PremiumAsian stock markets fell on Wednesday after US inflation edged down less than expected, fueling concern the Fed might think more interest rate hikes are needed. Tokyo, Shanghai, Hong Kong and Sydney declined. Oil prices retreated. Traders expect two more US rate hikes of 0.25 percentage points this year to slow business activity and hiring.
Benchmark indices rallied towards the end on Wednesday after remaining in the flat territory for most of the session to close with a gain of around 0.4%. Investor sentiment remained subdued for most of the day as inflation remains a concern but strong quarterly reports from some heavyweights provided the much-needed support towards the latter half.
Nifty reclaimed the 18,000 mark to close at 18,015, a jump of 85 points. Sensex closed with a gain of 242 points to end at 61,275.
IT started on a negative note but rebounded in the second half to gain more than a per cent. Realty and Auto also had a healthy session with a gain of more than 1%. FMCG index remained under pressure and ended in the red.
Tech Mahindra jumped more than 5%, while Eicher Motors and Apollo Hospitals added more than 4% and topped the stock chart. Hindustan Lever, ITC, and Sun Pharma shed more than a per cent and were among the biggest laggards.
Most Asian indices fell in line with a decline in U.S. equity futures, as investors digested hawkish Federal Reserve comments following a U.S. inflation report.
Japan's Nikkei share average fell on Wednesday. A spike in U.S. bond yields overnight buoyed Japanese bank shares but hurt real estate stocks. The Nikkei ended down 0.37% at 27,501.86, after gaining as much as 0.43% earlier in the session.
China stocks fell on tracking weakness in other Asian markets, while geopolitical concerns and worries about China's economy weighed on investor sentiment further.
China's blue-chip CSI300 Index closed down 0.5%, while the Shanghai Composite Index slipped 0.4%. Hong Kong's benchmark Hang Seng Index and the Hang Seng China Enterprises Index dropped 1.4% and 1.3%, respectively.
European shares opened lower on Wednesday after British lender Barclays slid on disappointing earnings and French luxury group Kering reported a slump in Gucci revenues. The pan-European STOXX 600 index dipped with Barclays falling to the bottom of the index.
UK's export-oriented FTSE 100 edged lower as Barclays tanked after reporting a fall in yearly profit, although losses were limited by a drop in the sterling after data showed domestic inflation eased more than expected. The blue-chip FTSE 100, fresh off a record high in the previous session, lost ground with Barclays sliding to the bottom of the index after reporting a 14% fall in annual profits.
The representative body of India's non-banking finance companies (NBFCs), on Wednesday, asked the federal government to give debt products, including market-linked debentures (MLDs), the benefits of long-term capital gains, similar to equities.
The Finance Industry Development Council (FIDC), in a letter to Finance Minister Nirmala Sitharaman, recommended that MLDs and debt mutual funds should get the tax benefit if a listed instrument is held for more than one year.
While traditional debt instruments have a fixed coupon rate, MLDs are structured products where returns are linked to market-traded instruments — a hybrid nature that allows them to enjoy a lower tax rate than regular debt products.
However, Sitharaman, in her federal budget presentation earlier this month, said the returns from listed MLDs will be taxed as short-term capital gains, instead of long-term – a move that could push taxes to as high as 30%, from 10% now.
"If the same is not feasible and the parity of tax between equity instruments and MLDs is removed, our humble submission is to apply the provisions prospectively on new investments," FIDC said in the letter. (Reuters)
Inflation in Pakistan could average 33% in the first half of 2023 before trending lower, and a bailout from the International Monetary Fund alone is unlikely to put the economy back on track, a senior economist with Moody's Analytics told Reuters.
"Our view is that an IMF bailout alone isn't going to be enough to get the economy back on track. What the economy really needs is persistent and sound economic management," senior economist Katrina Ell said in an interview on Wednesday. (Read More)
The hospitality industry continued to witness strong year-on-year (YoY) growth in business in the October-December quarter, driven by corporate travel, weddings, winter vacations, and festivities. Calendar year 2022 ended with a 90% YoY growth in revenue per available room, or RevPAR. RevPAR is used as a metric to gauge a hotel's performance.
