Daily Market Highlights SEP 09

%name Daily Market Highlights SEP 09

Previous Day Market Update 

Sensex closed at 58250.26 down by 29.22 points

Nifty closed at  17353.50 down by 8.60 points

DIPAM announced the shortlist of BRLMs to manage the proposed IPO of LIC. The list of investment bankers include Kotak Mahindra, Goldman Sachs, JP Morgan, ICICI Securities, JM Financial, Citigroup, Nomura, Axis Capital and SBI Caps. DIPAM has also appointed KFintech, formerly known as Karvy Computershare, as the registrar to the IPO. The LIC IPO is likely to be the biggest IPO in Indian capital markets at around Rs.75,000 crore. LIC IPO is crucial to the divestment target of Rs.175,000 crore in FY21.

RBI has removed UCO Bank from Prompt Corrective Action or PCA framework. Banks are put into PCA when their net NPAS spiral out of control. Banks under PCA need approval for decisions, cannot expand their loan books and cannot declare dividends. Now UCO Bank can expand its lending book and also look to expand its network. Net NPAs are down from 8.54% in Mar-17 to 3.94% currently. The company also posted profits in the recent fiscal. Government had infused Rs.2,600 crore into UCO Bank capital this year.

The central government has increased the minimum support price or MSP for wheat by 2% for upcoming Rabi season to Rs.2,015 per quintal. Other crops like oilseeds, pulses, mustard and masoor dal saw MSP hikes of 8%. MSP is the rate at which the government purchases crops from farmers. Currently, government fixes MSP for 23 crops, including 6 Rabi crops. However, farmers have objected to the meagre 2% hike in MSP for wheat. Centre has underlined that the MSP gives wheat farmers 100% profit margins.

In good tidings for Indian financial markets, Morgan Stanley highlighted in its latest bond market report that India could soon win inclusion into one of the world’s top bond indices (possibly GBI-EM index of JP Morgan). This is expected to happen by early 2022. Normally, inclusion of Indian bonds in global indices would immediately attract the passive bond investors who invest in bond indices via ETFs. The move is likely to trigger $40 billion of bond flows immediately and scale up to $250 billion over the next 10 years.

SAIL Ltd plans to double its capacity from the current 23 million tonnes per annum to 50 million TPA by the year 2030. This is in line with the broad intent of the National Steel Policy 2017. India is already the second largest producer of steel in the world, next only to China. In fact, SAIL has already started work on the land bank studies for the next phase of expansion. The last major expansion had taken their capacity from 12.8 MT to 22 MT. SAIL operates plants at Rourkela, Durgapur, Bokaro, Bhilai, Burnpur and Salem.

AMFI just announced the fund flow data into mutual funds for August 2021. Equity funds saw inflows of Rs.8,667 crore with the flexi-cap and focused funds categories dominating. This is lower than Rs.22,583 crore infused in July, but that was largely on account of the ICICI Pru Flexi Cap fund NFO, which had seen inflows of Rs.9,801 crore. The strong inflows combined with the Nifty appreciation led to the total AUM expanding to Rs.36.59 trillion. SIP flows for August 2021 stood at an all-time record level of Rs.9,923 crore.

Infosys Technologies has signed a strategic partnership with The Economist Group of UK. The ideas is to create a B2B franchise to accelerate sustainability solutions. While Infosys will bring its digital service capabilities, Economist will bring its global policy research, insights and events expertise. The idea is to create actionable content and long-term thinking to address sustainability challenges. While the broad financial implications are not known, it is the unique strengths of Infosys and Economist that is of note.

India Cements plans to set up a new plant in Madhya Pradesh and also debottleneck capacity at its plants. India Cements will also look to repay debt to the tune of Rs.551 crore during the current fiscal year. These data points were released when Srinivasan addressed the AGM of the company. Unlike the previous year, India Cements is getting the benefit of lower input costs as compared to the spike in the cost of coal, power and fuel last year. Cement demand in the South will be driven by new housing, roads and irrigation.

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