Weekly Market Analysis: Domestic indices close higher as investors’ sentiments recover; Future Retail, RIL and Paytm in news

Benchmark stock indices closed slightly higher for the week amid high volatility as investors’ optimism improved after reports said that Omicron variant will have mild illness than earlier variants of the coronavirus.

The researchers examined Omicron’s course in South Africa, Scotland and England. The results in each setting, while preliminary, all suggested that people infected with the variant were less likely to be hospitalized. This boosted investors’ expectation of a sustained economic recovery.

For the week, the Sensex closed 0.20% higher at 57124.31 and the Nifty gained 0.11% to close at 17003.75.

Top gainers Nifty sectoral indices during the week were Nifty IT [2.95%], Nifty Pharma [1.97%] and Nifty FMCG [1.31%]. Top losers were Nifty PSU Bank [-3.2%], Nifty Bank [-2.1%], Energy [-0.7%] and Auto [-0.5%].

Top losers in Nifty 50 were NTPC [-3.4%], Grasim Industries [-3.3%], BPCL [-3.3%], HDFC [-3.2%] and Axis Bank [-3.1%]. Top gainers were HCL Tech [8%], Cipla [5.6%], Tech Mahindra [4.9%], UPL [4.4%] and Wipro [4.1%].

Company News

Future Retail Ltd: The Competition Commission of India suspended the US e-commerce major Amazon’s investment in Future Coupons (FCPL), thereby putting a standby on the Amazon-Future Group deal. In addition, Future is also likely to approach various courts and tribunals including the Supreme Court, National Company Law Tribunal (NCLT) and the Singapore International Arbitration Centre (SIAC), bringing to their notice the latest order by the CCI.

Reliance Industries Limited (RIL): The company’s clean energy arm is expected to receive investments from Sovereign wealth funds including Singapore’s GIC Pte, Abu Dhabi Investment Authority and UAE’s Mubadala Investment Co, Mint newspaper reported, citing two people aware of the development. An Abu Dhabi Investment Authority spokesperson declined to comment on the matter.

Paytm: Shares of the fintech company got a boost after two brokerages initiated coverage with a higher target price than the current market price. Morgan Stanley has initiated coverage with an overweight rating and set a target price of Rs 1875 a share. Goldman Sachs also initiated coverage with neutral rating on the stock and set a target price of Rs 1630.

In other news, the company’s three senior executives have quit the fintech firm, according to a Mint news report. According to the report, Abhishek Arun, chief operating officer (COO) of Paytm Payments Bank; Renu Satti, COO, offline payments; and Abhishek Gupta, senior vice-president and COO, lending, have quit the firm.

Axis Bank: The private-sector lender said it will raise up to Rs 5,000 crore by issuing bonds. The bank said that it proposes to raise funds by issuing senior unsecured taxable redeemable non- convertible debentures of Rs 10 lakh each for cash at par with base issue size of Rs 2,000 crore and green-shoe option to retain over-subscription of Rs 3,000 crore thereby aggregating up to Rs 5,000 crore.

Bajaj Auto, Wipro: The two-wheeler company was removed from the 30-share S&P BSE Sensex with effect from Monday. The information technology (IT) company Wipro replaced Bajaj Auto in the 30-share benchmark index.

State Bank of India (SBI): The public-sector lender has acquired a minority stake in JSW Cement Limited, part of JSW Group. The lender has invested Rs 100 crore in the company via compulsorily convertible preference shares (CCPS). This capital infusion will support JSW Cement’s capacity expansion from current 14 MTPA to 25 MTPA.

Larsen & Toubro Ltd: The company’s construction arm, L&T Construction, bagged a ‘significant’ order for its buildings and factories business from a reputed developer. The order is valued in the range between Rs 1,000 crore and Rs 2,500 crore. The order includes construction of one of the largest residential townships in Bengaluru and the project is expected to be completed in 42 months.

Zomato Ltd: Shares of the company closed lower after the company received a copy of writ petition filed by Indian Federation of App-Based Transport Workers (IFAT). The petition which included Zomato, Uber India, Swiggy and Ola as respondents sought directions from court to government to notify or recognise app-based workers as ‘workers’ or alternatively as ‘unorganised workers’ or ‘wage workers’ under various labour laws. Zomato said that it is reviewing the petition and will present all relevant facts before the apex court.

IndiGo: The domestic airline company and Air France-KLM announced that they are launching an extensive codeshare agreement. With this new partnership, Air France and KLM will offer their customers access to 25 new Indian destinations.

L&T Finance Holdings (LTFH): Shares of the company closed 6.9% lower after the company said it would divest its asset management business. The company entered into a agreement with HSBC Asset Management India (HSBC AMC) to sell its wholly-owned subsidiary L&T Investment Management (LTIM) for an aggregate amount of $425 million.

Tata Consultancy Services (TCS): Shares of the company rose before paring its gains to close 0.22% higher after the company was selected by la Mobiliere, the oldest private non-life insurer in the Swiss market, to drive its digital transformation agenda. In an exchange filing, TCS said that it will help modernise the insurer’s I.T. estate with core system simplification, cloud adoption and application transformation.

HCL Technologies: Shares of the IT major surged nearly 5% to trade at Rs 1,283.8 apiece in early trade on Friday, backed by heavy volumes after several large deals on the exchanges. However, shares of the company closed 3.08% higher tracking broader market sentiments. The stock’s rally came after the promoters of the IT giant announced to buy 45 lakh shares of the company through a block deal, according to CNBC Awaaz report on Dec 23.

Global Markets

In the US markets, stocks rose on signs that the new omicron variant of the coronavirus might be less disruptive and dangerous than feared earlier. Ahead of Christmas, trading volumes were low and markets were closed on Friday.

Investors’ concerns eased further after President Joe Biden’s assurances at a press conference on Wednesday that there would be no shutdowns or lockdowns in response to the latest wave of coronavirus cases.

For the week, the S&P 500 jumped 2.27%, the Dow gained 1.65% and the Nasdaq surged 3.19%.

Japanese markets closed higher for the week as investors boosted technology and pharma sectors on the back of bargain buying. Nikkei 225 index closed 0.83% higher and Topix composite index rose 0.12% during the week.

Chinses market slipped amid the country’s central bank cutting the one-year loan prime rate (LPR) to stabilise the economy. CSI 300 fell 0.67% and Shanghai composite index dropped 0.39%.