Business in October-December 2021 was also strong on the back of weddings and domestic leisure travel, but corporate travel was only a fraction of what was witnessed last quarter. (Read More)
GE Power India on Wednesday reported a consolidated net loss of ₹139.29 crore in the December quarter. The company had posted a net loss of ₹112.63 crore in Q2 FY23 and ₹34.57 crore in Q3 FY22.
The power equipment maker’s consolidated total income fell 32% year-on-year to ₹545 crore in the December quarter. Sequentially, income rose 18.4% from ₹460 crore in the September quarter. (Read More)
Sealmatic India limited engaged in designing and manufacturing mechanical seals and associated products have planned its SME Initial Public Offering (IPO) starting Friday, February 17, 2023, and the issue will close on Tuesday, February 21, 2023.
According to the prospectus filed with BSE SME, 24,99,600 equity shares are offered at a price band of ₹220 to ₹225 per equity share. The ₹56 crore issue would comprise a fresh issue of up to 18,50,00 equity shares aggregating to ₹41.6 crore to fund the expansion plan and an offer for sale (OFS) of up to 6,49,600 equity shares aggregating to ₹14.6 crore. (Read More)
Individual stock investors in India are keeping faith in the country’s $3.1 trillion equity market even after a punishing selloff in Adani Group shares threatened to drag down one of the world’s best-performing indexes since the pandemic.
Hanoz Mistri is among the small investors in India who believe the carnage that has wiped off about $131 billion from the value of Adani shares won’t damp the long-term prospects for the nation’s equities. The ship-broker, who previously owned Adani group stocks, plans to continue investing in companies such as commodity businesses that benefit from India’s expanding middle class.
“India is a great consumption story and I am confident this journey will continue," Mumbai-based Mistri said in a phone interview.
Retail investors such as Mistri are part of a groundswell that is changing the face of the world’s second-biggest emerging market. Roughly 1 million new trading accounts are opened every month, and the total has now climbed above 110 million, more than the populations of South Korea and Spain combined. (Bloomberg)
India's embattled Adani Group is in talks with lenders to repay a $500 million bridge loan facility it had taken to buy controlling stakes in cement companies ACC Ltd and Ambuja Cements Ltd last year, the Economic Times daily reported on Wednesday.
The group is looking to repay the bridge loan with cash this month, the report said, citing people aware of the matter, adding that the loan had a tenor of six months and was part of a larger $5.25 billion financing package. (Read More)
The UK’s inflation rate fell for a third month, remaining stubbornly in double digits five times above the Bank of England’s targeted level.
The Consumer Prices Index rose 10.1% from a year ago in January, down from 10.5% the month before and a 41-year high of 11.1% in October. Economists had expected a slight slowdown to 10.3%.
BOE Governor Andrew Bailey hopes that inflation will fall sharply this year as energy prices ease and the economy tips into recession. While the BOE is concerned that a shortage of workers is pushing up wages and threatening an inflationary spiral, this month’s figures give policy makers room to wait before considering the next move on rates.
The decline in the latest month was largely due to falling petrol prices along with easing price pressures in restaurants and cafes. That was partly offset by a jump in the cost of alcoholic beverages and tobacco.
Core inflation, excluding energy, food, alcohol and tobacco, fell to 5.3% in the 12 months to January 2023 from 5.8%. (Bloomberg)
The most among the non-IT sectors in terms of hiring in January 2023 have been Insurance (93%), Oil & Gas (55%), Hospitality (53%), Banking (37%), Real Estate (31%), Auto (29%), BPO (16%) and Healthcare (10%). However, there are other Non-IT sectors also that have displayed cautious hiring sentiments like Telecom, Retail, and Pharma, as per the data by Naukri.
“The BFSI sector provides the majority of jobs in the non-tech sector in India, which is expected to account for approximately 30% of hiring with the rise in job roles in finance, accounting, risk management, compliance, and wealth management, among others," said Nitin Dave, CEO, Quess General Staffing. (Read More)
Shares of auto components major Bharat Forge on Wednesday fell over 4 per cent in late morning trade on Wednesday after the company reported a decline in profit for the third quarter ended December 31, 2022.
In the late morning session, the scrip of the company declined by 4.38 per cent to ₹835.55 apiece on the BSE.
