Daily Market Highlights JUN 10

morning main Daily Market Highlights JUN 10

Previous Day Market

Nifty closed at 15,635.35 down by 104.75 points

Sensex closed at 51,941.64 down by 333.93 points

Equity funds saw net inflows of Rs.10,083 crore in the month of May-21 as per AMFI data. In the last year, large-cap funds delivered 54%, mid-cap funds 78%, and small-cap funds 104%. That has been a boost to flows into equity funds. Between Jul-20 and Feb-21, equity funds saw outflows of Rs.46,800 crore but flows have turned around to positive since then. The months of March, April, and May saw inflows of Rs.22,600 crore into equity funds. The total AUM of mutual funds overall crossed Rs.33 trillion for the first time.

Former RBI governor, D Subbarao, is of the view that central banks should print money only as a last alternative and in the current juncture, COVID bonds would be a better option. However, such COVID bonds should not be outside the budget borrowings. RBI printing money is inflationary and also devalues the rupee. Subbarao pointed out that when bonds devolve on the RBI, it is tantamount to printing money, albeit indirectly. However, he feels RBI must avoid monetization of the deficit as a conscious monetary strategy.

GAIL India recorded a 28% rise in net profits for the Mar-21 quarter at Rs.1,908 crore. However, profits were lower on a sequential basis. For FY21, the total revenues stood at Rs.57,208 crore while the net profit for the full year stood at Rs.6,136 crore. The quarter saw operations of all plants and pipelines at stable levels and no major shutdowns were reported during the year. GAIL had a CAPEX of Rs.6,982 crore during the year on investment in pipelines. It had also expanded its focus on biogas, ethanol, and renewable energy.

In an aggressively positive stance, the Union Cabinet cleared the increase in support prices for Kharif crops for the 2021-22 season. This comes in the midst of an unprecedented farmer’s agitation being led from Punjab and Haryana. Sesamum saw the highest absolute price increase at Rs.452 per quintal with MSP for tur and urad up by Rs.300 per quintal. This is close to 1.5X all-India weighted average cost, which was promised in Budget-2021. All available high-yielding varieties of seeds will be distributed free of cost.

A few days ahead of the actual CPI inflation announcement scheduled on 14 June, the consensus estimate from a Reuters Poll has come in higher at 5.30%. The spike in inflation is expected to come from food and crude prices. CPI inflation had dipped to a level of 4.29% in Apr-21, along with a sharp fall in core inflation. It remains to be seen how core inflation pans out in May. In the last 1 month, there have been more than 10 hikes in petrol and diesel prices and that is expected to tip inflation higher. Global Inflation is rising.

There appears to be a lot of power in the power stocks as a number of power majors like Adani Power, Torrent Power,  JSW Energy, and Power Grid touched all-time high levels. Stocks like Tata Power, CESC, and BHEL are already quoting at 52-week highs. Power stocks were enthused by India’s power consumption growing by 12.6% to 25.36 BU or billion units, in the first week of Jun-21. Peak power demand was recorded at 168.72 GW on June 7. This is higher by 15% YoY and is a signal of demand getting back to normal levels.

Teamlease Services was up 17% on 09 June after an encouraging set of numbers reported for the Mar-21 quarter. Net profit was at Rs.19.6 crore on healthy operating performance. This contrasts with a net loss of Rs.-29.4 crore in the Mar-20 quarter. Total revenues were flat at Rs.1,350 crore. EBITDA margins grew 40 bps to 1.9%. General Staffing business was back to pre-Covid levels of headcount while it surpassed pre-COVID revenue run rate. Teamlease has also strengthened its digitalization strategy to deepen client interaction.

It appears to be suddenly raining IPOs as Delhivery is weighing a valuation of $4 billion for its proposed IPO in the Mar-22 quarter. That would be nearly 33% higher than the current valuation of $3 billion, based on its latest fund-raising. The digital player is expected to sell a 10-15% stake for $500-600 million. However, it is likely to file its DRHP only around August. Most of these companies prefer to observe the response to mega e-commerce players in the Indian market like Paytm and Zomato, both IPOs planned this year.

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