Daily Market Highlights MAY 14

Untitled 5 Daily Market Highlights MAY 14

Previous Day Market

SENSEX closed at 48,690.80 down by 471.01points

Nifty closed at 14,696.50 down by 154.25 points

Vedanta reported net profits of Rs.6,531 crore in the Mar-21 quarter compared to a net loss of Rs-12,521 crore in the Mar-20 quarter. The Mar-20 quarter loss was largely on account of Rs.17,132 crore being written off towards impairment of oil assets. Sales revenues for the Mar-21 quarter stood at Rs.27,874 crore, a growth of 42% YoY led by sharp volume and price traction in aluminum, zinc, iron ore, and silver with only the oil sector under some pressure. The finance charges for the Mar-21 quarter were 24% higher YoY.

One of the original founders of Infosys, Mr. SD Shibulal has hiked his stake in Infosys buying 7.59 lakh shares valued at around Rs.100 crore. This was an internal family transfer. The deal was executed by ICICI Securities being the sole broker. This hikes Shibulal’s stake in Infosys from 0.05% to 0.07%. For the Mar-21 quarter, Infosys had reported a 17% growth in net profit at Rs5,076 crore. The fortunes of Infosys appear to have seen a sharp turnaround after Parikh took over as the CEO in place of Vishal Sikka.

India has received a total of $83 billion in the form of external remittances in the year 2020, which is almost flat on a YoY basis. What is surprising is that the figure was maintained despite the pandemic hit income levels in a big way. This was highlighted in a World Bank report. In comparison, China received around $59.5 billion in remittances in the same year. Surprisingly, the remittances from the UAE fell by 17% but were more than compensated by remittances from other geographies. Mexico is in third place.

In what could be the first IPO by an insurance third party administrator or TPA, Medi Assist Healthcare Services has filed preliminary papers with SEBI for its proposed IPO. The IPO will be an offer of sale of up to 2.80 crore equity shares by the promoters and existing shareholders. Bessemer and Investcorp are among the early investors in Medi Assist. It is the largest health benefits administrator in India. Bessemer Ventures holds a 45.51% stake, Vikram Chatwal holds 31.63% while Investcorp holds 21.65% in Medi Assist.

While nobody is openly talking about it, the COVID-19 crisis has made India vulnerable enough to possibly trigger a sovereign downgrade. Experts are warning that, apart from the pandemic, the high levels of debt, unsustainable levels of fiscal deficit, and patch progress in reforms could also trigger a likely sovereign downgrade to speculative grade. With government debt as a share of GDP jumping to 90%, Moody’s, S&P, and Fitch have warned of a possible downgrade. India is current at BBB-, the lowest investment grade.

When it comes to financial planning and asset allocation, the 60/40 investment allocation strategy has stood the test of time. It basically entails 60% in equity and 40% in debt. Of late, that approach has come in for a lot of criticism. The biggest worry has been tepid returns in the debt portfolio. Globally, there are nearly $17 trillion of bonds with negative yields. Big fund houses are now beginning to question the idea of 40% in debt when 85% of global debt yields below 1% and 35% of debt paper does yield negative returns.

According to a report by Nielsen, the FMCG segment saw robust sales growth of 9.4% in the Mar-20 quarter, better than 7.3% in the Dec-20 quarter. However, the Jun-21 quarter could be a slightly different ball game. According to Nielsen, the rapid spread of COVID in rural areas could dent FMCG’s top-line growth in the coming quarters. Such concerns have already been flagged off by no less than the chairman of HUL. As per Nielsen, rural segments have less access to healthcare and hence recovery will be a lot slower too.

Jindal Steel & Power reported a multi-fold growth in net profit to Rs.1,901 crore in the Mar-21 quarter. This was on the back of strong operational performance and sustained demand for steel. Overall top-line revenues increased by 75% to Rs.11,881 crore in the Mar-21 quarter. Apart from a good operating show, the company also hived off non-core assets and lowered CAPEX in an attempt to deleverage. As a result, the net debt fell from Rs.35,919 crore in FY20 to Rs.22,146 crore in FY21. JSPL targets to be zero net debt.

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%name Daily Market Highlights MAY 14

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