The stock witnessed a similar movement on the NSE, where it slumped by 4.22 per cent to ₹836.65 per share.
Meanwhile, the 30-share BSE Sensex was trading 37.93 points or 0.06 per cent higher at 61,070.19 in the late morning trade.
On Tuesday, Bharat Forge Ltd (BFL) reported an 81.35 per cent decline in consolidated net profit at ₹78.72 crore in the third quarter ended December 2022, hit by higher expenses.
ONGC earned a standalone net profit of ₹11,044.73 crore in the third quarter of FY23, rising by around 26% from a profit of ₹8,763.72 crore a year ago same period. The government-owned firm recorded a decline in the production of crude oil and gas. On Tuesday, the company declared a second interim dividend of ₹4 per equity share for FY23. However, ONGC's PAT dropped by 13.88% as against the profit of ₹12,825.99 crore seen in the September 2022 quarter.
Computer Age Management Service on Wednesday said it has received an in-principle authorisation from the Reserve Bank of India to operate as a payment aggregator
In a stock exchange regulatory filing, it said the approval was given on Tuesday under the Payment and Settlement Systems Act, 2007.
As a specialised payment aggregator to the BFSI (Banking, financial services and insurance) segment, the company has been offering personalised payment options to meet different use cases for mutual fund investors and insurance policyholders for over a decade.
The licence by the central bank will enable the firm to broaden its product offerings to more number of businesses.
Payment aggregators are intermediaries playing an important function in facilitating payments in the online space. (ANI)
Twitter Inc. Chief Executive Officer Elon Musk said he aims to find his successor to lead the social-media company toward the end of 2023.
Elon Musk, speaking via a remote video link to the World Government Summit in Dubai on Wednesday, said he needed to stabilize the social-media platform financially before handing the reins to a new leader.
“I think I need to stabilize the organization and just make sure it’s in a financially healthy place and the product road map is clearly laid out," Musk said. “I’m guessing towards the end of this year should be a good timing to find someone else to run the company, because I think it should be in stable condition around the end of this year." (Read More)
Himanshu Binani – Research Analyst, Prabhudas Lilladher Pvt Ltd: Insecticides India (INST IN)
Rating: ACCUMULATE | CMP: Rs583 | TP: Rs700
Q3FY23 Result Update - Decent results in challenging times..!!
Quick Pointers:
§ Capex of Rs1.1bn largely behind; likely to reap benefits FY24 onwards.
§ Product pipeline remains healthy; to launch 5-6 new products in FY24.
We upgrade our rating to ‘Accumulate’ from Hold earlier with unchanged TP of Rs700 based on 13x FY25E EPS, given recent correction in the stock price. Insecticides India (INST) reported decent results amid challenging times better than our and consensus estimates with Revenue/EBITDA/PAT growth of 14%/25%/14% YoY driven by better margins (better product mix leading to gross margin expansion of 40bps YoY). Higher revenue contribution from B2C segment up 53% YoY to Rs2.8bn was partially mitigated by underperformance in B2B and exports segment down 24%/70% YoY. Management expects double digit revenue growth (+25% YoY) with absolute margins improvement in FY24 led by better contribution from new product launches and superior product mix.
Going forward, we expect INST’s business to pick up driven by a) higher contribution from new product launches (Rs1.17bn in 9MFY23 vs Rs246mn in FY22), b) better margin profile of in-licensing molecules and c) commencement of new capacities. Upgrade to ‘Accumulate’.
Oil declined after an industry estimate pointed to a substantial build in American inventories and investors assessed the outlook for US monetary policy following data showing still-elevated inflation.
West Texas Intermediate fell toward $78 a barrel after ending 1.4% lower on Tuesday. The industry-funded American Petroleum Institute reported that US commercial crude inventories rose by 10.5 million barrels last week, according to people familiar with the figures. That compares with a 2-million-barrel rise forecast in a Bloomberg survey. Official data come later Wednesday.
