Weekly Market Analysis: Dalal Street rises on bargain buying; Paytm, ITC, Airtel and LIC in news

Major domestic equity indices closed higher for the week snapping five-week losing trend, tracking Asian markets and as investors sought battered stocks .

The Sensex jumped 2.9% to 54,326.39 The Nifty 50 index surged 3.07% to 16,266.15 during the week.

In broader markets, Nifty Midcap 100 rose 2.9% and BSE Smallcap surged 4.1% during the week.

Top gainers among Nifty sector indices were Metal [7.4%], Auto [4.8%], FMCG [4.5%], Realty [4.3%] and Energy [4.3%]. Top loser was IT index which fell 2.82%.In the cash segment,

FIIs were net sellers and sold for Rs 11,401.2 crore, while DIIs were net buyers and bought for Rs 9,472.9 crore.

Nifty VIX, which indicates the volatility of the market, fell 1.7% in the week.

Company News

One97 Communications (Paytm): The company reported a loss of Rs 762.5 crore for the quarter ended March 2022 compared with a loss of Rs 444.4 crore in the corresponding quarter of the previous fiscal. The company’s revenues from operations were up by 89% year-on-year to Rs 1,541 crore.

For the full year FY22, the company posted a loss of Rs 2,396 crore against a loss of Rs 1,701 crore in the previous fiscal. Revenues from operations for FY22 stood at Rs 4,974 crore, up 77% from FY21.

ITC: Diversified conglomerate reported an 11.8% year-on-year (YoY) jump in net profit at Rs 4,191 crore in Q4FY22 as against Rs 3,748 crore in the year-ago period. Consolidated revenue from operations rose 15.3% YoY to Rs 17,754 crore from Rs 15,404 crore in the corresponding quarter last fiscal. Revenue from cigarette business grew 9.96% while non-cigarette FMCG revenue was up 12.32% from the corresponding quarter last year. The board recommended a final dividend of Rs 6.25 per share for FY22.

Bharti Airtel: The telecom firm nearly tripled its consolidated net profit for the fourth quarter of FY22, as sharp tariff hikes since November 2021 boosted its average revenue per user (ARPU). Consolidated net profit increased to Rs 2,008 crore in the March quarter from Rs 759 crore in the year-ago period. Revenues for the quarter grew 22% YoY to Rs 31,500 crore. Airtel continues to have the highest ARPU at Rs 178 from Rs 163 in the December quarter.

Life Insurance Corporation of India (LIC): The biggest IPO in India had a weak stock market debut and has a negative listing. Shares of the company opened Rs 872 apiece against an issue price of Rs 949 per equity share. Shares of LIC closed at 875.25 per equity share on Tuesday.

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey on Tuesday said the weak debut was due to unpredictable market conditions and suggested investors to hold on to the stock for long-term value. On Friday, the shares closed at Rs 826.15 per share.

Maruti Suzuki India (MSI): The carmaker said its new manufacturing facility in Haryana, the company’s third in the state, would reach peak production capacity of 10 lakh units per annum in the next eight years entailing a total investment of Rs 18,000 crore.

The new facility that would come at a 800-acre site at IMT Kharkhoda in Sonipat district, will entail total investment of Rs 11,000 crore in the first phase with a production capacity of 2.5 lakh units per annum. The first set of vehicles are expected to roll out of the facility in 2025.

Meanwhile, the carmaker said its shareholders have approved the appointment of Hisashi Takeuchi as Managing Director and CEO. In a regulatory filing, the auto major said 99.89% of votes polled through a postal ballot were in favour of the appointment of Takeuchi as MD and CEO.

Ashok Leyland: The company reported a 274% YoY jump in net profit at Rs 901.4 crore for the fourth quarter of FY22. Total income stood at Rs 8,744.3 crore during the quarter, up 24.9% against Rs 7,000.5 crore in the corresponding period of the preceding fiscal. Its truck market share for Q4FY22 improved to 30.6% against 28.9% in Q4 FY21.

InterGlobe Aviation (IndiGo): Ronojoy Dutta, the chief executive officer of IndiGo, said he will retire on September 30. The firm also said it has appointed Pieter Elbers as the next chief executive officer. The company has postponed its March quarter earnings announcement and now it will be on May 25.

Equitas Small Finance Bank (Equitas SFB): Veteran banker P N Vasudevan has resigned as the managing director and chief executive officer of Equitas Small Finance Bank, the lender informed the stock exchanges. Vasudevan, in his resignation letter, said he wants to devote his time towards social welfare through his public charitable trust.

