Weekly Market Report: Dalal Street tanks amid rate hike concerns; RIL, Adani Group Cos and Vedanta in news

Benchmark stock indices closed lower during the week as inflation remained high and investors were worried that global central banks would continue to raise interest rates to tame high inflation. For the week, the Sensex tumbled 1.59% to 58,840.79 and the broader Nifty 50 index tanked 1.68% to 17,530.85.

In the broader markets, the BSE Midcap index dropped 1.46% to 25,558.21 and the BSE Smallcap index was down 1.12% at 29,199.39.

Top Nifty sectoral indices were IT [-7.02%], Realty [-3.34%], Media [-3.11%], Pharma [-2.7%] and Auto [-2.01%]. Top gainers were Metal [1.86%], Bank [0.89%] and PSU Bank [0.56%]

For the week, FIIs were net seller for Rs 1,921.6 crore and DIIs were net sellers for Rs -2,936.8 crore.

The WTI Crude stood at $85.11 per barrel and the Brent Crude stood at $91.35 a barrel.

The Indian rupee closed at 79.74 against the US dollar on Friday.

Company News

Reliance Industries Ltd (RIL): The company’s retail arm, Reliance Retail, has sought shareholders’ approval to increase its borrowing limit from Rs 50,000 crore to Rs 1 trillion, according to a report by Economic Times. The company had borrowed Rs 40,000 crore in FY22, according to the report. The company is expected to seek shareholders’ approval in the September 30 Annual General Meeting (AGM), the ET report said.

Vedanta: Shares of the company tanked 8.66% in intraday trade on Friday after the company said it would not be undertaking the business of manufacturing semi-conductors. “We reiterate that the proposed business of manufacturing semiconductors is not under Vedanta Limited and it will be undertaken by the ultimate holding company of Vedanta Limited, Volcan Investments Limited,” the company informed the exchanges.

State Bank of India (SBI): The lender is opening special rupee accounts to handle Russia-related trade settlements in the local currency but clarified that it has not been identified as a nodal bank for handling Russia-related transactions. Accordingly, the bank is making necessary arrangements and processing requests received from various banks, including Russian banks, as per RBI guidelines and its own regulations.

SBI Cards and Payment Services (SBI Cards): The bank has raised Rs 500 crore by issuing bonds on a private placement basis. The company allotted 5,000 fixed rate, unsecured, taxable and redeemable bonds in the nature of non-convertible debentures of Rs 10 lakh each aggregating to Rs 500 crore. The tenure of the bonds is three years with a coupon rate of 7.39% per annum and is set to mature on September 15, 2025.

Telecom companies: Reliance Jio gained 2.94 million mobile subscribers in July, data released by the Telecom Regulatory Authority of India (Trai) showed. The company had added 420,000 new subscribers in June. Airtel added 0.5 million subscribers in July, while Vodafone Idea lost 1.54 million subscribers in July. Meanwhile, the government-owned BSNL and MTNL lost 1,327,999 and 3,038 wireless customers, respectively.

Jio had a customer base of 415.96 million as of July 31, followed by Airtel at 363.4 million, and Vodafone with 255.1 million. The overall number of telephone subscribers in India increased by 0.7 million in July to 1.17 billion as on July 31, according to TRAI data.

Larsen & Toubro (L&T): The company’s construction arm, L&T Construction, has secured a repeat order from the Department of Water Resources, Government of Odisha, to execute a Pressurized Underground Pipeline Irrigation Network System for the Right Command of Lower Suktel Irrigation Project. According to the company’s project classification, the value of the order ranges between Rs 1000 crore to Rs 2500 crore. The project scope involves survey, design, engineering, supply,laying, installation & commissioning of pumping main & distribution network with all allied electromechanical & automation works.

YES Bank: The private lender will sell its bad loans worth Rs 48,000 crore to an asset reconstruction company (ARC) floated by JC Flowers. According to a report in Mint, YES Bank will also pick up a 20% stake in the ARC. JC Flowers ARC It is expected to pay Rs 1,677 crore to the bank in the next 60 days, the Mint report added. After this, the bank will have near-zero non-performing assets (NPAs), Mint reported citing sources.

Fairchem Organics: Fairfax India Holdings is looking to sell its majority stake in speciality chemicals manufacturer Fairchem Organics, Mint news reported citing three sources aware of the matter. The transaction may value the publicly listed company at a 25-30% premium to its market capitalization and Fairfax has hired Bank of America (BofA) as an adviser for the deal, one of the three sources said.