Investors are trying to work out how much higher the US Federal Reserve will push interest rates to quell the pace of price gains. Consumer prices rose 0.5% in January, the most in three months, and the annual inflation rate came in at a higher-than-expected 6.4%, according to official figures on Tuesday. (Bloomberg)
Ekta Kapoor-owned film, television and web production house Balaji Telefilms saw its TV business revenue increase 48% year-on-year to ₹249 crore in the first nine months of FY23. Earnings before interest, taxes, depreciation or Ebitda zoomed 167% to ₹35 crore during this period.
There were eight shows on-air at the end of the quarter across four broadcaster networks, the company said and two new shows are expected to go on-air in the next quarter. (Read More)
Billionaire Anil Agarwal-owned Vedanta Resources, the parent of Indian resources giant Vedanta Ltd, said on Wednesday that it has cut its net debt by $2 billion in the last 11 months.
The company has completed half of its $4 billion debt reduction commitment ahead of plans, it said in a filing.
It added it will continue to reduce its $7.7 billion net debt during fiscal 2024 and 2025. (Reuters)
Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd: Siemens (SIEM IN)
Rating: ACCUMULATE | CMP: Rs3,124 | TP: Rs3,351
Q1SY23 Result Update - Healthy performance; strong outlook intact
Quick Pointers:
§ Order inflow came in strong at Rs54.5bn, owing to short cycle order.
§ EBITDA margin improved 441bps YoY, driven by better price extraction and positive impact from forex & commodity.
Siemens (SIEM) reported strong quarterly performance with consolidated revenue up ~17.4% YoY and EBITDA margin expanding by 441bps YoY to 14.9%, led by higher volumes, better price extraction, softening commodity prices and healthy contribution from subsidiaries. We believe that segments such as data center, e-commerce, waste heat recovery, smart infra, digitalization, automation, intralogistics, building automation, railway electrification, charging infrastructure, decarbonization, smart metering, smart grids etc. would be key growth drivers going ahead. Moreover, recent large order win in railways for 1,200 electric motive (9000 HP), worth Rs260bn will augur well in long run.
We remain positive on SIEM from a long-term perspective given 1) its strong and diversified presence across industries, 2) focus on digitization and automation products, 3) product localization, 4) strong balance sheet, 5) healthy public & private capex, 6) focus on cost efficiencies and 7) recent large order wins in mobility business. We maintain ‘Accumulate’ rating on stock with revised TP of Rs3,351 (Rs3,290 earlier), valuing it at 55X Mar’25, (54x earlier) given strong sustained performance.
A report by domestic brokerage and research firm ICICI Securities, which analysed and reviewed the monthly activity by top mutual fund houses for January 2023, showed that asset management companies sold four Adani Group stocks in the large-cap category, whereas bought one stock during the same period.
Mutual fund houses bought shares of Adani Ports and Special Economic Zone Ltd (APSEZ) among the top large-cap stocks in the last month whereas Adani Enterprises Ltd, Adani Green Energy Ltd, Adani Transmission Ltd, and Ambuja Cements Ltd shares were sold across AMCs, as per the brokerage data. (Read More)
ITC shares will be one of the dividend-paying stocks today as the board of directors of the company has fixed 15th February 2023 as the record date for finalising eligible shareholders for payment of interim dividends for the financial year 2022-23. The company board has already declared an interim dividend of ₹6 per equity share for its eligible shareholders. The payment of an interim dividend of ₹6 per equity share will be made between 3rd March to 5th March 2023. (Read More)
The initial public offering (IPO) of Macfos Ltd is going to open for public subscription this week on Friday, February 17, 2023 and the three-day initial share sale will conclude on Tuesday, February 21, 2023. The price band of the offer has been fixed at ₹96 to ₹102 per share.
Macfos IPO is an SME issue, comprising of 2,328,000 equity shares of the face value of ₹10 aggregating up to ₹24 crore. The Offer comprises an Offer for Sale (OFS) by the Selling Shareholders. The company in its offer documents said that the selling shareholders will receive the entire proceeds from the OFS and the company will not receive any part of the proceeds of the issue. The shares of the company are expected to list on BSE SME on March 1, 2023. Bigshare Services Pvt Ltd is the registrar of the issue. (Read More)
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services: The much-awaited US CPI inflation for January has come at 6.4% YoY but is up by 0.5% MoM. The takeaway from this data is that while the disinflationary process is on track, it is very slow. This means the Fed might hike rates again and the rates might remain higher for a longer period of time. That’s why US bond yields rose yesterday. A positive trend in India is that FIIs have turned buyers and this is good news for the bulls. But the rally is unlikely to sustain since there are no major triggers to take the Nifty beyond 18200. Since the major drag of sustained FII selling appears out of the way, sharp correction in the market is unlikely. High quality banking stocks have more room to go higher and IT, select autos and capital goods too look strong.
