Weekly Market Analysis: Dalal Street falls for fourth week as Russia-Ukraine conflict worsens; RIL, Biocon, Vodafone Idea and Hero MotoCorp in news

Benchmark indices fell sharply during the week due to escalating Russian-Ukraine conflict, rising crude oil prices and heavy selling by foreign institutional investors (FIIs). All these factors and its consequent economic fallout, globally, continued to weigh on investors’ sentiments. This was the fourth consecutive weekly loss registered by key benchmark indices. The Sensex fell 2.48% and the Nifty dropped 2.73% on a weekly basis.

Brent Crude was trading $118.11 per barrel and WTI Crude (the US Crude) was trading at $115.68 per barrel.

For the week, FIIs were net sellers for Rs 22,563 crore and DIIs were net buyers for Rs 16742.7 crore.

For the week, top losers were Nifty Auto [-9.17%], Nifty Bank [-5.55%], Nifty Realty [-3.99%], PSU Bank [-3.2%] and Pharma [-2.32%]. Top gainers were Nifty Metal [6.97%], Energy [3.7%] and Nifty IT [2.09%].

Company News

Reliance Industries Ltd (RIL): RIL’s subsidiary Reliance Strategic Business Ventures Limited (RSBVL) will invest Rs 1670 crore to create a joint venture (JV) with the Indian entity of U.S.-based Sanmina Corp for making electronic products in Chennai. The JV aims to make hardware for 5G communications, cloud infrastructure, healthcare systems, and defense and aerospace, Reliance said in a regulatory filing. RSBVL will hold 50.1 per cent equity stake in the joint venture entity with Sanmina owning the remaining 49.9 per cent.

Biocon Ltd: The biotechnology company’s subsidiary Biocon Biologics Ltd (BBL) will acquire the biosimilars business of its partner Viatris for up to $3.335 billion. Viatris will receive consideration of up to $3.335 billion, including cash up to $2.335 billion and compulsorily convertible preference shares (CCPS) in Biocon Biologics Ltd, valued at $1 billion. The deal is expected to close in the second half of the calendar year.

Vodafone Idea: The telecom operator said that the board has approved fund raising of Rs 4,500 crore on a preferential basis, through its promoters. The company will issue more than 338.3 crore equity shares at an issue price of Rs 13.30 per share to Euro Pacific Securities, Prime Metals, and Oriana Investments Pte Ltd. The company also said it has received board approval for additional fund raising of Rs 10,000 crore via private placement or qualified institutions placement.

Hero MotoCorp: The two-wheeler manufacturer unveiled its new brand ‘Vida’, for emerging mobility solutions, including EVs. It announced a $100 million global sustainability fund to nurture over 10,000 entrepreneurs on ESG solutions. The first initiative under the brand will be the launch of an electric vehicles on July 1, 2022. Production of new Vida model will be at the company’s ‘Green’ manufacturing facility in Chitoor, India.

Jet Airways: Jalan Kalrock Consortium appoints former Vistara and SpiceJet executive, Sanjiv Kapoor as CEO of Jet Airways. Kapoor will join Jet Airways as CEO from April 4, 2022. Sanjiv Kapoor is presently the President of Oberoi Hotels & Resorts.

Future Group: The company and e-commerce giant Amazon.com Inc have agreed to talks, seeking to resolve legal wrangles at the heart of a battle for supremacy in the country’s vast retail sector. In an unexpected move, Amazon counsel Gopal Subramanium suggested at a Supreme Court hearing that the two sides negotiate, saying the “whirlpool” of disputes fought on multiple fronts had been dragging on for too long. The judges said the two sides can take 10 days to reach a possible solution.

Hindustan Petroleum Corp Ltd (HPCL): The company has announced plans to raise Rs 1,500 crore on private placement basis on Monday. The fund would be utilised in refinancing existing borrowing and funding of capital expenditure.

