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Market Today with EZWealth – 22 Oct 2021
[/vc_column_text][vc_separator][vc_column_text]Benchmark equity indices posted their first weekly losses in three weeks as they closed lower for the fourth consecutive session today. The losses were led by likely selling pressure from foreign investors, high net-worth and retail investors during the session.
Today, the Nifty50 index closed 0.4 per cent lower at 18,114.9 points, while the BSE-Sensex closed at 60,821.6, down 0.2 per cent. For the week, the benchmark indices fell a little over 1 per cent. During the four-day sell-off in the market, investors’ notional wealth has declined by Rs 10.3 lakh crore.
A volatile day on the Street saw the benchmark indices open on a positive note but give up those gains by mid-day. The BSE-Sensex gyrated over 850 points from the day’s high to the day’s low reflecting the indecisiveness among investors.
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Headlines Today
[/vc_column_text][vc_column_text]China Evergrande makes payment before deadline, official media says
Troubled property giant China Evergrande made an interest payment to foreign bondholders one day before a deadline that threatened to put the company into default, an official newspaper reported Friday. Evergrande sent an $83.5 million interest payment to bondholders, China’s Securities Times reported without providing details. The outlet is backed by People’s Daily, the Communist Party’s official newspaper.
Weighed down by more than $300 billion of debt, the property developer has been trying to sell off parts of its vast empire in order to raise enough cash to pay off creditors. This week, one of those deals — largely seen as a last-ditch lifeline — fell through. Until the report on Friday from the Securities Times, market observers believed that Evergrande would miss the bond payment, effectively triggering a default. Although Evergrande narrowly averted default, it faces deadlines for several other bond payments in the coming days and weeks.
Bank credit grows 6.48%; deposit by 10.16%
Bank credit grew by 6.48 per cent to Rs 110.13 lakh crore and deposit by 10.16 per cent to Rs 157.56 lakh crore in the fortnight ended October 8, RBI data showed. In the year-ago fortnight ended October 9, bank advances were at Rs 103.43 lakh crore, and deposits were at Rs 143.02 lakh crore, according to RBI’s Scheduled Banks’ Statement of Position in India as on October 8, 2021 data, released on Thursday.
In the previous fortnight ended September 24, 2021, bank credit had grown by 6.67 per cent and deposit by 9.34 per cent. In FY2020-21, bank credit had grown by 5.56 per cent and deposit by 11.4 per cent.
Rise in Cases and Deaths Tests Britain’s Gamble on Few Virus Restrictions
For the last four months, Britain has run a grand epidemiological experiment, lifting virtually all coronavirus restrictions, even in the face of a high daily rate of infections. Its leaders justified the approach on the grounds that the country’s rapid rollout of vaccines had weakened the link between infection and serious illness.
Now, with cases, hospital admissions and deaths all rising again; the effect of vaccines beginning to wear off; and winter looming, Britain’s strategy of learning to live with the virus is coming under its stiffest test yet.
New cases surpassed 50,000 on Thursday, an 18 percent increase over the last week and the second time cases have broken that psychological barrier since July. The number of people admitted to hospitals rose 15.4 percent over the same period, reaching 959, while 115 people died of Covid-19, an increase of almost 11 percent.
Tata Explores $1 Billion Sale of U.S. Soda Ash Unit
Tata Chemicals Ltd. is considering selling its U.S. soda ash business, according to people familiar with the matter, joining a string of rivals looking at similar options. The Indian chemicals giant is in early discussions about the potential disposal, the people said, asking not to be identified discussing confidential information. It’s seeking $1 billion or more for the asset, the people said.
Derived from the mineral trona, soda ash is used in a wide range of everyday goods, including in the manufacturing of detergents and pharmaceuticals. It can also be used in the manufacture of glass and paper, and in water treatment. Tata Chemicals is one of the world’s largest producers of soda ash, with capacity for about 5.5 million tons each year. According to its website, 60% of this comes from natural deposits in the U.S. state of Wyoming and at Kenya’s Lake Magadi. Production in North America fell 18% in the 12 months through March, mainly because of a plunge in demand during the Covid-19 pandemic, the company said in its annual report. Tata Chemicals’ sales in the region dropped 19% to $388 million over the period.
Asian Paints flags ‘Aggressive’ price hikes as inflation eats into margins
Asian Paints Ltd. has warned that the onslaught of inflation led by higher commodity, packaging material and transport costs is likely to persist, warranting “aggressive” price hikes. “Inflation is at unprecedented levels, we haven’t seen this kind of an inflation in material prices at least in the last 40 years,” Amit Syngle, managing director and chief executive officer of India’s largest paint, told investors in a post-earnings conference call on Thursday. The company, he said, will seek to maintain its operating margin within a band of 18-20% through a mix of cost savings and calibrated product price increases to offset input cost rise. So far this financial year, the company has taken a price hike of 7% against a 21% material inflation.