Indian billionaire Gautam Adani’s embattled conglomerate said it has adequate cash reserves and its listed companies are able to refinance their debts.
The comments came in a credit report aimed at reassuring investors after a critical investigation by US short-seller Hindenburg Research last month. Scrutiny of the cash position of group companies has intensified as they pay down borrowings, given that a spike in yields on Adani debt after the Hindenburg report would make refinancing prohibitively expensive. (Read More)
Vodafone Idea board approved the appointment of Murthy GVAS as the Interim Chief Financial Officer and Key Managerial Personnel of the company, effective February 15, 2023.
“Board of Directors of the Company at its meeting held today, has approved the appointment of Mr. Murthy GVAS, currently designated as Executive Vice President – Financial Controller and Taxation Head, as the Interim Chief Financial Officer and Key Managerial Personnel of the Company, with effect from 15th February, 2023," the company said in an exchange filing. (Read More)
Eicher Motors Ltd reported an over 62% rise in consolidated net profit at ₹741 crore for the third quarter ended December 31, 2022 (Q3 FY23), riding on strong sales, as compared to ₹456 crore in the same period last fiscal. The company said its commercial vehicle joint venture Volvo Eicher Commercial Vehicle (VECV) recorded its highest ever third quarter sales at 18,162 units, a growth of 13% over the corresponding period last year. 2-wheeler arm Royal Enfield clocked total dispatches at 2,19,898 motorcycles, up 31% over last year.
“Eicher Motors (EIM) Q3 EBITDA rose 47% YoY (inline with JEFe) to a new high. RE volumes grew 31% YoY while EBITDA/vehicle was flat QoQ. Despite the ongoing 2W downturn, we believe EIM is on track to deliver the highest RE volumes and EPS in FY23E. We see multiple tailwinds for RE: 2W demand recovery, industry premiumization, limited competition and low EV risk. We don't see evidence of any significant cannibalization from Hunter either," said global brokerage Jefferies. (Read More)
Digital financial services firm One97 Commuications, which operates under the Paytm brand, on Tuesday said it has completed buyback of shares worth ₹849.83 crore at an average price of ₹545.93 per share.
The company bought back shares in the price range of ₹702.65 to ₹480.25 apiece, according to a regulatory filing.
"The company bought back an aggregate of 1,55,66,746 equity shares utilising a total amount of ₹849,83,39,982, which represents 99.98 per cent of the maximum buy-back size. The price at which equity shares were bough back was dependent on the price quoted on the stock exchanges," the company said.
The Paytm board had approved buyback of shares worth ₹850 crore on December 13, representing 6.67 per cent of the total paid-up share capital between December 21, 2022 to February 13. (PTI)
Here are the top 10 stocks that could be in focus in today's trade:
Adani Group: Adani Group chairman Gautam Adani has referred to the current sell-off in Adani stocks as temporary, emphasizing that the conglomerate’s flagship will now “moderate leverage" even as it pursues growth. Adani Group companies have lost a whopping ₹10.4 trillion in shareholder wealth in two weeks. The group has a net debt of ₹1.96 trillion as of September 2022. Adani Enterprises on Tuesday reported a net profit of ₹820.6 crore in the quarter ended December against ₹11.63 crore loss from a year ago. Revenue grew 42% to ₹26,950.83 crore. (Read More)
The rupee fell by 7 paise to close at 82.77 against the US dollar on Tuesday, amid strong American currency and caution observed by market participants.
Forex traders said lower crude oil prices, higher domestic equities and weaker dollar index resisted the fall in the rupee.
At the interbank foreign exchange market, the rupee opened at 82.59 against the greenback, and finally settled for the day at 82.77, down 7 paise over its previous close.
On Monday, the rupee fell by 12 paise to close at 82.70 against the US currency.
