Previous Day Market Update
Sensex closed at 59141.16 up by 417.96 points
Nifty closed at 17629.50 up by 110.05 points
The Big Bad Bank announcement finally came on 16th September, with details of the government support. Finance Minister confirmed that the National Asset Reconstruction Company or NARCL, would be operational soon. The government guarantees will be up to Rs.30,600 crore for security receipts issued by NARCL and will expire in 5 years. NARCL will acquire stressed assets worth Rs.200,000 crore from banks by paying 15% cash to lenders and the balance 85% in security receipts. Security receipts will be tradeable.
JSW Steel raised $1 billion via issuance of sustainability-linked bonds of SLBs in the international market. This makes JSW Steel the first steel company globally to issue SLBs in hard currency. Managing Director, Seshagiri Rao, confirmed that the response from global investors had been overwhelming. The proceeds will be deployed for funding capex and to refinance debt. The sustainability bonds commit to achieving below 1.95 tonnes of CO2 per ton of steel by 2030, failing which, interest will be stepped up by 37.50 bps.
It looks like the fliers are returning with a vengeance. Nearly 67 lakh domestic passengers travelled by air in August, which is a good 33.83% higher compared to the 50 lakhs that travelled in the month of July. This data was put out by the DGCA. This was also helped by an increase in the cap on capacity from the 65% to 72.5%, which resulted in a sharp increase in the load factors. The overall industry level occupancy levels also increased to 70.2%. Indigo reported the best on-time performance at 96.5% across key airports.
The Rs.171 crore IPO of Paras Defence and Space Technologies which opens on 21-Sep and closes on 23-Sep, has announced its price band in the range of Rs.165-175 per share. Paras Defence works extensively on manufacture and testing of defence products and services with government backed agencies and specializes in space engineering. The market cap of the company at the upper end of the price band would be a modest Rs.683 crore. The IPO consists of Rs.141 crore fresh issue and Rs.30 crore as offer for sale.
Speaking on the recent shift to 100% peak margins and the proposed shift to optional T+1 settlement, the SEBI Chairman underlined that both the measures would be in the larger interests of the investors. Both the moves had come in for extensive criticism by the broker body ANMI as well as the FPIs. He pointed that with the sharply higher retail participation as indicated by the surge in demat accounts, the onus was on the regulator to make the stock markets a safer place. He justified T+1 as a measure long overdue.
Hero MotoCorp will join the list of auto companies revising prices upwards to offset the rise in input costs. The price hike is likely to be approximately Rs.3,000 across the range of motorcycles and scooters. Prices of steel, copper and other commodities had been rising rapidly in the last 1 year and that had forced most auto companies to pass on price hikes. In August, Hero Moto reported a 22% fall in total sales due to supply chain constraints. Tata Motors, M&M, Renault, Bajaj Auto, Toyota have all hiked product prices.
Zen Technologies has surged 140% in the last one month and the key reason has been its virtual monopoly in the drone manufacturing space in India. With the recent announcement of the performance linked incentive scheme or PLI for auto sector, including drones, Zen has received a leg-up. The stock was already rising in anticipation of this announcement. In addition, the company has also doubled its order book in the last 2 months and has just received an order of Rs.155 crore from the Indian Air Force in August 2021.
In the midst of speculation about change of leadership at Tata Sons, N Chandrasekaran has clarified that there were no such plans. Even Ratan Tata underlined that the current team at Tata Sons had done a phenomenal job in boosting market value of the group and such rumours had no basis. Bloomberg had earlier reported that Tata Sons was planning to create a CEO role in the structure to improve corporate governance. Speculation has been rife in recent times as Chandra’s tenure at Tata Sons ends in Feb-22.