Market Walk

Top Market Highlights Of The Day – Dec 31st 2021

RBL Bank appears to be worsening as the stock touched a 52-week low of Rs.131

The situation at RBL Bank appears to be worsening as the stock touched a 52-week low of Rs.131. The fears were triggered after the bank wrote off loans worth Rs.300 crore within 7 months of sanctioning. That had been one of the key reasons for RBI nominating Yogesh Dayal to the board of RBL Bank leading to the CEO Vishwavir Ahuja proceeding on long leave. RBI has reiterated that RBL Bank is healthy and also well capitalized with net NPAs under 2.2%. However, market are not taking any chances with the stock.

States demand GST rate hike on textiles be put on hold

One of the key agenda items in the 46th GST meeting will be a debate on the recently announced hike in GST on textiles from 5% to 12%. The new rates go live from January. The GST Council may either scrap this proposal or put off the implementation. The rate hike in textiles had been proposed to rectify the inverted duty structure. However, the objections came in the light of the stiff competition Indian textiles are facing from Bangladesh. It is estimated that this rate hike may result in 15 million job losses in textile industry.

IT stocks are expected to report stellar earnings in the December quarter

IT stocks are expected to report stellar earnings in the December quarter and the impact was evident in the performance of the IT index. The BSE IT index hit a life-time high. The focus in the current year has been on mid-cap IT stocks like Birlasoft, Persistent Systems, KPIT etc, which are expected to benefit from better growth traction. Among the largest caps, even Wipro and Infosys more than doubled during the year. The trigger came from Accenture upping its guidance. Most mid-caps have given solid guidance.

Gold is likely to end 2021 with negative returns

After nearly 3 years of outperformance, gold is likely to end 2021 with negative returns. Gold has been pressured by higher treasury yields in the US since higher bond yields increases the opportunity cost of holding gold and makes gold unattractive. Globally, gold has dipped below the $1,800/oz mark as the interest in gold is normally inversely proportional to the interest in equities. After scaling a high price of Rs.56,200 per 10 grams on the MCX, gold has fallen by nearly Rs.9,000 per 10 grams in the current year.

IDFC First Bank board in favour of merger with IDFC Ltd

In its board meeting on 30-Dec, IDFC First Bank considered the proposal for merger of IDFC Ltd and IDFC Financial Holdings into the Bank. The board has given its approval to the merger deal in-principle, subject to the final approval of the shareholders, creditors and regulators. There will be a separate committee that will work on the terms of the proposed merger, including the valuation aspects of the deal. This news has kept the markets excited since it would save IDFC from the pressure of holding company discount.

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