According to Dilip Parmar, Research Analyst, HDFC Securities, "The lower crude oil prices, higher domestic equities and weaker dollar index were unable to push the rupee higher amid lingering worries over high inflation, trade deficit and lower carry."
The US government data showed consumer prices rose in January but recorded the smallest annual rise since October 2021. (PTI)
STOCK IN FOCUS
Wipro (CMP 405): In view of strong deal pipeline, management’s confidence on growth across verticals and attractive valuation, we have a BUY recommendation with a target price of Rs460, valuing the stock at a P/E multiple of 17x FY25E earnings.
Intraday Picks
HINDALCO (PREVIOUS CLOSE: RS435) BUY
For today’s trade, long position can be initiated in the range of Rs431-
428 for the target of Rs448 with a strict stop loss of Rs423.
NAVINFLUOR (PREVIOUS CLOSE: RS4,090) SELL
For today’s trade, short position can be initiated in the range of Rs4,130-
4,160 for the target of Rs3,960 with a strict stop loss of Rs4,215.
PIIND (PREVIOUS CLOSE: RS3,035) SELL
For today’s trade, short position can be initiated in the range of Rs3,060-
3,080 for the target of Rs2,970 with a strict stop loss of Rs3,125.
Job-providing platform LinkedIn has started laying off employees from its recruiting team – joining the layoff bandwagon in a bid to rein in the costs amid a looming global economic downturn.
As part of the massive layoff, the Microsoft-owned professional networking and recruiting platform has targeted employees from its recruiting team, but the exact number of impacted staff still remains unclear.
The job cuts at LinkedIn are likely to be part of Microsoft's plan to trim around 10,000 jobs across various divisions. (Read More)
As mentioned above, Vaishali Parekh of Prabhudas Lilladher has recommended three intraday stocks for today, here we list out important details in this regard:
1] RCF: Buy at ₹112, target ₹120, stop loss ₹109;
2] Cochin Shipyard: Buy at ₹495, target ₹520, stop loss ₹488; and
3] Poonawalla Fincorp: Buy at ₹312, target ₹328, stop loss ₹307. (Read More)
Global soft drink major The Coca-Cola Company on Tuesday said its consolidated unit case volume grew 5 per cent for the full year ended December 2022, benefitted from "strong growth" from markets such as India.
Its developed markets grew low single digits for the quarter and mid-single digits for the year, driven by growth across most markets while developing and emerging markets declined by low single digits for the quarter and grew mid-single digits for the year.
"This performance benefited from strong growth in India and Brazil and was unfavourably impacted by the suspension of business in Russia," said the Atlanta-headquartered company in its global earnings released on Tuesday.
Even for the fourth quarter, The Coca-Cola Company has "strong growth" in Brazil, India, Great Britain and Mexico, it added.
Its "sparkling flavours declined 2 per cent for the quarter and grew 5 per cent for the year," the company said, adding, "This performance benefited from strong growth in India and the United States ..."
While its juice, value-added dairy and plant-based beverages declined 7 per cent for the quarter and grew 3 per cent for the year. (PTI)
Debt-ridden telecom operator Vodafone Idea on Tuesday reported widening of its consolidated loss to ₹7,990 crore for the third quarter ended December 31, 2022.
The company had registered a loss of ₹7,234.1 crore in the same period a year ago.
The consolidated revenue from operations of Vodafone Idea (VIL), however, increased by 9.29 per cent to ₹10,620.6 crore from ₹9,717.3 crore in the December 2021 quarter.
"On a YoY basis, revenue growth is strong at 9.3 per cent aided by improvement in subscriber mix, tariff intervention and 4G subscriber additions," the company said in a statement.
The government during the quarter converted ₹16,133 crore interest related to deferment of spectrum auction instalments and AGR dues into equity, and now holds around 33 per cent stake in the company.
"Separately, our board has approved issuance of Optionally Convertible Debentures amounting to ₹16 billion to ATC India. With these positive developments, we continue to remain engaged with our lenders for further debt fund raising as well as with other parties for equity or equity linked fund raising, to make required investments for network expansion and 5G rollout," VIL CEO Akshaya Moondra said. (PTI)
Inflation, increasing inte