ITC gains could go up in smoke if tobacco taxes rise in Budget
Investors in cigarette-to-hotel conglomerate ITC NSE -0.96 % might have to endure a phase of renewed uncertainty as worries about higher taxes on tobacco could put a lid on gains. The government’s recent decision to form an expert group with representation from other ministries, which will suggest tax rate options on all tobacco forms in the upcoming Union Budget on February 1, took the wind out of the ITC stock’s sails just as it looked like the share price was poised to catch with the market.
ITC shares had seen a technical breakout in September after moving in a range of Rs200-220 for several months. From a low of Rs 199.1 hit in early May – which is ITC’s calendar year low – the stock touched a 52-week high of Rs 265.3 on Monday. The stock is up about 15% from mid-September.
For the group, cigarettes continue to be its mainstay business though it is strengthening its presence in consumer goods. It is a market leader in the cigarettes segment with brands such as Classic and Gold Flake.
Arbitration panel rejects Future’s plea on Reliance deal in dispute with Amazon
A Singapore arbitration panel has rejected Future Retail’s plea to quash an order from last year that put its $3.4 billion deal with Reliance NSE 1.33 % on hold, in a boost for its partner Amazon.com Inc which is seeking to block the transaction. Amazon has been locked in a tussle with Future and accuses it of breaking contracts when it sold its retail assets to Indian market leader Reliance last year. Future denies any wrongdoing.
After the Singapore arbitrator put the deal on hold in October 2020 in an interim decision, Future had appealed to revoke it. The panel has rejected that application, Future said in a statement to Indian stock exchanges on Friday. The dispute started after Future, India’s second-largest retailer with over 1,700 stores, entered into a deal last year to sell its retail, wholesale, logistics and certain other businesses to Reliance, after COVID-19 hit its operations hard. Amazon had its sights on ultimately owning some of Future’s retail assets itself. It has argued a 2019 deal it had with a Future unit contained clauses prohibiting the Indian group from selling its retail assets to anyone on a “restricted persons” list that included Reliance.
Larsen and Toubro plans to go carbon neutral by 2040
Larsen & Toubro Ltd. plans to achieve water and carbon neutrality by 2035 and 2040, respectively, it said in a report on sustainable goals. L&T, which operates primarily in the construction and engineering sector, is prone to climate change and has already started implementing several climate-related policies, it said. About 10% of the Mumbai-based company’s electricity comes from renewable sources. Through energy conservation measures, the company has mitigated 33,500 tons of CO2 emissions during the financial year to March 2021. Climate variability and global warming has emerged as one of the biggest risks of the 21st century. While India has so far rejected pressure to commit to a net-zero emissions target, several of its large conglomerates including Reliance Industries Ltd. and the Adani Group have committed billions to green investments such as solar and hydrogen.
L&T has also been focusing on water and material recycling, it said. It recycled and reused 57% of its wastewater during the last fiscal. Since 2008, the company has cumulatively used 43,068 tons of recycled steel and 2.4 million tons of recycled fly ash. Today, 22% of its input material comes from recycled or eco-friendly sources.
IPO-bound Nykaa acquires home-grown D2C brand Dot & Key
Beauty and personal care marketplace Nykaa, which plans to launch its initial public offering next week, on Friday announced the acquisition of home-grown direct-to-consumer (D2C) brand Dot & Key.
Nykaa had informed about the Dot & Key acquisition in its draft red herring prospectus (DRHP). “On September 28, 2021, our company acquired 51 percent of the outstanding equity shares of Dot & Key Wellness Private Limited through the subscription and purchase of equity shares,” it had said. According to its DRHP, Nykaa acquired Dot & Key for about Rs 97 crore.[/vc_column_text][vc_column_text css=”.vc_custom_1634904504589{margin-top: 10px !important;margin-right: 10px !important;margin-bottom: 10px !important;margin-left: 10px !important;border-top-width: 2px !important;border-right-width: 2px !important;border-bottom-width: 2px !important;border-left-width: 2px !important;background-color: #dddddd !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 3px !important;}”]
Stocks in the news
[/vc_column_text][vc_column_text]Indiamart Intermesh: The B2B e-commerce firm posted an 18 per cent increase in its consolidated net profit to Rs 82 crore in the second quarter ended September. The company had registered a net profit of Rs 70 crore in the corresponding period a year ago.
JK Cement: The cement player said it has signed a pact with Punjab Renewable Energy Systems (PRESPL) to scale up the use of biomass-based and alternative fuels as a replacement to fossil fuels like coal in its manufacturing operations.
Syngene International: The pharma firm reported a 20.8 per cent decline in its consolidated net profit at Rs 66.7 crore for the second quarter ended September. The company had posted a net profit of Rs 84.1 crore in the September quarter of the previous fiscal.
