Weekly Market Analysis: Dalal Street tanks on inflation and economic growth concerns; SBI, Tata Motors, L&T and Asian Paints in news

Domestic shares closed lower on concerns over higher global inflation and slower economic growth prospects. The Sensex plunged 3.72% to 52,793.62. In the last two weeks, the Sensex have fallen 4,267.25 points or 7.5%. The Nifty 50 index tanked 3.83% to 15,782.15 during the week.

In the cash segment, FIIs were net sellers and sold for Rs 19,967.7 crore, while DIIs were net buyers and bought for Rs 18,202 crore.

Top losers among Nifty sector indices were Metal [-12.4%], energy [-10.6%], PSU Bank [-8.8%], Realty [-5.8%] and Bank [-4.3%]. All other indices closed in red.

Boader markets also followed benchmark indices. The BSE Midcap index tanked 5.7% to close at 21,815.7, while the BSE Smallcap index plunged 6.6% to close at 25,315.8.

Nifty VIX, which indicates the volatility of the market, jumped 10.5% in the week.

Company News

State Bank of India (SBI): The lender reported 41.2% YoY rise in net profit at Rs 9,113.5 crore in Q4FY22. The bank’s NII soared 15.26% to Rs 31,198 crore during the quarter, as against Rs 27,067 crore earned in Q4FY21. Net NPA slipped to Rs 27,966 crore as against Rs 34,540 crore in the previous quarter. The lender also announced dividend of Rs 7.10 per share. Shares of the company closed 3.9% lower on Friday as it missed analysts estimates.

The country’s largest lender said its board has approved raising up to $2 billion from the overseas market during the current fiscal to fund foreign business growth. The central board has approved raising of funds through single or multiple tranches, SBI said in a regulatory filing.

Tata Motors: The automaker posted a loss of Rs 1,033 crore in Q4FY22, declining from loss of Rs 7,605 crore in same period last year. Revenue during the quarter declined by 11.5% to Rs 78,439 crore YoY, impacted by subsidiary Jaguar Land Rover, whose revenues in Q4 fell 27.1% YoY to 4.8 billion pound sterling amid semi-conductors shortage, and disruption in the European and China business.

The group is making a transition towards sustainability across businesses which includes a clean mobility push at Tata Motors and its British luxury unit Jaguar Land Rover, Tata Group Chairman Chandrasekaran said at an industry event.

Meanwhile, Tata Motors plans to launch 10 electric models by 2025, whereas Jaguar Land Rover’s luxury Jaguar brand will be entirely electric by 2025 and the carmaker will launch e-models of its entire lineup by 2030, he added.

In other news, the automaker has expanded its electric vehicle range in the country with the launch of Nexon EV MAX, priced between Rs 17.74 and Rs 19.24 lakh (ex-showroom). It is equipped with a 40.5 kWh lithium-ion battery pack and offers 33 per cent higher battery capacity than the Nexon EV, delivering ARAI certified range of 437 km.

Larsen & Toubro (L&T): The engineering & infrastructure major reported a 10% year-on-year growth in profit at Rs 3,621 crore in the quarter ended March 2022, with revenue rising 10% YoY to Rs 52,851 crore and EBITDA increasing 2.1% YoY to Rs 6,520.5 crore compared to year-ago period. The number of order inflow grew by 46% YoY to Rs 73,941 crore in Q4FY22 in value terms.

Asian Paints: The paint company’s consolidated net profit was nearly flat at Rs 874.05 crore in Q4FY22, compared with Rs 868.89 crore in the year-ago period. This was due to higher input costs which weighed on operating profit margin. Revenue rose 19% to Rs 7,892.67 crore in Q4FY22 from Rs 6,651.43 crore in the corresponding peroid last fiscal.

Vodafone Idea Ltd (VIL): The telecom operator posted a consolidated loss of Rs 6,563.1 crore in Q4FY22, compared to a loss of Rs 7,230.9 crore in the previous quarter, supported by higher operating income and ARPU. Revenue during the quarter rose 5.4% QoQ to Rs 10,239.50 crore. EBITDA grew by 22 percent QoQ to Rs 4,649 crore in the reported quarter with average revenue per user increasing by Rs 9 sequentially to Rs 124 during the quarter.

Ashok Leyland: The company’s electric vehicle arm, Switch Mobility, will invest about Rs 1,000 crore for setting up a new manufacturing unit in South India. The company is also in talks with financial investors to raise over $200 million for its expansion.

Hindalco Industries: Shares of the company fell 6.6% in intraday trading on Thursday after its subsidiary Novelis posted a 15% fall in its Ebitda to $431 million during the Jan-Mar quarter due to short-term production and logistics challenges. Jefferies downgraded the stock and cut Hindalco’s target price to Rs 475 apiece from Rs 700 per share citing weakening global metal demand outlook.

Meanwhile, Novelis plans to build a $2.5 billion low-carbon aluminium recycling and rolling plant in the US to cater to the growing demand for beverage can sheets and the automotive market.

Adani Ports and Special Economic Zone Ltd (APSEZ): The company moved the Bombay High Court challenging the disqualification of its bid in connection with a tender issued by state-run Jawaharlal Nehru Port Authority (JNPA) for upgradation of the latter’s container terminal in Navi Mumbai. A vacation bench of Justices AK Menon and NR Borkar sought a reply from the Board of Trustees of JNPA and posted the matter for hearing on Friday (May 13).

