Previous Day Market Update
Sensex closed at 58247.09 down by 69.33 points
Nifty closed at 17380.00 down by 24.70 points
For August, trade data has been encouraging but the deficit also widened. Exports rose by 45.76% to $33.28 billion for Aug-21 compared to $22.83 billion in the same month last year, although this could be attributed largely to the base effect. However, even Imports surged 51.72% $47.09 billion resulting in a merchandise trade deficit of $13.81 billion for the month. For the first five months of the fiscal year ended Aug-21, exports were up 67.33% at $164.10 billion while imports were sharply up 80.9% at $219.63 billion.
Shree Cement will set up an integrated plant with 3.50 MTPA capacity at Nawalgarh in Rajasthan. The plant will also have a clinker capacity of 3.80 MTPA. The total investment of Rs.3,500 crore will be funded through internal accrual and debt. The capacity expansion will be completed by Mar-24. To meet the power needs of the cement plan, the company will also set up a captive solar plant with capacity of 106 MW at an investment of Rs.500 crore. Capex works out to $100 per tonne, higher than its average $70.
WPI inflation or wholesale price inflation surged to 11.39% in Aug-21, despite the fall in retail CPI. This clearly shows that rising input costs continues to remain a pressure point for Indian industry. This is the fifth month in a row that WPI inflation has been in double digits. Fuel saw a 26.1% spike, which pushed up inflation despite tapering of wholesale food inflation. Fuel has a huge secondary impact as it pushes up the prices of almost all products and services. Core WPI inflation touched all-time high level of 11.1%.
BOFA Securities Europe and Rare Enterprises, owned by Rakesh Jhunjhunwala, jointly purchased Rs.225 crore worth of Zee Entertainment shares on Tuesday. Zee Entertainment was up nearly 40% on the NSE after it was reported that CEO and ME, Punit Goenka may be asked to move on. Punit Goenka is the son of the founder of Zee Group, Subhash Chandra. While Rare bought the stock at a price of Rs.220, BOFA bought the stake at a price of Rs.236 crore. Both purchased close to 5 million shares of Zee Entertainment.
The parent company of OYO, Oravel, plans to convert itself into a public limited company ahead of the proposed IPO. The application for the change of status and name has already been filed with the ROC. This conversion is a must before it can come out with the public issue. The board of OYO had already approved the increase of authorised share capital of the company from Rs.1.17 crore to Rs.901 crore. It will file its DRHP by November for its proposed Rs.11,000 crore IPO at a valuation of nearly $16 billion.
According to a recent report by Bloomberg, Indian stocks may be giving bullish signals despite outperforming peer group in the last 3 years. For example, the MSCI India index beat the MSCI World Index by 600 bps last month, which is the largest gap in any month since 2018. For the 12-month period, the India index has outperformed the global peer group by 15%. India index outperformed the world index for the eight straight month, a phenomenon seen only twice in the past i.e. in the years 2003 and 2007.
The Union Cabinet is likely to consider a moratorium on spectrum dues by telecom companies when it meets on Wednesday. This is part of the package to give relief to telecom companies like Vodafone Idea, that need to pay over Rs.50,000 crore as unprovisioned past statutory dues. The relief package will also include giving an option to convert interest on spectrum dues of Vodafone Idea into government equity. Vodafone Idea is seeking a major bailout package from the government to continue as a going concern.
India companies may be set to raise record amount of capital from the offshore debt market as global investors chase bonds to rebalance their global portfolios. In the first 9 months, Indian companies have already raised $19 billion from the offshore market, slightly below the previous record of $21 billion in the full year 2019. Already, companies like Tata Motors and Axis Bank have raised funds at one of the lowest yields among EMs. HDFC Bank had raised $1 billion via AT1 bonds at a record low yield of just 3.7%.