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In cues from overseas, European Central Bank’s meeting this week will be in focus for guidance on its pandemic bond-buying programme. Also, Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, HSBC Holdings, China Vanke, PetroChina, Ping An Insurance Group will release their earnings.
Mukesh Ambani-led Reliance Industries (RIL) is reaping the benefits of an increase in production from its oil and gas assets. The higher production from RIL-bp controlled Dhirubhai-6 (D6) block in the Krishna Godavari (KG) Basin will coincide with the government significantly hiking the price allowed for selling domestically produced natural gas, according to media reports.
RIL’s share of production from the KG-D6 basin sequentially rose by 18.4% to 39.2 billion cubic feet equivalent (BCFe) during the quarter ending September 30 of the current financial year. This stood at 33.1 BCFe in April-June 2021. There was nil production from this asset in July-September 2020. “Commissioning of R-Cluster and Satellite Fields in KG D6 block led to a turnaround in the oil and gas segment earnings," RIL said in a presentation.
The privatisation of Bharat Petroleum may hit a roadblock due to high fuel prices due to a rise in global crude oil prices, as per media reports.
The price of global benchmark Brent crude oil has risen 13% in a month to $85 per barrel, its highest level in seven years.
Net profit fell 1.8% year-on-year to ₹269.2 crore in the September ended quarter, while revenue rose 5.2% to ₹1,352.4 crore from ₹1,285.5 crore a year ago.
Gold prices held firm on Monday near the key level of $1,800 as a drop in the U.S. dollar bolstered bullion's safe-haven appeal, while investors cautiously eyed the next Federal Reserve meet for guidance on its monetary policy.
Spot gold was up 0.6% at $1,803.06 per ounce, as of 0858 GMT. U.S. gold futures rose 0.4% to $1,802.80.
The dollar index hit a near one-month low, making bullion more appealing to buyers holding other currencies.
The United States, through its International Development Finance Corp., and India's Biological E. Ltd said on Monday they have finalised a financing arrangement for $50 million to expand the vaccine maker's capacity to produce COVID-19 shots.
Business traction healthy, elevated claims impact earnings.
· Gross premium grew at a healthy pace of 14% YoY to | 11632 crore
· VNB margins remained healthy at 26.4%, aided by a balanced product mix
· Claims remained elevated amid pandemic; provision buffer at | 204 crore
· Surplus improved from | 59 crore to | 178 crore QoQ
Key triggers for future price performance
· Focus on credit protect & retirement product to aid business growth
· Strong distribution network remains core to maintain business momentum
· VNB margins to be industry leading at ~26%, led by balanced product mix
· Approval from IRDA, CCI for merger of Exide Life expected in Q4FY22
We retain our ‘BUY’ rating on the stock
Target Price and Valuation: We value HDFC Life at 4.4x FY23E EV with TP of ₹850/share
A whistle-blower flagged off related party transactions (RPTs) carried out by the promoters of Asian Paints Ltd. (APL) that allegedly benefited them at the cost of company’s shareholders.
The whistle-blower informed SEBI that money to buy a company called Paladin Paints and Chemicals (PPC) went from APL but its promoters Ashwin Dani and son Malav now control it in their personal capacity. SEBI has sought details from the whistle-blower.
THE BELEAGUERED auto segment was affected in the September quarter by unending supply constraints. The global semiconductor crunch, accentuated by lockdowns in some chip-manufacturing markets, hit passenger vehicles sales. Rising input costs because of higher commodity prices also played spoilsport.
Two-wheelers stayed in the slow lane as well because of the impact of the pandemic on rural markets, but the commercial vehicle segment had a relatively smoother ride because of an improvement in economic activities.
Automakers Maruti Suzuki and Bajaj Auto, which are set to announce their September-quarter results on Wednesday, are expected to feel the pinch of the raw material crunch. The operating margins of the two companies could contract by 400-240 basis points (bps) year-on-year (y-o-y), respectively, according to estimates by Axis Securities analysts. There could be some respite as the situation begins to normalize and this could help scale up the availability of raw material in this quarter.
European shares tiptoed higher on Monday, led by miners and energy stocks as commodity prices strengthened, while investors awaited a flurry of earnings reports with several behemoths set to publish results this week.
The pan-European STOXX 600 inched 0.02% higher, after Asian peers eked out slim gains.
London's benchmark FTSE 100 index grew 0.4% to 7,233.61 points. Frankfurt's DAX index gained 0.1% to 15,548.68 points. The Paris CAC 40 opened flat at 6,732.87.
Ramco Cements consolidated September quarter revenue at ₹1,503 crore versus ₹1,266 crore a year ago.
Corporate India has shown resilience in the aftermath of the pandemic, logging a 14% year-on-year increase in job opportunities in Q3 2021, according to a report by recruitment firm Michael Page.
The surge in hiring is led by e engineering and manufacturing as well as the technology sector. While engineering and manufacturing saw significant rise in employment, technology is a close second with a 58% increase in job opportunities.
