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Major equity indices fell during the week as investor sentiments were dampened after the Fed raised interest rates by a quarter percentage points and Indian government hiked securities transaction tax (STT) on futures and options contract. In addition, investors were worried over the lingering fears of contagion in the global banking system. For the week, the Sensex declined 0.80% to 57,527.10. The Nifty 50 index lost 0.91% to 16,945.05. The BSE Midcap index slumped 1.98% to 23,633.56. The BSE Smallcap index tanked 1.48% to settle at 26,767.
Top losers were Realty [-4.52%], Metal [-4.1%], IT [-3.18%], PSU Bank [-3.16%], and Media [-1.45%]. Top gainers were Pharma [0.68%] and FMCG [0.45%].
During the week, FIIs were net sellers for Rs 6,654.2 crore and the DIIs were net buyers for Rs 9,430.5 crore.
Indian rupee fell 22 paise to 82.48 against the US dollar on Friday [24-03-2023].
The government has hiked the Securities Transaction Tax (STT) on futures and options contracts, following amendments to the Finance Bill, 2023, passed by lower house of the parliament on Friday. STT has been hiked by 23.52% on the sale of options and 25% on the sale of futures contracts.
According to the amendments to the Finance Bill, STT on the sale of options has been hiked to Rs 2,100 on a turnover of Rs 1 crore against an earlier applicable levy of Rs 1,700. On the sale of futures contracts, the STT has been hiked to Rs 1,250 on Rs 1 crore of turnover against the earlier levy of Rs 1,000. On the options side, the STT is charged on the premium and not the strike price.
In other news, Indian government announced that windfall gains tax on crude petroleum has been reduced to Rs 3,500/tonne from Rs 4,400/tonne, while the special additional excise duty on diesel has been hiked to Rs 1 per litre from Rs 0.5 a litre.
Company News
Hindustan Aeronautics Ltd (HAL): The Rs 2,800-crore offer for sale of HAL was subscribed 3.8 times on the final day, with the retail portion getting a subscription of 1.23 times. The government is selling 3.5% stake in HAL at a floor price of Rs 2,450 apiece. The OFS consisted of a base issue size of 1.75% or 5.85 million shares, with an option to retain an over-subscription of 1.75%. The retail portion of the OFS also received an overwhelming response, with the government getting bids for 14,50,924 shares against 11,70,357 shares on offer for the category. The clearing price for the retail category was set at Rs 2,472 a share.
Insurance Companies: Shares of insurance companies declined in trade on Friday after the government passed Finance Bill 2023 with amendments in the Lok Sabha. As per the amendment, annual premiums exceeding five lakh rupees will be taxed post March 31, 2023.
Power Grid: The company’s board has approved plans to raise Rs 600 crore via unsecured, non-convertible, non-cumulative, redeemable, taxable bonds on a private placement basis by securitising the cashflows of its special purpose vehicle for 10 years from FY2032 to FY2033. The base issue size is Rs 100 core with a greenshoe option of Rs 500 crore. The interest will be paid on quarterly basis and the bonds are redeemable at par in 40 equal installments.
Asset Management Companies (AMCs): Shares of AMCs such as HDFC AMC, UTI AMC, Aditya Birla Sun Life AMC, etc., declined on Friday after the Indian government decided to treat the gains arising from debt mutual funds as short-term capital gains via an amendment to the Finance Bill. The amendment is likely to impact all debt funds negatively as high net worth retail investors may move to safe havens like bank fixed deposits.
Bharat Electronics (BEL): The Ministry of Defence has signed two contracts worth of Rs 3,800 crore with the company for supply of medium power radar and digital radar warning receiver for Indian Air Force.
Reliance Industries (RIL): Jio-bp, a joint venture between Reliance Industries and bp, and Piramal Realty, the real estate arm of Piramal Group, have entered a partnership for installation of EV charging stations across Piramal Realty’s residential developments. The partnership is to provide world-class EV charging solutions across Piramal’s residential projects in Mumbai.
Meanwhile, Reliance Consumer Products, the FMCG arm of the company’s retail subsidiary Reliance Retail Ventures, expanded its FMCG portfolio with the launch of personal and home care products.
JK Tyre & Industries: The company has received an investment of $30 million (Rs 240 crore) from International Finance Corporation (IFC) to part finance the expansion of manufacturing capacities and integrate advanced, resource-efficient technologies in the production of commercial and passenger car radial tyres which have better safety and longevity. IFC will hold 5.6 % stake in the manufacturer through issue of compulsorily convertible debentures (CCDs) on preferential basis.
Mahindra and Mahindra (M&M): The company has completed the acquisition of MITRA Agro Equipments by increasing its shareholding from 47.33% to 100%. M&M bought venture capital Omnivor’s full stake in the company, which was one of its first institutional investors in MITRA. MITRA plans to accelerate the expansion of its product portfolio and its network in India and overseas markets after the acquisition.
