Weekly Market Report: Dalal Street falls on rate hike concerns and FII outlfows; RIL, Adani Group and Tata Steel in news

Dalal Street dropped during the week as investors were worried that the aggressive rate hike by the Fed and hawkish commentary by the the Fed Chair Jerome Powell would stall global economic growth. For the week, the Sensex fell 1.26% to 58,098.92 and the Nifty 50 index declined 1.16% to 17,327.35.

Broader markets also declined, tracking headline indices. The BSE Midcap index fell 1.12% to 25,271.41 and the BSE Smallcap index lost 1.32% to settle at 28,812.76.

Top losers among Nifty sectoral indices were Energy [-4.43%], Realty [-3.87%], PSU Bank [-3.12%], Bank [-3.02%] and Metal [-1.8%]. Top gainers were FMCG [3.85%], Pharma [2.14%] and Auto [1.07%].

Top losers in Nifty 50 index were Power Grid Corp [-14.1%], Shree Cements [-9.1%], UltraTech Cement [-5.3%], NTPC [-5.1%] and Hindalco Industries [-3.9%]. Top gainers were Sun Pharma [6.1%], Hindustan Unilever [6.1%], ITC [4.6%], Britannia [4.3%] and Eicher Motors [3.9%].

For the week, FIIs sold for Rs 4,361.8 crore and DIIs bought for Rs 1,137.9 crore in the cash segment.

The rupee touched a lifetime low of 81.26 against the US dollar during the session on Friday. The rupee fell as the US dollar index strengthened as investors sought the safe-haven currency. However, the rupee recouped some losses to close 80.99, down 13 paise from Thursday’s closing, against the US dollar on Friday.

On the technical chart, Nifty 50 index has formed a solid bearish candlestick pattern, while a shooting star pattern is formed on the weekly and monthly chart indicating that the market is likely to be under pressure in the coming week. 

Company News

Reliance Industries Ltd (RIL): The conglomerate said it would invest $12 million for a 20% stake in solar technology developer Caelux Corp to produce more powerful and lower cost solar modules. RIL’ wholly-owned subsidiary, Reliance New Energy (RNEL), and Caelux have also entered into a strategic partnership agreement for technical collaboration and commercialisation of latter’s technology, Reliance said in an exchange filing.

The company’s retail arm, Reliance Retail, is in advanced talks to get the rights for beauty retailer Sephora in India, the Mint newspaper reported citing two people familiar with the matter. Sephora’s operations will transfer from Arvind Fashions Ltd to Reliance Retail if an agreement is reached, according to the report.

The company’s CFO Alok Agarwal plans to sell 2.25 lakh shares between May 10 to August 31, 2023. He also will gift 1.25 lakh shares between May 10 to May 31, 2023.

Ambuja Cements and ACC: Billionaire Gautam Adani pledged his entire stake in Ambuja Cements and ACC, worth about $12.5 billion, to foreign banks to fund his family’s $6.5 billion acquisition of the two cement makers. The family’s 63.15% stake in Ambuja Cements and 56.69% in ACC have been pledged by Adani Group, according to exchange filing made by Ambuja Cements.

Adani Ports And Special Economic Zone (APSEZ): The company has bagged a Rs 25,000 crore project to develop Tajpur deep sea port in West Bengal. The greenfield project will see Rs 15,000 crore utilised toward port development and the rest toward building related infrastructure. Meanwhile, Avantika Singh Aulakh, VC and CEO, Gujarat Maritime Board, has resigned from Adani Port’s board.

Adani Group: Adani Ports’ dollar bonds have dropped more than Indian peers on concern about the group’s debt, and its notes due in August 2027 fell to an all-time low this week, Bloomberg news reported. Bonds of group companies including Adani Green Energy and Adani Transmission Step-One also mostly underperformed the broader Indian market, the report said. Adani Ports’ seven dollar-denominated notes have lost about 14% on average so far this year, while Adani Transmission Step-One’s notes due in 2036 and Adani Electricity Mumbai’s 2030 securities have lost more than 17% each, the report added.

