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The domestic benchmark equity indices fell after five-week winning streak on profit booking by investors and losses in pharma and IT stocks. For the week ended on August 26, 2022, the Sensex dropped 1.36% to 58,833.87, while the Nifty 50 index declined 1.12% to 17,558.90.
On the technical chart, the Nifty 50 index formed a hanging man candlestick on the weekly time frame indicating a likely downtrend next week.
Broader markets faired better compared to headline indices. The BSE Midcap index rose 0.61% to 25,119. The BSE Smallcap index gained 0.85% to 28,415.89.
Top losers among Nifty sectoral indices were IT [-4.48%], Pharma [-1.71%], FMCG [-0.41%] and Auto [-0.13%]. Top gainers were PSU Bank [4.44%], Media [0.97%], Energy [0.93%] and Realty [0.74%].
During the week, FIIs were net buyers for Rs 450.4 crore and DIIs were net sellers for Rs 503.3 crore.
Company News
Adani Group: The Group has launched its Rs 31,000-crore open offer to acquire 26% additional stake from the public shareholders of Swiss firm Holcim’s two Indian listed entities ACC Ltd and Ambuja Cements. In two separate regulatory filings, Ambuja Cements and ACC have submitted their letter of offers, launched by the Adani family group’s Mauritius-based firm Endeavour Trade and Investment.
Meanwhile, Adani Group companies are “deeply overleveraged,” with the group investing aggressively across existing as well as new businesses, predominantly funded with debt, CreditSights, a Fitch Group unit, said in a report. The report stated that the aggressive expansion pursued by the Adani Group companies has put pressure on its credit metrics and cash flow.
In other news, shares of the media company, NDTV, extended gains to hit upper circuit limit for the third straight day in the opening trade on Friday. The company’s shares have been on an uptrend after Adani group’s hostile takeover bid with the announcement of an open offer on Tuesday to acquire an additional 26% stake.
Further, Adani Enterprises said that news broadcaster NDTV does not need the Securities and Exchange Board of India’s (Sebi’s) approval to transfer the shares of its promoter entity, RRPR Holdings, to VCPL, according to a letter to the stock exchanges.
Bharti Airtel: The company’s promoter, Bharti Telecom, will buy a 3.33% stake from Singtel for about Rs 12,895 crore within 90 days, the telecom operator said. According to exchange filing, Bharti and Singtel will work towards equalising their stake in Airtel over a period of time.
IDBI Bank: The Indian Government is planning to sell at least 51% of state-backed IDBI Bank, according to Bloomberg news report. The government owns 45.48% in the bank, while LIC owns another 49.24 per cent stake in the lender. The government and LIC will formally seek to gauge buyer interest as soon as the end of September, sources said. Shares of the lender rose 5.13% in intraday trading.
In other news, the lender’s chief executive officer said that the bank is likely to recoup 195 billion rupees ($2.4 billion) on bad debt in his pitch to potential buyers amid India’s planned auction of the firm, Bloomberg reported. “We are sitting on about 780 billion rupees of fully provided for bad loans, including written-off loans, and around 25 per cent is likely to be recovered,” Rakesh Sharma said in an interview. “This hidden asset is not reflected in our current valuation and will directly boost the bottom line,” he added.
Indian Oil Corp (IOCL): The oil refiner plans to invest more than $25 billion to achieve net-zero emissions from its operations by 2046, its chairman S. M. Vaidya said at an annual shareholders meeting, according to Reuters news report.
Mining Companies: Shares of mining companies rose after the country’s apex court partially relaxed ceiling limit on iron ore mining. The mining limit for Bellary is raised to 25 MMT and for Chitradurga and Tumkur to 15 MMT. The Supreme Court was hearing applications requesting the lifting of the ceiling limits for production of iron ore for mining leases in districts of Bellary, Chitradurga and Tumkur.
Insurance Companies: Shares of insurance companies rose after the insurance regulator’s new proposal. The Insurance Regulatory and Development Authority of India (IRDAI) has recently proposed a 20 percent cap on the agents’ commission for insurance companies and also released a draft consultation paper on the commission limit. The limit on agents’ commission, remuneration and reward has been proposed for general insurers and standalone health insurers.
Telecom Companies: The telcos will not require any approval for laying cables or installing mobile towers over private properties, according to new Right of Way Rules. The centre also notified rules for using infrastructure for the installation of small mobile radio antennas or laying overhead telecom cables along with charges, to ease roll out of networks, specially 5G services.
Infosys: The IT services company has reduced the average variable payout of employees to about 70 per cent for the June quarter amid margin squeeze and high employee costs. The decision was communicated to all the employees through an email.
GAIL India: The Indian government is in talks with Russia to resume gas supplies under the long-term import deal between Gazprom and GAIL (India), Reuters reported. “There are some immediate issues which we are trying to tackle both at the company level and also at G2G (government to government) level,” GAIL Chairman Manoj Jain said at an annual shareholder meeting.