In other news, World Bank arm IFC will invest Rs 600 crore in a new last-mile mobility company wholly owned by Mahindra and Mahindra (M&M). The firm will be a newly incorporated company. The investment will be in the form of compulsory convertible instruments at a valuation of up to Rs 6,020 crore. The Rs 600 crore investments will give IFC an ownership of 9.97-13.64% in the new mobility company.
Cochin Shipyard: The company has bagged an international order from NAVSHUTTLE 1 AS and NAVSHUTTLE 2 AS, Lysaker Norway, for the construction of two zero emission feeder container vessels with an option for two more vessels. The total project cost is about Rs 550 crore and the first vessel is to be delivered in 28 months and the second will be delivered within 34 months. NAVSHUTTLE 1 AS and NAVSHUTTLE 2 AS are part of the Samskip Group, headquartered in the Netherlands.
Bajaj Hindusthan Sugar: The company said it has acquired two companies — Phenil Sugars Ltd (PSL) and Bajaj Power Ventures Private Ltd (BPVPL) — for Rs 800 crore.
Larsen & Toubro (L&T): The company signed an agreement with France-based McPhy Energy for a long-term partnership where the latter will grant an exclusive manufacturing license of its pressurised alkaline electrolyser technology to the former, including future product upgrades.
Nazara Technologies: The company’s subsidiary, Absolute Sports (Sportskeeda), has signed an agreement to acquire a 73.27% stake in Pro Football Network LLC (PFN), a premier source of coverage and analysis of the NFL (United States’ most watched sport) and college football. This marks the first acquisition of Absolute Sports in the US sports media market. The acquisition cost is $1.82 million (Rs 16 crore). In CY22, PFN had revenues of $2.1 million.
Maruti Suzuki India (MSI): The automaker said that it continues to witness increased cost pressure driven by overall inflation and regulatory requirements and it has planned price hike from April, 2023, which shall vary across models. The company added that it is taking maximum effort to reduce cost and partially offset the increase through a price increase.
Tata Motors: The commercial vehicle manufacturer will increase the price of commercial vehicles by up to 5% starting from April 1, 2023. The decision to increase prices is a result of the company’s efforts to comply with more stringent BS6 phase II emission norms. The price increase will be applied across the entire range of commercial vehicles.
Hero MotoCorp: The two-wheeler manufacturer said it will increase prices of its model range by around 2% from April 1, 2023, to offset the impact of rise in production cost and conform to stricter emission norms. The price revision will vary depending on specific models and markets, it added.
Hindustan Zinc (HZL): The company will pay dividends worth Rs 10,990 crore ($1.3 billion) to its shareholders. This will be the fourth time this year the company is paying dividends. The miner will pay an interim dividend of Rs 26 per share, which is 1,300% on the face value of Rs 2 per share, according to an exchange filing. The key beneficiaries will be Agarwal’s Vedanta, which owns about 65% in HZL, and the Indian government that holds about 30%.
Power Finance Corporation (PFC): The state-owned company said its board has approved raising up to Rs 80,000 crore through various financial instruments. An amount of Rs 40,000 crore will be raised through long-term domestic borrowings, and another Rs 20,000 crore by way of long-term foreign currency borrowing, according to its regulatory filing. Besides, proposals have been approved for raising up to Rs 20,000 crore through short-term borrowings and commercial paper. The proposals approved are for raising fund during the FY2023-24, the company said.
Global Markets
Major equity indices in the US ended higher after the Federal Reserve increased rates as expected and gains in technology stocks. For the week, the S&P 500 gained 1.4%, the Dow Jones rose 1.2% and the Nasdaq index climbed 1.7%.
The US Federal Reserve raised interest rates by another 25 basis points to 4.75% to 5%, the highest level since September 2007. Moreover, Fed projections hinted at just one more hike this year. Meanwhile, Treasury Secretary Janet Yellen said that the US government is prepared to guarantee more deposits if the banking crisis worsens.
On the economic front, Weekly Jobless Claims remained near five-decade lows. The S&P Global Composite Index of both services and manufacturing activity jumped from 50.1 to 53.3, indicating expansion in the private sector. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.2% last month, the Commerce Department said. Core capital goods orders advanced 4.3% on a year-on-year basis in February.
Japan’s stock markets ended with mixed returns for the week, with the Nikkei 225 index gaining 0.19% and the broader Topix falling 0.21%. The yen strengthened after the US Federal Reserve raised interest rates as anticipated. The Japanese Yen appreciated to 130.6 against the US dollar from about JPY 131.8 prior week.
Meanwhile, the rate of consumer inflation slowed in Japan, with the core consumer price index rising 3.1% YoY in February, down from 4.2% in January.
Chinese markets closed higher after market participants were optimistic that the country’s central bank will maintain an accommodative stance amid the global banking contagion. The Shanghai Stock Exchange index rose 0.46%, the CSI 300 climbed 1.72%, and the Hang Seng index jumped 2.03%.
The People’s Bank of China (PBOC) left its benchmark one-year and five-year loan prime rates (LPR) at 3.65% and 4.3%, respectively, for the seventh consecutive month since August 2022.