Tata Consultancy Services (TCS): Global building materials firm CEMEX selected the IT major to accelerate its digital transformation and improve employee experience for over 4,00,000 people. TCS will work with CEMEX for next seven years. The information technology giant will utilise AI-driven human-machine collaboration suite to integrate systems. The digital transformation will enable CEMEX to reduce time to market, improve processing times, productivity among others.

Axis Bank: The lender said that it has committed a USD 150 million (about Rs 1,140 crore) loan for strengthening the healthcare infrastructure in the country in association with IPE Global, in the aftermath of the pandemic. The continued threat of new variants has reinforced the need to boost investments and partnerships in the health sector.

Tata Steel: The company will double its capacity from the current 20 million tonnes in India to 40 million tonnes during this decade, Tata Sons chairman Chandrasekaran said after paying his homage to its founder Jamsetji Nusserwanji Tata on his 183rd birth anniversary. He also said the performance of Tata Steel is “historic” but its best is yet to come.

Maruti Suzuki India (MSI): The country’s largest car maker reported a marginal drop in total wholesales at 164,056 units in February. The company had sold 164,469 units in February 2021, MSI said in a regulatory filing. The company exported 24,021 unit, a jump of two-fold as against 11,486 units in the corresponding month last year, the company said.

Tata Elxsi: The technology services provider and Renesas Electronics Corp announced their collaboration on a state-of-the-art design center in Bangalore that will develop targeted solutions for electric vehicles (EVs). The new Next Generation EV Innovation Center (NEVIC) was opened in January of this year. The centre in Bangalore will be a new hub for the two companies to develop crucial EV systems, such as battery management systems and motor control units.

Eveready Industries: The company’s chairman & MD have tendered their resignations amid Burman group seeking control of the company. Aditya Khaitan was the non-executive director and chairman, while Amritanshu Khaitan served as the Managing Director. The resignations will be effective immediately.

Economy News

India’s manufacturing sector output and new orders increased in February, according to IHS Markit Purchasing Managers’ Index (PMI) which rose to 54.9 for the month of February 2022, from 54 in January 2022. A reading of below 50 on the PMI indicates contraction in activity levels, while a reading of above 50 signals expansion of activity in the particular sector.

India’s services sector output rose marginally to 51.8 in February from 51.5 in January, pointing to a moderate rate of expansion, according IHS Markit report. Higher demand conditions and improving sentiments among stakeholders drove this moderate expansion. The IHS Markit composite PMI output rose to 53.5 in February from 53.0 in January.

India’s GDP growth slowed down to 5.4% in October-December quarter of 2021, compared with 8.5% in the prior quarter, data released by the country’s statistics agency showed. The statistics ministry also said India’s GDP is epected to grow by 8.9% in FY22, down from its first advance estimate of 9.2%, released in early January 2022.

The country’s merchandise export in February 2022 stood at $33.81 billion, a rise of 22.36% from $27.63 billion in February 2021. Meanwhile, merchandise import in the month of February 2022 was $55.01 billion, a jump of 34.99%, from $40.75 billion in February 2021.

Global Markets

In the US markets, major stock indices dropped in a volatile week due to negative investors’ sentiments amid worsening Russian-Ukraine war. For the week, the S&P 500 fell 1.27%, the Dow lost 1.30%, the Nasdaq plunged 2.78%. Top losers were stocks in technology and financial sectors, while stocks in energy sector gained as oil prices skyrocketed.

Japan’s stock markets registered losses for the week, tracking global market and tense situation in Europe amid the ongoing Ukraine crisis. Nikkei 225 index fell 1.85% and the broader Topix index was down 1.67% on a weekly basis.

Chinese markets also retreated as the Russian-Ukraine war and disappointing economic data dampened risk appetite of investors. China will release its GDP data and it is likely to post a growth of 5%-5.5%, which is below 6% since the early 1990’s. The Shanghai Composite index edged down 0.1%, and the blue-chip CSI 300 Index lost 1.7%. Meanwhile, China abstained from voting against Russia in the UN General Assembly and did not join Western countries in implementing sanctions against Russia.