NTPC: The state-owned power company has invited bids for raising term-loan of up to Rs 5,000 crore, which would be utilised for capital expenditure for ongoing or new electricity generation capacity addition projects.

Union Bank of India: The lender reported over 8% rise in standalone net profit at Rs 1,440 crore for the quarter ended March 2022, compared with a net profit of Rs 1,330 crore in the same quarter of FY21. Total income rose to Rs 20,417.44 crore during January-March 2021-22 as against Rs 19,804.91 crore in the year-ago period, the bank said in a regulatory filing. Net NPAs fell to 3.68% (Rs 24,303.30 crore) from 4.62% (Rs 27,280.52 crore).

Greaves Cotton: Shares of the company closed 8.3% higher on Friday after the company’s E-Mobility business turned profitable in Q4FY22. In Q4FY22, the company reported its highest-ever consolidated revenue of Rs 621 crore, up 19 % YoY from Rs 520 crore in Q4FY21. Profit after tax (PAT) grew 22% YoY at Rs 17 crore.

Canara Bank: The state-owned lender is investigating a fraud in its housing finance unit Can Fin Homes, after a whistle-blower complaint highlighted irregularities in certain accounts, Reuters reported citing sources. Fake income tax return documents had been submitted for those accounts, the source said. An internal committee was still probing the matter to find out more about the nature of the fraud.

MRF Ltd: The tyre manufacturer reported a 50.26 per cent decline in consolidated profit at Rs 165.21 crore for the fourth quarter ended March 2022, due to high input costs. It had posted a consolidated profit of Rs 332.15 crore in the same period of previous fiscal. The consolidated revenue from operations in the fourth quarter stood at Rs 5,304.82 crore in the quarter under review, as against Rs 4,816.46 crore a year-ago period.

PVR Ltd: The multiplex chain operator reported narrowing of its consolidated loss after tax at Rs 105.49 crore for the fourth quarter of FY22. The company had reported a net loss of Rs 289.12 crore in the year-ago period. Its revenue from operations surged 196.68 per cent to Rs 537.14 crore in the quarter under review as against Rs 181.46 crore in the same quarter last fiscal.

Apollo Tyres: The company’s consolidated net profit declined by 61% to Rs 113 crore for the fourth quarter ended March 2022 due to higher raw material costs. The company had reported a consolidated net profit of Rs 287 crore in the year-ago period. Revenue from operations rose 11% to Rs 5,578 crore, as against Rs 5,026 crore in the fourth quarter of FY21.

Indian Bank: The lender’s net profit dropped 43% in the fourth quarter of FY22 to Rs 984 crore, compared to Rs 1,709 crore the same period last fiscal year. The bank’s total income was up 9% YoY to Rs 11,405 crore in the quarter under review. Net interest income (NII) grew 28% YoY to Rs 4,255 crore in Q4FY22 from Rs 3,334 crore in the year-ago period. Net NPAs stood at 2.27% in Q4FY22, as against 3.37% in Q4FY21.

Rainbow Children’s Medicare Limited: The company’s shares made a weak stock market debut on Tuesday. The scrip got listed at Rs 510 apiece on the NSE, a discount of about 6% as compared to its IPO issue price of Rs 542 per share. Shares of the company closed Rs 450.20 apiece.

Economy News

India’s retail inflation measured by the Consumer Price Index (CPI), increased to 7.79% in the month of April 2022. The retail inflation for the month of March 2022 stood at 6.95%. This is the fourth consecutive month that the CPI data has breached the Reserve Bank of India’s (RBI) upper margin target of 6%.

India’s factory output, which is measured by Index of Industrial Production (IIP), witnessed a growth of 1.9% in March 2022. Industrial production grew 1.7% in February 2022. The IIP soared 24.2% in March 2021, the data showed. The manufacturing sector’s output grew 0.9%, Mining output rose 4% and power generation jumped 6.1% in March 2022.

Global Markets

In US markets, major equity indices registered another week of losses, as investors were worried over the Federal Reserve’s steps to tame inflation may lead to a recession in the US economy. For the week, the S&P 500 slumped 2.41%, the Nasdaq plunged 2.8%, and the Dow lost 2.14%.

In the economic data front, the US consumer inflation slowed to a annual pace of 8.3% versus the March reading of 8.5%. However, it was above consensus estimates of around 8.1%. The core consumer inflation, which is excluding volatile food and energy prices, showed a reading of 6.2%, compared with estimates of 6%. The US Labor Department’s report showed nonfarm payrolls increased by 428,000 jobs in April, while Unemployment rate remained unchanged at 3.6% in the month.

Chinese stock indices rallied as coronavirus cases declined and positive comments from the country’s market regulator boosted investor sentiments. The Shanghai Composite index added 2.76%, and the blue chip CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, rose 2.04%.

Meanwhile, China’s producer price index (PPI) rose 8.0% year-on-year, the National Bureau of Statistics (NBS) said in a statement on Wednesday, following an 8.3% rise in March. The consumer price index (CPI) gained 2.1% from a year earlier, from March’s 1.5% rise.

Japan’s stock markets fell during the week on concerns about slowing global growth due to tighter monetary policy. Further, the negative impact of the war between Russia and Ukraine weighed on the sentiments of market participants. The Nikkei 225 index fell 2.13%, and the broader Topix index sank 2.70%.