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Investors’ wealth dips Rs 76,196 cr amid sell-off in markets

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Investors’ wealth eroded by Rs 76,196.54 crore on Wednesday, with the market witnessing a sell-off amid rising concerns over possible aggressive interest rate hikes to tame high inflation.

The market capitalisation of BSE-listed companies — which is also an indicator of wealth of investors — tumbled Rs 76,196.54 crore to Rs 2,85,94,997.40 crore amid the 30-share Sensex falling 224.11 points or 0.37 per cent to 60,346.97 points.

The 30-share index rebounded more than 1,200 points from the early lows before settling at 60,346.97 points, a loss of 224.11 points or 0.37 per cent compared to Tuesday’s closing level.

The broader NSE Nifty closed lower 66.30 points or 0.37 per cent at 18,003.75 points.

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The Sensex had plunged 1,150 points to a low of 59,417.12 points, while the Nifty declined to a low of 17,771.15 points in early trade on Wednesday, following deep losses in US markets.

Tracking the weak trend in equities, the market capitalisation of BSE-listed firms had tumbled by Rs 2.21 lakh crore in initial deals. However, the markets showed steady recovery and pared most of the losses to settle 4 per cent down.

According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, Indian markets displayed strong resilience in the face of negative global cues.

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While markets opened 1.6 per cent lower, it showed steady recovery throughout the day to wipe out the entire opening loss and managed to close near day’s high with marginal loss of 0.4 per cent.

“Controlled inflationary environment v/s global peers, strong flows from retail, domestic as well as foreign institutions continue to drive the domestic equities.

“Although there can be bouts of volatility due to adverse global cues. Support base buying at lower levels are giving much needed strength to the Indian markets and any sharp decline will be good opportunity to buy in Indian equities,” Khemka added.

INDICES ON A CRASH COURSE; VIX SURGES 8%: Bear hug on recession fears

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Equities tanked on Friday amid weak global cues as concerns of a global recession, sticky inflation, rising commodity prices and the possibility of aggressive tightening by central banks spooked investors.

As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging markets and developing economies that would do them lasting harm, a new study by the World Bank said.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies,” said World Bank Group president David Malpass.

Also Read: Warning signs flashing for global recession in 2023, as interest rate hikes threaten economic growth

The benchmark BSE Sensex slid over 1,200 points on Friday before closing at 58,840, down 1,093 points or 1.8%. The gauge has shed 1,731 points, or 2.9%, in the last three sessions and has slid 1.6% the past week. The Nifty 50 settled at 17,530, down 346 points or 1.9%. The broader markets also suffered, with the Nifty midcap and smallcap falling in the range of 2.5% to 3%. The Volatility Index — India VIX — surged 8% to settle near 20-odd level.

Most Asian indices ended in the red too, with Jakarta Composite (1.9%) and Shanghai Composite (2.3%) slipping the most.

Index heavyweights such as Reliance Industries, Infosys, HDFC Bank, TCS and ICICI Bank contributed the most to the fall. All sectors ended in the red, with realty, IT, oil & gas, consumer durables and auto falling the most.

Volumes on the NSE were the highest in since May 31, partly aided by FTSE rebalancing trades. The advance decline ratio was sharply negative at 0.23:1. India VIX, an index that measures volatility, jumped 7.8% to 19.82.

Global ratings agency Fitch on Thursday slashed its growth forecast for the Indian economy to 7% in 2022-23 from 7.8%, with 2023-24 growth to slow further to 6.7% from 7.4% projected before.

“Investors are expecting an aggressive rate hike next week, with one-third of market respondents expecting the Fed to do 100 basis points, whereas a 75 bps hike is mostly discounted. The adverse rub-off impact of this was felt in the Indian equity market also, over the last three sessions, including extended losses on Friday,” said Aishvarya Dadheech, fund manager, Ambit Asset Management.

Indian equities have been resilient in the last couple of months and outperformed major global markets by a wide margin.

