Daily Market Update – Oct 23rd

unnamed Daily Market Update   Oct 23rd

Reliance may be getting over-owned by foreign portfolio investors as the FPI holding in Reliance Industries touches a record 27.2% in Sep-20 quarter. Foreign portfolio investors held 165.8 crore shares representing 25.2% of the total shareholding with another 2.05% being held by qualified institutional buyers or QIBs. While the FPI stake in RIL went by 60 bps QOQ the MF holdings in Reliance were down by 25 bps largely because most funds were approaching the statutory 10% of corpus that they can invest in a single stock. As of the Sep-20 quarter, MF stake in Reliance Industries is down to 5.12%.

Bajaj Auto reported a 19% decline in its net profit at Rs.1138 crore for the Sep-20 quarter. While Bajaj has recovered from the COVID impact, this fall was more due to lower treasury income and state restrictions on export benefits. Overall sales revenues for the quarter also fell by 8% at Rs.7442 crore. The company also admitted that the fall in operating profits could have been worse than 7% had it not been for fixed cost optimization. Volumes sold were 10% lower in the quarter at 1.053 million. The December quarter is expected to show much better traction on the back of festive demand. Bajaj has the strongest export franchise among two-wheelers and it reported record export sales of 212,000 units in September 2020. While Africa and Latin America are revising, ASEAN continues to see tepid demand.

In another set of key results, Asian Paints beat analyst estimates for Sep-20 despite average profit growth. The company was well supported by low raw material prices during the quarter. APIL reported net profits flat at Rs.830.37 crore while sales revenues were up 5.93% at Rs.5350 crore for the Sep-20 quarter. During the quarter, the international portfolio of Asian Paints did well with demand revival visible in the Middle East, Africa and Asia. Decorative business segment registered healthy double digit volume growth for the quarter. APIL has been a star market performer despite steep valuations.

It was a last minute scrape-through for the Equitas Small Finance Bank IPO, which closed on 22 October. The Rs 518 crore IPO was finally subscribed 1.95 times with the qualified institutional buyers or the QIB quota subscribed 1.92 times. The retail portion had already been fully subscribed on the second day itself. It may be recollected that the IPO had opened for subscription on 20 October. It was a combination of fresh issue of Rs.280 and an offer for sale of Rs.238 crore. Equitas SFB had already raised Rs.139.68 crore from anchor investors. The IPO is expected to list on November 2 on NSE and BSE.

The Smartphone segment in India has bounced back post-lockdown to an all-time high of 50 million units in Sep-20 quarter. China continues to dominate the Indian market with 76% market share. In the Indian Smartphone market, Xiaomi was the market leader with 26.1% share followed by Samsung with 20.4% share. In addition, Vivo and Realme had 17.4% share each while Oppo had 12.1% share of the market. Samsung is the only Korean player in the top-5 with the others being Chinese. These are in volume terms and Samsung continues to lead in value. Even Apple sold 8 lakh units in the quarter.

ONGC won 7 out of the 11 geographical areas that were put on offer under the fifth round of bidding vide the Open Acreage Licensing Policy or OALP. Oil India won the remaining four blocks. According to the DGH, OALP-5 will generate exploration work commitment of $400-450 million right away. These 11 blocks are spread across 8 sedimentary basins. They include 8 on-land blocks, 2 shallow-water blocks 1 ultra-deepwater block. Normally, ultra-deep water blocks get better pricing. Invenire Energy was the only private bidder in the fray. This is based on revenue sharing model with reduced royalty terms, no oil cess as well as marketing and pricing freedom. The energy sector is expected to contribute 24% of the projected CAPEX in infrastructure and exploration is expected to be one such important area.

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