Daily Market Highlights OCT 6th

3 Daily Market Highlights OCT 6th

Previous Day Market Update 

Sensex closed at 59,744.88 Up by  445.56 points

Nifty closed at  17,822.30 Up by 131.05 points

Moody’s has raised India’s sovereign rating outlook from “Negative” to “Stable”. However, the overall rating has been kept static at Baa3, which is one notch above the Speculative Grade. This change in outlook was driven by a faster than expected recovery in economic growth, the current account deficit transforming into surplus and checks and balances on the fiscal deficit. However, Moody’s pointed out that the risk of COVID resurgence, high debt levels and low levels of per capita income remain key risks.

The 3 day MPC meet commences on 06 October and will culminate in the announcement of the monetary policy on 08 October. The broad consensus is of the RBI maintaining the repo rates and also holding on to its accommodative stance of the policy. However, there are a section of experts who believe that the RBI could hike reverse repo rates from 3.35% to over 3.50%. This option was suggested by MPC member, Jayanth Varma, as an alternative to rate hikes and also as a signal that it was time for liquidity tapering.

Fino Payments has got SEBI approval for going ahead with its proposed IPO. Now, the next steps would be start the IPO rollout process and then file the RHP with the Registrar of Companies before the IPO. Fino Payments is a payment bank regulated by the RBI. Fino Payments IPO will entail a fresh issue of Rs.300 crore and an offer for sale of 156.03 lakh shares. The final size of the issue will depend on the pricing. It offers a wide array of financial services on its platform and most of its services are offered in digital mode.

HDFC Bank may have put off plans to list its NBFC arm, HDB Financial Services, but it is now looking at a strategic investor to pick a stake in the company. HDFC Bank is expecting a valuation of around $9 billion for HDB Financial Services. The reports are that HDFC Bank may look to dilute 20-25% stake in the NBFC arm, and this strategic sale could become the basis for pricing the IPO in future. HDB Financial has 8.7 million customers, AUM of Rs.61,567 crore and NIM of 7.5%. Gross NPAs had shot up to 7.75% in FY21.

Oil stocks surged on Tuesday with ONGC gaining almost 8% and solid gains from GAIL and other OMCs too. There were broadly two triggers for this solid spike in oil stocks. The first was the sharp 62% hike in natural gas prices announced by the government for the second half of FY22. Government had recently hiked natural gas prices from $1.79 to $2.90 per MMBtu. Secondly, Brent Crude and WTI crude scaled 2014 levels for the first time in 7 years as Brent edged close to $83/bbl on widening demand supply gap.

With sugar production robust and the government likely to end 2020-21 sugar cycle with closing stock of nearly 7 million tonnes of sugar, there are hopes of aggressive ethanol blending. But, ethanol aggression comes with serious food security costs. Prime Minister Modi had fast tracked India’s ethanol ambitions by setting a target of 20% mandatory blending of ethanol with petrol by 2025. However, this is diverting food grains to biofuels. These biofuels will reduce $4 billion in crude import bill, but cold have other costs.

Essel Group founder Subhash Chandra has admitted that he was puzzled by the recalcitrant approach adopted by Invesco Fund. He has urged Invesco Fund to disclose the rationale behind its demand for the ouster of Punit Goenka from the helm of Zee Entertainment. Invesco Fund holds 17.88% of Zee and that is about 5-times the stake that the Chandra family owns. Chandra put the onus on the regulator to verify the intent of Invesco in trying to stifle the Sony deal. He added that Sony deal favoured the small investors.

The CCI approved Carlyle’s $3 billion bid for Hexaware Technologies. Carlyle will buy this stake from Baring Private Equity Asia. Baring had bought a controlling stake in Hexaware in 2013 for $420 million, so they will end up making a good ROI. Hexaware provides transformational IT services including automation, cloud and CRM technology. It leverages artificial intelligence (AI) and robotic process automation (RPA) in this transformation. Hexaware was originally floated by Atul Nishar, the brain behind Apple IT coaching.

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