Adani Group

The group led by billionaire Gautam Adani won the race to acquire Swiss cement major Holcim’s stake in Ambuja Cements and its subsidiary ACC for $10.5 bn (around Rs 81,361 crore), including the open offers. Holcim owns 63.19% in Ambuja Cement and 4.48% in ACC. Ambuja Cement, in turn, owns 50.05% in ACC.

Further, the group has made an open offer to acquire a 26% stake each in its two listed companies Ambuja Cements and ACC Ltd from public shareholders. Through its Mauritius-based subsidiary Endeavour Trade and Investment, the group has made an open offer at Rs 385 per share for Ambuja Cements Ltd and Rs 2,300 per share for ACC Ltd. The open offer comes a day after Adani announced $10.5 billion deal to acquire Holcim’s India business

Meanwhile, AMG Media Networks, a unit of billionaire Gautam Adani’s conglomerate Adani Enterprises, will buy 49% stake in Raghav Bahl-curated digital business news platform Quintillion Business Media Pvt Ltd for an undisclosed sum, according to a regulatory filing.

Adani Enterprise: The company announced its entry into the health care sector. In a regulatory filing, the company said it has incorporated a wholly-owned subsidiary, Adani Health Ventures (AHVL), for this purpose. AHVL will carry out the business of healthcare-related activities like setting up of medical and diagnostic facilities, research centres, it said.

Oil Marketing Companies

Indian Oil Corporation Ltd (IOCL): The oil marketing company’s consolidated net profit for the quarter ended March stood at Rs 6,645.72 crore, down 26.37% from Rs 9,026.49 crore in the same quarter last year due to a margin squeeze in petrochemicals and losses on auto fuel sales. Its revenue from operations climbed 26.13% to to Rs 2.09 lakh crore, from Rs 1.65 lakh crore in the corresponding quarter last year . The board approved a bonus issue of 1:2 for its shareholders.

Bharat Petroleum Corp Ltd (BPCL): The government is considering selling up to a quarter of state-run refiner after failing to attract suitors for the whole firm, Reuters reported citing two officials. New Delhi is considering inviting bids for a 20%-25% stake in BPCL, instead of an outright sale of its entire 52.98% holding, according to the two government officials. The officials said discussions about the plan were in the early stages.

Hindustan Petroleum Corp Ltd (HPCL): The state-run oil refiner posted a 34% decline in consolidated net profit to Rs 2,019 crore in the quarter ended March 2022 from Rs 3,061 crore in the year-ago period due to rise in total cost. Revenue for the quarter stood at Rs 1.07 trillion, up 24.2% from Rs 85,755 crore last year. Average gross refining margin during the year ended March 2022 was $7.19 per barrel as against $3.86 per barrel during the corresponding previous year.

Economy News

India’s inflation based on wholesale price index (WPI) stood at 15.08% in April 2022 compared with 10.74% in April 2021. The WPI inflation was 14.55% in March 2021 and 13.11% in February 2021.

“The high rate of inflation in April 2022 was due to higher prices of mineral oils, basic metals, crude petroleum & natural gas, food articles, non-food articles, food products and chemicals & chemical products etc. as compared to the same month of the previous year,” the Ministry of Commerce & Industry said.

Global Markets

Wall Street continued to fall on a weekly basis as worries over higher inflation weighed on economic growth prospects and consumers’ buying sentiments. For the week, the S&P 500 dropped 3.05%, the Dow lost 2.9% and the Nasdaq tanked 3.82%.

Further, economic data showed the US consumer spending on retail rose 0.9% in April and retail sales excluding autos rose 0.6% in April. New claims for U.S. unemployment benefits rose last week. Initial claims for state unemployment benefits jumped 21,000 to a seasonally adjusted 218,000 for the week ended 14th May 2022, the Labor Department said.

Chinese stock indices rose as the country’s central bank cut key interest rates to support the country’s property sector even as disappointing economic data weighed on market sentiments. The broad Shanghai Composite index advanced 2%, the blue-chip CSI 300 index jumped 2.2% and Hang Seng advanced 2.96%.

China cut its benchmark reference rate for mortgages by an unexpectedly wide margin on Friday. This reduction is to help revive the country’s ailing housing sector to improve its economy. The central bank lowered the five-year loan prime rate (LPR) by 15 basis points to 4.45%. However, the one-year LPR was unchanged at 3.7%.

Japan’s stock indices ended positive for the week, with the Nikkei 225 index gaining 1.18% and the broader Topix was up 0.71%. The gains were due to positive sentiments on the back of Chinese government supporting its weakning economy and Japan’s decision to ease coronavirus restrictions.

Japan’s economic recovery was slower than its global peers, with the country’s GDP shrinking by an annualized 1% quarter on quarter during the first three months of 2022. This was due to higher import prices weighing on trade and lower consumer spending due to the coronavirus restrictions during the period.