KEC International: The RPG Group company said it has secured new orders worth Rs 1,829 crore across its various businesses. In the transmission and distribution (T&D) vertical, it has secured orders worth Rs 656 crore for projects in Europe and Americas.
Container Corporation of India: The state-owned multi-modal logistics company reported a 41.25 per cent rise in consolidated net profit to Rs 248.29 crore for the second quarter. The company had clocked a net profit of Rs 175.77 crore in the year-ago period.
South Indian Bank: The Kerala based private sector lender reported a net loss of Rs 187 crore for the September quarter, hit by higher bad loans. It had posted a net profit of Rs 65.10 crore in the same period a year ago.
Domino’s, which pioneered 30-minute delivery, has reduced delivery time to 20 minutes in multiple locations with high store density, as speedy deliveries intensify among players and online platforms. “Opening of new stores in existing cities help improve customer experience like 20-minute delivery which is driven by density of stores in a region,” Jubilant Foodworks Ltd said in its post second-quarter earnings management call.
A day after the Bombay High Court on October 21 ordered Zee Entertainment to hold extraordinary general meeting (EGM), the media company has argued that the board can’t give nod to something that will turn out to be illegal. The counsel appearing for Zee, Gopal Subramanium, said that the company believes that holding EGM is illegal.
The share price of Indian Hume Pipe Company rose 5 percent intraday on October 22 after the company was awarded a Rs 156.27-crore contract. received a letter of acceptance (LoA) for a project of contract value of Rs 156.27 crore. The project is for construction of Piped Distribution Network (PDN) for Palashi Branch Canal, Vadjal Branch Canal, on Man Canal of Urmodi Irrigation Project for creation of 11280 Ha irrigation potential with five years of operation and maintenance.
TVS Motor Company suffered a production loss of 25,000 units of its premium Apache range of motorcycles in the September quarter because of a semiconductor shortage that has squeezed the automobile industry. The industry has looked for alternative sources of microchips with limited success. “Because of the semiconductor shortage we lost more than 25,000 (units) of Apache, where we have extremely good demand,” TVS Motor’s chief executive officer K N Radhakrishnan said in an earnings call. TVS sells five models under the high margin Apache brand with prices starting at Rs 1.06 lakh (RTR 160) and going up to Rs 2.55 lakh (RR 310). The Chennai-based bike and scooter maker is estimated to have suffered a revenue loss of anywhere between Rs 270 crore and Rs 330 crore to the chip shortage in the July-September quarter.
Biotechnology major Biocon on Friday said its consolidated net profit declined by 18 per cent to Rs 138 crore for the second quarter ended September 30. Revenue from operations, however, increased by 5 per cent in the second quarter to Rs 1,840 crore from Rs 1,750 crore in the year-ago period, Biocon Ltd said in a statement.
21st Cen Mgt Consolidated September 2021 Net Sales at Rs 192.55 crore, up 300960% Y-o-Y. Quarterly Net Profit at Rs. 30.51 crore in September 2021 up 3987.93% from Rs. 0.78 crore in September 2020. EBITDA stands at Rs. 34.33 crore in September 2021 up 5821.67% from Rs. 0.60 crore in September 2020.
After a long hiatus, theme parks in Maharashtra will reopen after the state government allowed amusement parks to restart operations from October 22. One of India’s biggest theme parks, Imagicaa, will be back in action and is expecting strong business in the second phase of reopening. Riding on the festive season, Dhimant Bakshi, CEO, Imagicaaworld Entertainment, expects business to reach 55-60 percent of the pre-COVID-19 level by the end of FY22. By the end of FY23, he expects business to reach pre-COVID-19 levels.
Private lender Yes Bank Ltd. saw its net profit rise 74% in the July-September quarter on lower provisions. Net profit for the second quarter stood at Rs 225.5 crore compared with Rs 129 crore a year ago, according to its exchange filing. Analysts polled by Bloomberg had estimated a net profit of Rs 119.3 crore for the quarter. Net interest income, or core income, for the bank fell 23% from last year to Rs 1,512 crore. Non-interest income at Rs 778 crore for the quarter was down 10.5% compared to a year ago. Asset quality of the bank improved during the quarter, with gross non-performing asset ratio falling to 14.97% as of Sept. 30, from 15.6% as of June 30. Net NPA too fell to 5.55% from 5.78% a quarter earlier. Provisions for the quarter stood at Rs 377.4 crore, 65% lower than a year earlier.
Shares of South Indian Bank were on a free fall on Friday, declining as much as 12 per cent after a disappointing set of numbers in September 2021 quarter.
The Kerala-based private lender posted a net loss of Rs 187 crore in the September quarter as against Rs 65 crore profit in the year-ago period on higher provisions and lower interest income.
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