CEAT: Shares of the company zoomed 20% on Thursday on the back of healthy business outlook. In its annual report, the company said that export sales are likely to improve and the company will continue to strengthen its leadership position in two-wheeler segment. The company also plans to gain more market share in Passenger Car Radial tyres (PCR) and Truck and Bus Radial (TBR).

Besides, brokerage firm Motilal Oswal has given a buy call for the tyre company stock with a target price of Rs. 1,630 apiece. The brokerage house expects healthy demand and commodity deflation to drive recovery from H2FY23.

Eicher Motors: The company joined the Rs 1 trillion market capitalisation club during the intra-day trade. The shares of the company opened at Rs 3,541.30, touched a high of Rs 3,670.90, and closed at Rs.3,622.50 on Thursday.

Brightcom: The digital marketing company has decided to call of its deal to acquire MediaMint for Rs 566 crore and will now go for a strategic alliance with MediaMint. Some of MediaMint’s recent client additions are in the same business as Brightcom, which could impact the growth prospects of the combined business. Therefore, the companies have decided to pursue independent paths of growth.

Tamilnad Mercantile Bank: Shares of the bank had a tepid stock market debut with the stock listing at Rs 495 apiece on the NSE, a discount of more than 3% as compared to its IPO issue price of Rs 510 per share. The shares touched a high of Rs 515 apiece and closed at Rs 509.65 per share on Thursday.


Adani Group Companies

Adani Enterprises: The company surpassed insurance giant Life Insurance Corporation of India (LIC) and FMCG company ITC to become most valuable stock in terms of market capitalisation after a strong rally in the Gautam Adani’s Group company.

Meanwhile, Adani Group‘s Chairperson Gautam Adani surpassed Amazon’s Jeff Bezos to become the world’s second richest person. He is now only behind Tesla CEO Elon Musk, the world’s richest man with a networth of $273.5 billion, according to Forbes’ real time data, LiveMint reported.

Further, Switzerland’s Holcim has closed the sale of Ambuja Cement and ACC, Ambuja’s subsidiary, to the Adani Group, resulting in cash proceeds of $6.4 billion.

DB Realty and Adani Group: Adani Realty is in advanced talks with Mumbai-based DB Realty for a potential merger deal, The Hindu BusinessLine reported citing sources. After the merger, the combined entity would be renamed to Adani Realty, the report added. Adani may pump in capital into DB Realty, according to the report. Shares of DB Realty rose 4.98% per equity share.

Adani Wilmar: The company is searching for local and overseas acquisition targets as Gautam Adani doubles down on boosting his empire’s food operations weeks after Reliance Industries announced plans to launch a consumer goods business, Bloomberg reported. “We are looking at acquiring brands in staple foods and distribution companies to boost our consumer goods offering and reach,” Angshu Mallick, chief executive officer and managing director at Adani Wilmar, said in an interview. “We are expecting to conclude a couple of acquisitions by March,” he added. The company has earmarked 5 billion rupees ($62.9 million) from its initial public offering for purchases, Mallick said.

Adani Ports and SEZ (APSEZ): The company’s subsidiary, HDC Bulk Terminal Ltd (HBTL), has signed the concession agreement with Syama Prasad Mookerjee Port, Kolkata (SMPK) for mechanisation of berth no. 2 at Haldia Port. Under the agreement, the company will have the rights to design, build, finance, operate, maintain and manage the bulk terminal with a capacity of 3.74 million tons per annum for a concession period of 30 years at Haldia Dock Complex, Haldia.

Tata Group Companies

Tata Power: The company’s subsidiary, Tata Power Solar Systems Limited (TPSSL), received a ‘Letter of Award’ (LoA) of Rs 612 crore for setting up a 100 MW groundmounted solar project for SJVN Limited (SJVN). The project is located at the Raghanesda solar park plot C, Gujarat. The LoA was awarded through tariff-based competitive bidding and the project will be commissioned within 11 months from the date of receiving of LoA.

Tata Consultancy Services (TCS): The IT major in an exchange filing said that it has successfully completed the first phase of the cloud transformation for Penumbra, a US-based healthcare company. TCS has upgraded its order management, finance and procurement functions with a new digital core. It has also integrated internal and external data sources to enable real-time insights for better decision making.