The turnaround in FPI inflows in equity markets and rising expectations of India’s inclusion in the global bond market indices have led to a stable currency and resilient bond markets over the last month. FPIs have shopped for equities worth $1.5 billion in September.

The external environment, however, remains challenging, with global commodity prices remaining meaningfully above pre-pandemic levels.

“It exposes the economy to uncertainty especially on external stability. Indeed, the trade deficit remained near all-time highs in July and August and we expect the current account deficit to track near 10-year high of 5% of GDP in quarter ended September. While the CAD has widened, a turn in FPI flows in August, alongside FX intervention by RBI (FX reserves are down $20.8 billion since July end) have helped to keep the currency steady,” said a report by Morgan Stanley.

The RBI most likely will have to raise rates by 50 bps in its next policy meet to combat pressure on the rupee, according to experts. The yields on Indian 10-year government securities spiked 15 bps to 7.25% in the last three days.

“We believe the market is likely to be volatile in the near term. Investors should use the volatility in the coming weeks in a phased manner to build a position with a view of 12-18 months in quality companies where earnings visibility is high,” said Neeraj Chadawar, head – Quantitative Equity Research, Axis Securities.

According to him, domestic-oriented themes like banks, FMCG, hospitals, domestic industrials, and discretionary consumption are well placed over export and cyclical-oriented themes.

Delhi Schools Diwali, Chhath holiday list – Know all dates in October, November and December

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Delhi School Diwali Holiday List: For students, holidays represent an indispensable aspect of their academic life, eagerly awaited and cherished for various festivities and national celebrations such as Gandhi Jayanti, Diwali, and Dussehra. These breaks offer not only respite from the demanding school routine but also serve as occasions for rejuvenation and family bonding. The compilation of upcoming holidays serves as a convenient guide, allowing students to effectively plan their activities during the Delhi School Closure. It encourages them to utilize this time wisely, engaging in recreational pursuits, pursuing personal interests, and embracing valuable moments with loved ones.

Below is a list of holidays for the month of October, November and December:

Gandhi Jayanti – October 2, 2023Maha Panchami – Dussehra – October 19, 2023 to October 24, 2023Maharishi Valmiki Jayanti – October 28, 2023

November

Diwali: November 12, 2023Bhai Duj: November 15, 2023Chhat Puja: November 19, 2023Guru Tegh Bahadur’s Martyrdom Day: November 24, 2023Guru Nanak Jayanti: November 27, 2023.

December

Christmas Eve: December 24, 2023Christmas: December 25, 2023New Year’s Eve: December 31, 2023

Schools to remain closed on October 28

On the occasion of Maharishi Valmiki Jayanti, schools in Delhi and other states will be closed. Parents and students are advised to contact the school authorities for any queries.

Global fund managers raise cash allocation to 21-year high: BofA

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Fund managers across the world are gravitating to cash amid rising inflation, central bank tightening and geopolitical tensions. Bank of America’s September Global Fund Manager Survey (FMS) characterises this mood as “super-bearish”, with allocation to cash inching up to 6.1% in August, the highest in 21 years and well above the long-term average of 4.8%.

According to the survey, the short-term “pain trade” is up once again for risk assets, the global growth expectations are near all-time lows and the maximum bearish sentiment prevails.

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In India, three of the top 20 fund houses by equity assets – SBI MF, Axis MF and PPFAS – were holding more than 10% in cash at the end of August, according to Motilal Oswal Financial Services. Another four – ICICI Prudential MF, Franklin Templeton MF, IDFC MF and PGIM India – had cash levels of between 5% and 10%.

According to FMS survey, investors cut their net underweight in stocks further to -52% in September while pushing longs to defensives to 53%, the highest since February 2009.

The Fed will end hiking rates in Q2 of 2023, according to 36% of FMS investors. FMS investors have repriced terminal Fed funds rate much higher in the past month, with 38% now seeing the Fed hiking rates till 4-4.25%, versus 3.5-3.75% in August 2022.

A net 61% of FMS investors see the US dollar as the most overvalued, up 2 ppt month-on-month to a record high. Net 72% expects weaker economy next year and net 79% expects lower inflation in the next 12 months.