Meanwhile, Adani Group is planning to foray into steel sector by bidding for the state-owned Rashtriya Ispat Nigam slated for disinvestment in January, according to a report by businessline. Adani Group is expected to be more aggressive than the legacy players such as JSW Steel, Tata Steel and ArcelorMittal Nippon Steel, the report said citing sources.

Tata Steel: The company has approved amalgamation of seven metal companies of Tata group into Tata Steel. Theseven metal companies of Tata group that will be merged with Tata Steel are Tata Steel Long Products Limited, The Tinplate Company of India Limited, Tata Metaliks Limited, TRF Limited, The Indian Steel & Wire Products Limited, Tata Steel Mining Limited and S & T Mining Company Limited.

In other news, the company has raised Rs 2,000 crore through NCDs issue after the board of directors approved the allotment of 20,000 non-convertible debentures with face value Rs 10 lakh each to identified investors on private placement basis. The NCDs are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE.

Hero Group: The group along with the US-based private equity giant KKR will invest $450 million in the motorcycle maker’s renewable energy arm, Hero Future Energies, the companies said. “This investment will position Hero Future Energies for continued growth and support its efforts to expand its renewable energy capacity and capabilities across technologies such as solar, wind, battery storage, and green hydrogen, and into new markets over time,” the companies said in a statement.

State Bank of India (SBI): The lender has raised Rs 4,000 crore Basel III compliant Tier 2 bonds at coupon rate of 7.57%. The bonds have a tenor of 15 years with a call option after 10 years and on anniversary dates thereafter.

Punjab National Bank: The public sector lender has raised Rs 658 crore by issuing Basel III compliant additional Tier-1 bonds at a coupon rate of 8.3% per annum, on a private placement basis.

Mahindra & Mahindra (M&M): The automobile company is in talks with global investors to raise between $250 million and $500 million to expedite its plans to build electric vehicles (EVs), Reuters news agency reported quoting source with direct knowledge of the matter.

In other news, the company said it will buy an additional 17.41% stake in Swaraj Engines Ltd from Kirloskar Industries Ltd (KIL) for Rs 296 crore. The acquisition will result in increasing the company’s stake in Swaraj Engines to 52.13% from 34.72%, according to the company’s regulatory filing. The company proposes to acquire 21,14,349 equity shares at Rs 1,400 per share, the company added. With this acquisition, SEL, which is currently an associate of the company, would become a subsidiary of M&M, the regulatory filing said.

Airtel: Pastel Ltd, an entity of Singtel, has divested 1.59% stake in Bharti Airtel for Rs 7,261 crore at an average price of Rs 772.5 apiece through an open market transaction. The stake has been bought by Bharti Airtel’s promoter Bharti Telecom, as per block deal data available with the National Stock Exchange (NSE).

Wipro: The IT major has terminated the services of 300 staff members who were found working for its rivals while still being on the company’s payroll, the firm’s executive chairman Rishad Premji said, according to a PTI report. Premji was speaking at an All India Management Association’s event.

Solar PV Module Manufacturers and Renewable Energy Producers: The Union Cabinet approved a Rs 19,500-crore production linked incentive scheme on ‘national programme on high efficiency solar PV modules’. The Centre, in an official release, noted that the scheme will bring direct investment of around Rs 94,000 crore and lead to direct employment of about 1,95,000 persons and indirect employment of around 7,80,000.

YES Bank: The private lender said that its board has approved the sale of stressed assets worth around Rs 48,000 crore to JC Flowers ARC, which has turned out to be the sole bidder for the portfolio. The US-based asset reconstruction company had in July this year emerged as the base bidder for the proposed sale of the identified stressed loan book of Yes Bank.

SpiceJet: The aviation regulator DGCA has extended the 50% limit on SpiceJet’s number of flight departures until October 29 as a matter of ‘abundant caution’. The airline will be subjected to “enhanced surveillance” during this period, DGCA said.