PB Fintech: The company has approved a capital infusion of Rs 250 crore in Paisabazaar Marketing and Consulting and Rs 650 crore in Policybazaar Insurance Brokers, respectively during FY23. The company also incorporated a step-down subsidiary in Abu Dhabi to extend its technology hub in UAE. It will acquire 45% to 51% stake in UAE-based YKNP Marketing Management through its Dubai arm for $4 million.
Union Bank of India (UBI): The public sector bank has plans to put its Rs 2,077 crore outstanding loan to KSK Mahanadi Power on sale, according to The Economic Times news report. UBI, the second biggest lender to KSK Mahanadi Power, has set a reserve price of Rs 919 crore in cash for its exposure. At this price, the lender expects to recover 44% of the outstanding amount with a 56% haircut. The last date for expression of interest from buyers is August 31, which will be followed by an electronic auction on September 1, the report said.
Power Grid Corp: The state-owned company has acquired a special purpose vehicle Neemuch Transmission, which has been set up to establish an inter-state transmission link to evacuate power from Neemuch special economic zone. According to its exchange filing, the company acquired Neemuch Transmission from the bid process coordinator, REC Power Development and Consultancy.
TVS Motor: The two-wheeler manufacturer plans to acquire 48.27% stake in Narain Karthikeyan’s Startup Nkars Mobility Millenial Solutions for Rs 86.41 crore. Nkars Mobility is engaged in leasing two-wheeler, selling, trading and distributing pre-owned two-wheeler motor cycles and scooters.
The acquisition will be done through subscription of shares issued by way of preferential allotment and purchase of shares from some existing shareholders. TVS will obtain 48.27% stake in Nkars Mobility through subscription of shares issued by way of preferential allotment and through purchase of shares from certain existing shareholders of Nkars Mobil
Titan: The company plans to expand its jewellery business by adding 20-30 Tanishq stores over the next two to three years in the Middle East and North America, according to C K Venkataraman, MD, Titan. He was speaking during a launch of a campaign on Thursday. Titan expects its sales to grow by 15-20 per cent this festive season compared to last year, Venkataraman said during the launch of its initiative “Titan Shaurya”.
Oil and Natural Gas Corporation (ONGC): The state-owned company has relaunched a tender to sell gas from its KG fields at a higher price of $15 per mmBtu as the company wants to capitalise on a global surge in energy prices. The firm sought bids for the sale of 0.75 million standard cubic meters per day of gas for one year from the KG-DWN-98/2 (KG-D5) fields in the Bay of Bengal, according to the tender document. The firm asked users to quote a premium they are willing to pay over and above the reserve gas price of 14 per cent of Brent crude oil price plus $1 per million British thermal unit.
Vedanta: The mining company said that it will not decrease its $2 billion capex target for the current financial year despite falling metal prices. “We cannot stop the project in between and these are all the brownfield projects where the returns are very good and this will make our operation more effective, more productive, more efficient,” Vedanta’s Chief Executive Officer Sunil Duggal said. Duggal was speaking to reporters on the sidelines of the second day of the conference on the Indian minerals and metals industry organised by NMDC and FICCI.
Parag Milk Foods: The dairy company has raised a total of Rs 131 crore through preferential allotment from marquee investors and promoters. The promoters also plans to invest Rs.18.75 crore. The funds raised will be used for the working capital requirements of the company.
Global Markets
Wall Street closed sharply lower as investors were worried over the Federal Reserve’s ability to fight inflation without hurting the US economy. For the week, the S&P 500 tanked 4%, the Dow plunged 4.2%, and the Nasdaq slumped 4.4%
Federal Reserve Chair Jerome Powell at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming, Powell warned market participants that restoring price stability will likely require maintaining a restrictive policy stance for some time. Powell’s comments were hawkish and he reiterated that taming inflation as the bedrock of the recovery.
China’s stock markets declined during the week investors were less optimistic about the country’s economic growth outlook. The Shanghai Composite index fell 0.67%, the CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, fell 1.05%.
Meanwhile, the People’s Bank of China cut its one-year benchmark lending rate by 5 basis points and its five-year rate by 15 basis points. As a result, the one-year loan prime rate stands at 3.65% and the latest five-year loan prime rate is 4.3%.
Major equity indices in Japan pared earlier gains during the week and closed lower as investors became cautious ahead of the US Federal Reserve Chair Jerome Powell’s speech at the annual Jackson Hole economic symposium on Friday. For the week, the Nikkei 225 index fell 1% and the broader Topix index lost 0.75%.
Japan’s factory activity growth slowed to a 19-month low in August due to persistent higher raw material and energy costs as well as weakening global demand. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 51 in August from a 52.1 final in July.
Activity in the services sector contracted for the first time in five months, as a fall in new business raised concerns over tepid demand in the domestic economy. The au Jibun Bank Flash Services PMI Index slipped to a seasonally adjusted 49.2 in August from July’s final of 50.3, contracting for the first time since March. Meanwhile, the au Jibun Bank Flash Japan Composite PMI declined to 48.9 from July’s 50.2 final.