The share of FMS investors saying recession is likely increased further in September to 68%, the highest since May 2020. Since its post-pandemic peak of 80% hit in June 2022, the share of investors believing the economy is in its late-cycle phase has dropped continuously to 67% in September. Historically, a drop of this magnitude and length has coincided with a recession.

The ongoing energy crisis in Europe will likely push the domestic economy into a recession, according to almost 70% of FMS investors.

Close to 70% of FMS investors expect China GDP growth in 2022 to slow to 4% or less versus 57% one month ago, much below the average real GDP growth of 8.8% observed since 1990.

Two hundred forty panellists with $695-billion AUM participated in the August survey. Two hundred twelve participants with $616-billion AUM responded to the Global FMS questions and 121 participants with $265-billion AUM responded to the regional FMS questions.

Nifty near 18K: Market pundits call for caution

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By Ashley Coutinho

Market pundits are calling for caution amid a surge in Indian equities since mid-June and the benchmark 50-share Nifty nearing a decisive resistance level of 18,000.

“I am at a loss to explain why markets are not reacting more negatively to the bleak global economic outlook,” said Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies. “The fall in commodity prices may have raised hopes that inflation has peaked. FPIs have returned due to a possible portfolio rebalancing after a prolonged bout of selling from October to June.”

The turnaround in FPI inflows into equity markets and rising expectations of India’s inclusion in the global bond market indices have led to a stable currency and resilient bond markets over the last month.

Rising interest rates in the US have put emerging market economies with large import bills and dollar-denominated debt on the back foot. JP Morgan analysts put an ‘underweight’, or ‘sell’ sign, on international emerging market (EM) sovereign debt on Friday.

Also Read: Mcap of 7 of top 10 most valued firms climb over Rs 1.33 lakh crore; TCS, Reliance lead gainers

India stands out among the EMs because of its currency stability, growth prospects, robust forex reserves as well as relatively low levels of external debt, current account and fiscal deficits.

A return to risk-off trade, however, could spell bad news for the country, says Holland. “India will not be totally immune to a global sell-off even if our growth prospects are better. But the hope is that if global markets correct by, say, 10%, India will go down by maybe 5% as the country looks relatively more attractive in the EM pack.”

The US Federal Reserve is expected to raise rates by 75 basis points this month. The European Central Bank raised its key interest rates by an unprecedented 75 bps last week in a bid to tame inflation amid worries of a looming recession.

“A key variable to track is crude oil prices since the Indian market is quite vulnerable to higher oil prices. Moreover, the consequences of a coordinated global central bank balance-sheet tapering exercise need to be closely watched because it has the potential to lead FPIs to a robust risk-off stance,” UR Bhat, director at Alphaniti Fintech, said.

Brent crude oil prices have slid 25% over the last three months.

“While there is a lot of talk of decoupling and a robust market in light of the global scenario, India is neither immune, nor isolated from the headwinds and knock-on affects of a possible global recession, high energy costs, rising rates and inflation,” said Arun Chulani, sponsor & investment adviser, First Water Capital, a category III Alternate Investment Fund (AIF).

Valuations are a concern. Over the last 12 months, the MSCI India index (4%) has outperformed the MSCI EM index (-24%) by a wide margin. The Nifty now trades at 21x FY23E EPS, comfortably above its long period average.

“With the post-Covid earnings momentum at play, equity valuations have corrected from the 2021 peaks but are still some distance away from the value zone. The current valuations are well in excess of one standard deviation away from the historic mean,” Bhat said.

With interest rates on the rise, the historic mean has less significance than in normal times. He added: “On a price to book basis, the valuation premium is even more stark. For valuations to come within the fairly valued zone, earnings have to surprise positively or some meaningful correction has to happen.”

Jefferies believes that the IT sector remains at significant risk in case of a sell-off. “Any potential market correction will likely emanate out of hawkish stance by the Fed and the likely stagflation worries. That could hit the IT sector,” it said in a recent note.

