Investors’ optimism was boosted by the Bank of Japan’s (BoJ’s) continued commitment to its dovish stance amid a hawkish monetary policy stance globally.

Chinese markets fell during the week with the broad, with the Shanghai Composite index retreating 1.8% and the blue-chip CSI 300 index down 0.8%. However, the government said it would support the economy, ensure capital markets stability, resolve risks pertaining to property developers and a complete crackdown on Big Tech, according to a state media.