Non-IT sectors such as legal and human resources also witnessed a substantial increase in job opportunities as employment rose at 35% and 25% respectively in Q3 2021 compared to the year-ago period.
“This buoyancy in hiring reflects the increase in economic activity and mass vaccination drive carried out by the government in the last few months following the ebbing of the second Covid-19 wave," the report said.
Solar tariffs may rise to ₹2.6-2.7 per unit (from an all-time low of ₹2 unit) over next fiscal following the recent increase in Goods and Services Taxes (GST) on renewable energy equipment, and proposed customs duty on imported solar modules.
Oil prices climbed on Monday, extending pre-weekend gains to hit multi-year highs as global supply remained tight amid solid fuel demand in the United States and elsewhere in the world as economies pick up from coronavirus pandemic-induced slumps.
U.S. West Texas Intermediate (WTI) crude futures rose 62 cents, or 0.7%, to $84.38 a barrel, after gaining 1.5% on Friday. They touched their highest since October 2014 - $84.76 - earlier in the session.
Brent crude futures increased 56 cents, or 0.7%, to $86.09 a barrel, following on from last Friday's 1.1% gain. The contract earlier hit its highest since October 2018 of $86.43.
The Supreme Court on Monday directed the Centre to put the counselling for National Eligibility cum Entrance Test (PG) on hold until it decides the validity of the Centre's decision to introduce Other Backward Classes (OBC) and Economically Weaker OBC and EWS reservation in the All India Quota (AIQ).
As the Supreme Court was informed that the full schedule for the counselling starting from October 24 and ending on October 29 has been announced, the Apex Court said the counselling should not proceed till the court decides the issue.
Going ahead, we expect buying demand to emerge from 18000-17800 range as we do not expect key support threshold of 17800 to be breached. Key point to highlight during ongoing corrective phase is that, the index has been retracing recent sharp up move as it filled the three positive gaps seen during last week.
We believe such price action would make market healthier. The ongoing sectoral churn, pricing in the Q2FY22 earnings which is a healthy sign for structural up trend, wherein Banking, capital goods and realty continued to relatively outperform.
Thus, any dip from here on towards 17800 should be capitalised on to accumulate quality stocks amid progression of Q2FY22 result season. Meanwhile, last week’s high of 18600 would act as immediate resistance.
India's first indigenous aircraft carrier (IAC) Vikrant set sail on Sunday for the second sea trials, ahead of its planned induction into the Indian Navy by August next year.
The 40,000-tonne aircraft carrier, the largest and most complex warship to be built in India, successfully completed a five-day maiden sea voyage in August.
Following the first sea trials, the Navy had said that the performance of key systems of the warship was found to be satisfactory.
Reliance Industries Ltd reported a comprehensive beat across segments, with reported operating profits above our (+8%) and street (+5%) estimates. Stronger refining margins, aided by revival in petroleum demand due to improved mobility, higher footfalls and operating days in Retail segment as localized lockdowns eased and sequentially higher ARPU in the telecom segment aided better profitability. In addition, higher natural gas production from KG D6 and better realization in CBM and US shale further helped RIL report stronger earnings.
RIL has generated a strong 24% return over past 3M, we maintain our BUY rating on the stock and raise TP to ₹2860/sh (from ₹2440/sh) as we factor in for value accretion ( ₹340/sh) from investment in renewable energy
India logged 14,306 new COVID-19 cases, taking the virus tally to 3,41,89,774, even as active cases declined to 1,67,695, according to Union Health Ministry data on Monday.
Death toll climbed to 4,54,712, with 443 daily fatalitie. India had recorded more than 500 deaths on Sunday.
On Friday, the rupee had closed at 74.90 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12% to 93.53.
Shares of listed multiplex companies PVR Ltd and Inox Leisure Ltd have been in focus from the last few trading sessions following the reopening of theatres in Maharashtra on 22 October. Maharashtra is the key growth driver for these companies with about 25-30% revenue contribution for Hindi content. It should be noted that states such as Andhra Pradesh, Karnataka, Odisha, Rajasthan, and Telangana are already operating at 100% occupancy.
While this development is a positive, the operating performance of both companies was weak in the September quarter. Inox's Ind-AS adjusted Ebitda loss stood at ₹64 crore in the September quarter and PVR's came in at ₹110 crore. Ebitda is short for earnings before interest, tax, depreciation, and amortization. Paucity of content and prevailing occupancy caps weighed on their earnings, analysts said. Even though many production houses have announced their release schedules with a strong content pipeline, the rising competition from over-the-top (OTT) platforms remains strong.
Consumer-focused companies are finding it hard to maintain profit margins, having been unable to offset soaring commodity inflation through price hikes, according to a Mint analysis of early trends in September quarter corporate earnings.
In addition, these numbers show signs of a slowdown in consumer demand, especially in rural India.
