Daily Market Update – APR 23

Untitled 5 Daily Market Update   APR 23

Previous Market Close Update

Sensex closed at 48,080.67 up by 374.87 points

Nifty closed at 14,406.15 up by 109.75 points

Banks that have just approved a debt recast plan for Future group are likely to withdraw the offer once the merger deal with Reliance Retail goes through. In the latest round of restructuring, the banks agreed to extend the tenure of loans by another 2 years to help Future group get through the crisis. Former ICICI CEO, K V Kamath, headed the RBI approved committee that passed the recast plan. However, banks have emphasized that the recast was just a Plan-B till the time the Rs.24,713 crore deal with RIL is closed out.

MPC minutes released on 22 April has highlighted the rising COVID cases, the falling growth momentum and the rising inflation as the key risk factors. While the six members of the MPC were unanimous about holding repo rates at 4% and maintaining accommodative stance, all the members concurred that any guidance on rates should be data-driven only. All members have unequivocally highlighted the supply-side driven inflation as biggest risk factor that could bring about a shift in the stance of the MPC members.

Sugar stocks like Balrampur Chini, Dalmia Bharat and Triveni Engineering rallied in the range of 30%-45% in the last few days when the Sensex continued to remain negative. Analysts are expecting robust earnings growth for sugar companies. Sugar analysts are also positive about the leeway given to sugar companies to export sugar and also to enhance their ethanol blending. The government wants to take ethanol blend to 20% of petrol by the year 2025. Analysts have pointed that this could make sugar stocks non-cyclical.

Power Grid proposes to launch the first ever INVIT IPO by a PSU company on 29 April. This will also contribute richly to the government’s disinvestment target of Rs.175,000 crore for FY22. INVIT is a pool of infrastructure assets and, unlike REIT, it has more of debt characteristics. The size of the IPO is pegged at around Rs.7,700 crore. The price band is likely to be announced on 29 April. Reportedly, global pension funds, long-only funds and even domestic mutual funds had evinced interest as had insurance companies.

It is estimated by a Dun & Bradstreet survey that nearly 75% of small businesses in India may be adversely impacted by the resurgence of the COVID-19 pandemic. Manufacturing SMEs are likely to be the worst hit. The D&B survey was conducted across a sample of 250 companies from manufacturing and services with annual turnover of Rs.100-250 crore. Nearly 7 out of 10 SMEs were apprehensive that it may take more than one year to recover to pre-COVID levels of output. There is pressure on supply and demand.

Indian Oil Corporation has seen its capacity utilization fall from 100% to 95% in the last one month. The resurgence of COVID and the latest curbs on movement across India are likely to hit demand for fuel. While, the cuts are quite nominal as of now, most insiders concur that the cuts could get deeper going ahead. Experts anticipate that due to COVID, petrol sales could drop by 100,000 bpd in Apr-21 and 170,000 bpd in May-21. Diesel demand is likely to contract by 220,000 bpd in April and by 400,000 bpd in May-21.

Torrent Power will set up a 300 MW solar power plant in the state of Gujarat at an estimated cost of Rs.1,250 crore. The entire project is expected to be completed and commissioned within 18 months of the date of execution of the PPA or power purchase agreement. The tariff has been set at Rs.2.22/KWH for a period of 25 years. In the alternate energy space, Torrent has till date executed 648.5 MW wind project and 138 MW solar projects. In addition, nearly 515 MW renewable projects are under execution.

Tata Steel has filed a commercial court claim in the UK against the GFG Alliance led by Sanjeev Gupta. The GFG Alliance owns Liberty Steel, which had recently missed payments from an acquisition that goes back to 2017. Liberty had stepped in to purchase Tata’s Speciality Steels business in UK for £100 million. But, the payments were missed leading to this legal wrangle. There are more problems for GFG Alliance as it was backed by trade credit financier, Greensill Capital, which recently went bankrupt under bad loans.

World Indices at 9 AM

image Daily Market Update   APR 23

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