Tata Power: The company’s Transmission and Direction (T&D) Services have announced to invest Rs 5,000 crore to ensure reliable and quality electricity supply to industries. “We are fully committed to realise the Odisha government’s vision of Make in Odisha through reliable and quality power supply to industries,” Tata Power’s T&D, President, Sanjay Banga said, adding that Tata Power Discoms serve 9 million customers across the state.

Tata Steel: The Tata Group company said that the board of directors has approved the fund raising plan through the issue of non-convertible debentures up to Rs 2,000 crore in two series. In the first series, they will raise Rs 500 crore and in the second series, the fund raising via NCDs would be Rs 1,500 crore.

Economy News

India’s inflation based on Consumer Price Index rose to 7% in August from 6.71% in July, according to government data. In the same period last year, inflation stood at was 5.3%.

The Consumer Food Price Index (CFPI) or the inflation in the food basket showed a month-on-month increase of 7.62% in August 2022, from 6.69% in July. Prices of vegetables rose 13.23% YoY in August. Cereals and products gained 9.57%, milk and products rose 6.39%, and fruits grew 7.39%, while
egg prices slipped 4.57%.

Meanwhile, India’s industrial production registered a growth of 2.4% YoY in July, much weaker than June’s 12.7% rise, according to data released by the country’s statistical agency. In the same month of 2021, industrial output had advanced 11. %.

Among three main sectors, manufacturing and electricity sector grew, while mining output fell. Manufacturing sector grew 3.2% over the same period last year and electricity output increased 2.3%, while mining sector contracted shrank 3.3% from July 2021. In the April to July period, industrial production posted an expansion of 10.2% YoY, electricity grew 13.2% on year and mining output was up 6.1% YoY.

India’s inflation based on wholesale price index (WPI) stood at 12.41% in August 2022 compared with 11.64% in August 2021. The WPI-based inflation grew 13.93% in July 2022, while the number was 16.23% in June. The wholesale price index continued to remain in double digit for the 17th consecutive month in August.

Inflation in food articles segment stood at 12.4% in August 2022 versus 10.78% previous month. Vegetables inflation stood at 22.3% in August 2022 compared with 18.3% in July 2022. Cereals inflation rose to 11.8% from 9.8% a month ago.

Fitch Global Ratings reduced India’s GDP growth forecast expecting a global slowdown and tighter monetary policy. In its latest report, the ratings agency expects the Indian economy to grow at 7% in FY23 compared with its previous estimates of 7.8%. The forecast for FY24 have also been cut to 6.7% from earlier estimates of 7.4%.

The World Bank and International Monetary Fund also warned of a global recession in 2023, and said global central banks rising rate may not be enough to bring down inflation.

Global Markets

The US markets slumped for the week as investors were concerned over persistent high inflation and aggressive rate hikes by the Fed in the upcoming monetary policy meeting scheduled next week. For the week, the Dow tanked 4.14%, S&P 500 plunged 4.77% and Nasdaq plummeted 5.48%.

The CPI-based inflation number was above expectations and dampened hopes of investors that the inflation had peaked. Headline inflation rose 8.3% for the 12 months ended in August against estimates of 8.1%. In July, inflation was 8.5%. Further, core inflation (excluding food and energy) jumped to 6.3%, which was its highest level since March and above expectations for a rise of 6.1%.

Meanwhile, global transportation and logistics company FedEx warned of a gloomy outlook on the global economy and weighed on the US markets at the end of the week.

Japan’s stock markets fell over the week due to worries of an economic slowdown and high inflation across the world. The Nikkei 225 index dropped 2.29% and the broader Topix index fell 1.37%. The Japanese currency ended the week at about JPY 143 against the US dollar from about JPY 142 the prior week.

China’s stock markets fell as its currency depreciated and investors were worried over global recession. People’s Bank paused its monetary easing measures amid rising pressure from an aggressive and hawkish U.S. Federal Reserve. The broad Shanghai Composite index tumbled 4.2%, the CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, plunged 3.9% and the Hang Seng slumped 3.10% during the week.

On the economic front, China reported better-than-expected growth in factory output and retail sales last month. Industrial production rose 4.2% year-on-year in August compared with 3.8% in July. Retail sales jumped 5.4% year on year from July’s 2.7% growth. The Chinese central bank kept its one-year medium-term lending facility (MLF) unchanged at 2.75%.