Daily Market Highlights SEP 23

2 Daily Market Highlights SEP 23

Previous Day Market Update 

Sensex closed at 58919.27 Down by -85.72 points

Nifty closed at  17545.60 Down by -16.40 points

Chennai based Data Patterns India, which supplies electronic systems to defence and aerospace, filed DRHP with SEBI for its proposed IPO. The IPO will consist of Rs.300 crore fresh issue and an OFS of 60.71 lakh shares by promoters. The total size of the issue is estimated at Rs.600-700 crore. Data Patterns may consider a pre-IPO placement of Rs.60 crore. Funds will be used for repayment of debt, expansion of facilities and working capital. Data Patterns is backed by former Blackstone India head, Matthew Cyriac.

Essel Group, the promoter of Zee Entertainment, will get a transfer of 2% stake in the Zee-Sony merged entity as part of the non-compete agreement. It will have to be approved by the majority shareholders of Zee. Essel Group owns 3.44% in Zee but the merger will dilute the stake of Essel to 2%. Sony will transfer 2% out of its 52.93% stake, reducing Sony’s own stake in the merged entity to 50.93%. The non-compete payment is to incentivize the existing promoters not to enter into similar business for a fixed time period.

Buoyed by the Telecom Relief Package, Vodafone Idea is confident of raising requisite funds to cushion the balance sheet. The package had given 4-year moratorium on AGR and SUC payments, subject to charge of interest for the period. This also ensures that Indian telecom does not become a duopoly. The problems aggravated after the Supreme Court refused to review the AGR calculation formula. India is the world’s second largest wireless market after China and no player wants to lose the access to this market.

Chip shortage globally is really becoming a serious problem. The average time to get chip orders executed has increased sharply to 21 weeks. This shortage is hitting the automobile and electronics industry really hard. The sharp shortage of semiconductors hampered the recovery from the pandemic, particularly for carmakers. It is estimated that global automobile manufacturers would lose close to $110 billion in sales due to chip delays. In India, auto companies are cutting output sharply in the midst of the festival season.

Tyre companies, including Apollo, BKT, JK Tyres, MRF and Ceat rallied sharply up to 5% on Wednesday. Interestingly, this is happening at a time when auto supply is likely to fall sharply due to the chip shortage. The solid Kharif output has ensured strong demand for tyres from the agricultural sector. Global demand is also up sharply. While margins have been under pressure due to rising input costs, analysts are expecting that margins should recover in the next two quarters as demand revives back to previous levels.

With interest rates at record lows and strong festive demand expected, real estate stocks are having the time of their lives. Nifty Realty index touched a life-time high after Godrej Properties reported sales of over Rs.575 crore in a single day in NCR region. Both DLF and Godrej Properties were up 10% on 22-Sep while the other realty players like Indiabulls, Prestige, Sobha and Sunteck also gained. The realty index was up 8.6% in the day. The Tier-1 developers are likely to gain market share in this massive safety shift.

In one more case of shareholder activism, IDFC shareholders rejected re-appointment of Vinod Rai as non-executive director on the IDFC board. The resolution was rejected by 62.3% votes. The other 5 resolutions were passed smoothly. Vinod Rai’s term already ended on 30-July. Shareholders are already unhappy with the inability of IDFC to sell the AMC business as committed. Incidentally, Vinod Rai was the CAG when the telecom 2G scam was brought to light and which eventually led to the fall of the UPA government in 2014.

In connection with the Karvy case, the Enforcement Directorate conducted raids at multiple locations in Hyderabad and across India. This is in connection with the money laundering probe against Karvy. The chairman of Karvy group, C Parthasarathy, has already been arrested on complaint by IndusInd Bank of unlawfully pledging shares. The loan amounts were allegedly diverted to group companies. Karvy was barred from capital markets and has been prohibited by ED from alienating any of its assets till instructed.

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