Indian Railway Catering and Tourism Corporation (IRCTC): The company is set to enter the payment aggregator space and it has planned to approach RBI for an aggregator license, according to a report by BusinessLine. The report said IRCTC has received an approval from the Registrar of Companies, NCT, Delhi and Haryana to change the Main Objects Clause of the Memorandum of Association and insert a new clause to act as a Payment Aggregator.

Power Grid Corp: Global brokerage firm Jefferies said that Power Ministry is in talks with Power Grid to purchase PFC’s 52.63% stake worth Rs 14,400 crore in REC. The brokerage firm observed that the purchase of PFC’s stake in REC was a near-term dampener and could adversely impact FY23-25E EPS by 3-5%. Shares of the company tanked 7.97% on Friday.

Telcom companies: The government released the draft Indian Telecommunication Bill, 2022, under which it has proposed a provision to waive off fees and penalty of telecom and internet service providers. According to the draft, the central government may, “waive in part or full any fee, including entry fees, license fees, registrations fees or any other fees or charges, interest, additional charges or penalty” for any licence holder or registered entity under the telecom rules.

Vodafone Idea (VIL): The telecom operator is facing difficulties in finalising deals for 5G equipment as vendors are asking the company to clear previous dues first, according to a news report by Economic Time. The deals for 5G equipment supplies and tower tenancies have also hit a roadblock with vendors demanding advance payments, the report added.

Fortis Healthcare: Shares of the company tanked 20% after the Supreme Court refused to lift the halt on IHH Healthcare’s open offer for Fortis. IHH Healthcare had acquired a 31% controlling stake in Fortis in 2018 by paying $1.1 billion in a bidding process overseen by an independent board. This development led to an open offer to acquire another 26% of Fortis shares from the market. The open offer was not pursued as Daiichi had filed a plea against it.

In a separate news, the Supreme Court ordered six months jail term to brothers Malvinder Singh and Shivinder Singh in the Daiichi-Fortis case and ordered a forensic audit of the Fortis-IHH deal.

Exide Industries: The company said the first phase of its 6Gwh lithium-ion battery plant in Karnataka will be ready in 27-30 months, and it has lined up Rs 3,800-4,000 crore investment to execute the project. The project, spread over 80 acres, will expand to become a 12-Gwh (Gigawatt hour) capacity integrated lithium-ion battery facility involving a total investment of Rs 6,000 crore, and it will take 8-10 years to reach its peak capacity.

M&M Financial Services: The RBI has asked the company to stop outsourcing all recovery and repossession arrangements immediately, till further orders. The order came after a pregnant woman was mowed down by a recovery agent of the company in Jharkhand’s Hazaribagh.

Global Markets

Wall Street registered losses for the second week in a row after Federal Reserve’s Federal Open Market Committee indicated that short-term interest rates would continue to rise sharply over the next several months. . For the week, Dow fell 3.99%, S&P 500 tanked 4.64%, and Nasdaq plunged 5.07%.

Chinese stock markets dropped as global growth slowdown concerns dampened investor sentiments. The Shanghai Composite index slipped 1.22%, the CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, dropped 1.95% and Hang Seng tanked 4.42% during the week.

The People’s Bank of China kept its one-year and five-year loan prime rates (LPR) unchanged at a monthly meeting, in line with expectations. The one-year loan prime rate remains at 3.65%, and the five-year rate closely tied to home mortgages stands at 4.3%.

Japan’s stock markets closed lower in a truncated week due to weak global sentiments over rising interest rates. The Nikkei 225 index fell 1.5% and Topix was down 1.16%. An aggressive large interest rate hike by the Fed further widened the U.S.-Japan interest rate differential.

The Japanese government intervened in the foreign exchange market to support the Japanese yen after it fell below JPY 145 against the US dollar. The Japanese yen finally settled for JPY 143.31 against the US dollar at the end of the week.

In the economic front, core consumer prices in Japan rose 2.8% in August from the year-ago period, government data showed.

Meanwhile, the Japanese central bank decided to keep its monetary easing policy unchanged, in contrast to the US and European central banks. The Bank of Japan’s Policy Board unanimously voted to keep its short-term policy interest rate at minus 0.1% and continue to guide 10-year government bond yields around 0%.