Daily Market Highlights SEP 01

3 Daily Market Highlights SEP 01

Previous Day Market Update 

Sensex closed at 57552.39 up  by 662.63 points

Nifty closed at  17132.20 up by 201.15 points

GDP for Jun-21 quarter came in at 20.1%, largely along expected lines. However, this is more due to the low base as GDP had fallen -24.4% in Jun-20 quarter. However, the number could have been much better had it not been for the disruption caused by COVID 2.0. One key inference that emerges is that overall trade, represented by exports and imports, was the big driver of growth. However, major IIP components like mining, manufacturing and electricity are still below 2019 levels, showing steep pandemic impact.

For the first 4 months of FY22 ending Jul-21, fiscal deficit stood at Rs.321,000 crore. That is approximately 21.3% of the budgeted estimates for FY-22. The good news is that fiscal deficit may not spill over like last time. For FY21, government had reported fiscal deficit at 9.3% of GDP compared to the budgeted 9.5%. For FY212, the fiscal deficit estimate is 6.8% of GDP. The fiscal deficit has been in check this fiscal largely due to reduced expenditure by the government and buoyant revenues from direct and indirect taxes.

According to a report by ICRA, the aviation industry may require additional funding of Rs.45,000 crore in the next 2 years to reduce their debt burden and protect their balance sheets. ICRA has held on to its negative credit outlook on Indian aviation. Despite limited activity, the cash burn for airlines has been quite high due to steep fuel prices. The overall aviation industry is expected to report a steep loss in FY22. ATF prices were up 71% yoy in the first 5 months of FY22 and fare caps pose a big challenge to airlines.

Veeda Clinical Research plans to raise Rs.700 crore through the IPO route, which will be a combination of fresh issue and an OFS. The company is expected to file the draft red herring prospectus or DRHP with SEBI in the next few days. Veeda Clinical is backed by CX partners as well as the family office of Havells as well as Nikhil Vora of Sixth Sense Ventures. Veeda specializes in bioavailability and bioequivalence (BA/BE) studies, which have been gaining traction with a plethora of drugs going off-patent in the next 5-6 years.

Core sector output showed 9.4% growth in Jul-21, roughly at the same level as the previous month. In the last few months, core sector growth has been extremely robust on account of the low base effect. Core sector comprises of 8 core industries which account of 40.27% of the IIP basket. The positive growth in the core sector output was driven by cement, coal and natural gas. For the Apr-Jul period, core sector showed 21.2% growth. The only sub-sector that showed negative growth in July was crude oil at -3.2%.

After the pressure created 2 months back, most of the Adani shares have rallied sharply to recoup and even better previous levels. On Tuesday, Adani Transmission, Adani Total Gas and Adani Power were all locked in 5% upper circuit. Adani Ports SEZ and Adani Green Energy also rallied on Tuesday. Interestingly, Adani Transmission has rallied 75% in last one month and is just 4% below its all-time high levels. Similarly, Adani Enterprises is just 7.5% away from its all-time high. Adani Wilmar is planning a Rs.4,500 crore IPO.

HCL Tech hit new high of Rs.1,193 on Tuesday after it announced an investment Austin GIS Inc. In the last one month, HCL Tech has surged 16%, outperforming the Sensex by a huge 800 bps margin. It has recently signed a contract with Munich Re of Germany to create next generation digital workplace. HCL had also recently signed an end-to-end IT transformation deal with Wacker Chemie of Germany to establish a modernized digital workplace. HCL Tech has a 37% exposure to IMS, where spend is non-discretionary.

Global consumer internet giant, Prosus NV, announced acquisition of BillDesk for $4.7 billion. The deal will be done through PayU, the payment and fintech business arm of Prosus. Currently, Prosus operates in more than 20 high-growth markets. Together, PayU and BillDesk will handle about 4 billion transactions annually, which is nearly 4 times the current volume of PayU in India. The transaction is, of course, subject to approval from CCI. The deal will take Prosus’ cumulative investment in Indian tech to over $10 billion.

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