Analysts said September quarter earnings so far have been a mixed bag. A Mint analysis of 176 companies shows that net profit adjusted for one-time items increased 6.68% from the preceding three months against 2.54% in the June quarter. Net sales of these companies grew 9% in the fiscal second quarter from a decline of 2% in the preceding three months. The analysis excludes oil and gas, banks, financial services and insurance (BFSI) companies. “Earnings so far are a mixed bag, where IT reported a good set of numbers whereas the margin pressure was visible in the consumer space with inadequate price hikes, as compared to raw material inflation," said Neeraj Chadawar, head of quantitative equity research at Axis Securities. (Read here)
"The markets are struggling at the psychological level of 18000. Despite opening at above 18200, the index failed to sustain and dropped within a few minutes. If we can keep above 18000 on a closing basis, it would be a positive sign. However, if we break that level, the sentiments in the short term would get jittery and the Nifty could slide down further towards 17700-17800."
HSBC Holdings reported a 74% rise in third quarter profit, beating market expectations, as the Asia-focussed bank released cash set aside for expected bad loans that have not materialised.
The bank posted pretax profit of $5.4 billion for the quarter to September, versus $3.1 billion a year earlier and the $3.78 billion average estimate of 14 analysts compiled by HSBC.
HSBC also announced a share buyback of up to $2 billion, as it continues to return excess capital to shareholders in place of investing the cash in its businesses.
Reliance Industries Ltd reported a consolidated profit of ₹15,479 crore for the quarter ended September, up 46% year-on-year, driven by a sharp recovery in retail business, and sustained growth in digital and oil-to-chemical segments.
Consolidated revenue was at ₹1.74 lakh crore, up 50% from the year-ago period.
ICICI Bank on Saturday reported its highest ever quarterly net profit of ₹5,511 crore for Q2FY22, an increase of 30% year-on-year. Profits rose on the back of a 19% growth in its domestic loan portfolio. Net non-performing assets fell below 1%, the lowest since 2014. Advances rose 17% year-on-year and 4% sequentially to ₹7,64,937 crore as on 30 September.
The week started with a decent bump up which was then followed by yet another gap up on Tuesday to reach new millstone of 18600. However, the high beta midcap counters (recent movers) started correcting fiercely, which dampened the overall sentiments in the market. Nifty had a rub off effect of this and in the process; it came off slightly in the following couple of sessions as well. Thursday morning, the global markets were a bit stable and as a result, our markets opened with a decent upside gap, exceeded the SGX Nifty by a fair margin. However it was merely a formality as we not only saw Nifty erasing all gains but also went on to slide below 18100 during the penultimate hour. Fortunately due to late recovery in some of the heavyweights, Nifty managed to recover fair bit of ground to conclude the weekly expiry tad below the 18200 mark. The similar price action was seen on Friday too and with a gradual decline, Nifty ended around 18100.
Clearly, the Nifty constituents other than financial stocks are weak and they are leading the correction in the index. However, the banking stocks seem to have different plans. They refused to correct in the first half of the week and in fact, when Nifty was about to knock the crucial support of 18000 in the latter half, the banking counters came for a rescue. There was complete gush seen in the banking space on Thursday, which led BANKNIFTY to close above the new millstone of 40000 with some authority. If banks had not shown this mesmerising move towards the end of the week, the Nifty would have certainly breached the 18000 mark. Now two major indices are showing complete divergence, so going forward it would be interesting to see whether the BANKNIFTY’s strength lifts Nifty higher or vice versa. Hence, all eyes on the banking space going forward; because a follow up move from hereon will certainly lift the overall sentiments in the market.
As far as levels are concerned, 18060-18000 are crucial supports, while18260 – 18400 will be seen as immediate hurdles. Since the weekly chart of midcap index is showing a bearish formation, which can be termed as ‘Engulfing’ candle, we advise traders not to create aggressive longs in high beta counters. Yes the thematic approach can still be followed, but one needs to be very selective now. Below 18000 for Nifty, the near term uptrend gets negated and then we are up for some correction which is overdue since a long time.
Tata Sons Ltd plans to invest at least $2 billion in its ambitious super app TataNeu, and later raise an additional $5 billion from external investors by selling minority stakes in the digital venture, two people aware of its plans said.
TataNeu, which is still in the testing phase, is expected to launch nationally early next year. It is designed as a single-point digital doorway to the Tata group’s various consumer offerings, including healthcare, food and grocery, financial services, fashion and lifestyle, electronics, over-the-top services, education and bill payments. (Read here)
Foreign portfolio investors (FPIs) have turned net sellers in Indian market by pulling out ₹3,825 crore in October so far.
In the past two months, huge buying was witnessed in the debt segment when FPIs had ₹13,363 crore in September and ₹14,376.2 crore in August. However, so far, in October, FPIs have pulled out ₹1,494 crore, depositories' data showed.
From equities, FPIs took out ₹2,331 crore.
The total net outflow stood at ₹3,825 crore during October 1-22.
The stage is set for India’s biggest initial public offering (IPO), with the markets regulator approving the share sale by fintech giant One97 Communications Ltd, owner of the Paytm app.
The Securities and Exchange Board of India (Sebi) has cleared the Noida-based digital payments company’s ₹16,600 crore (roughly $2.2 billion) IPO, three people aware of the development confirmed. (Read here)