Punjab National Bank Q2 profit rises 327% on strong advances

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The net profit of Punjab National Bank rose 327% year-on-year in July-September quarter, aided by a growth in its loan book and lower provisions.The state-owned bank posted a net profit of Rs 1,756 crore, up 40% on a sequential basis.

The net profit was much higher than the Rs 1,163 crore estimated by Bloomberg.

Retail loans rose 40.2% year-on-year to Rs 2.2 trillion as on September 30. Of the retail portfolio, core retail rose nearly 17% year-on-year to Rs 1.5 trillion.

Personal loans rose 39% to Rs 19,868 crore.

Home loans and vehicle loans rose 14% and 28.3%, respectively.

Agriculture segment rose 4.5% to Rs 1.5 trillion. Micro, small and medium-sized enterprises (MSME) segment rose 6.5% to Rs 1.4 trillion.

The share of retail, agriculture, and MSME loans within the overall portfolio rose 218 basis points (bps) to 55.6% as on September 30.

Corporate loans and other segments rose 8.3% to Rs 4 trillion as on September 30.

Domestic deposits rose 9.4% to Rs 12.8 trillion.

Total term deposits rose 15.3% to Rs 7.7 trillion as on September 30. Low-cost current account savings account deposits rose 2.6% to Rs 5.4 trillion.

CASA share to domestic deposits fell to 42.15% as on September 30 from 44.9% a year ago.

Net interest income, difference between interest earned and interest expended rose nearly 20% to Rs 9,923 crore in the quarter under review. Net interest margin rose to 3.24% in the September quarter from 3.11% a year ago.

However, the state-owned bank’s cost of funds rose to 4.21% as on September 30 from 3.39% a year ago.

ASSET QUALITY

Domestic gross non-performing asset ratio fell to 7.06% as on September 30 from 10.7% a year ago. Gross non-performing asset ratio was highest in the MSME, and agriculture segment.

Provisions fell nearly 30% to Rs 3,444 crore in the quarter under review.

Slippages ratio fell to 0.86% as on September 30 from 3.34% a year ago.

Cash recoveries and upgrades were Rs 3,498 crore in the quarter under review. Fresh slippages were Rs 1,750 crore. The bank wrote-off bad loans worth Rs 3,665 crore in the quarter under review.

The bank recovered loans worth Rs 5,333 crore in the September quarter.

Provision coverage ratio rose to 91.9% as on September 30 from 83.96% a year ago. Capital to risky asset ratio rose to 15.09% as on September 30 from 14.7% a year ago.

Expect monthly payment from Vodafone Idea to continue: Indus Towers

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Indus Towers, the country’s largest mobile tower company, on Thursday said the company expects one of its largest customers – Vodafone Idea – to continue clearing its monthly bills. Without naming Vodafone Idea, the towers company said it is engaging with the telecom operator to chalk out a ‘time-bound’ plan to clear past dues as well.

“While the customer (Vodafone Idea) had some challenges during the quarter, we received the monthly payment in October. Our expectation is that the monthly payment will continue and we will continue to charge as per the MSA (master services agreement) rates,” said Prachur Sah, MD and CEO, Indus Towers, at the July-September earnings call.

Comments from Sah assumes significance as Vodafone Idea owes Indus Towers about Rs 5,653 crore till September end, for which the towers company has made a provision for doubtful debts. Further, at a time when Indus has elevated its capex to support tower and tenancy additions, it is crucial for the company to recover past dues from Vodafone Idea.

In the September quarter, Indus Towers’ trade receivables rose 16.6% sequentially to Rs 6,186 crore. The company created an overall net provision for doubtful debt of Rs 1,335 crore during the quarter. Analysts said there was a minor provision of Rs 130 crore that Indus Towers created related to Vodafone Idea during the quarter.

“We have not written off any dues of the customer (Vodafone Idea). We do expect 100% or near 100% payment from the customer to continue,” said Vikas Poddar, CFO, Indus Towers.

Poddar added: “There was some financial commitment that the customer had in the previous quarter, but that hump is pretty much over.”

Even as Indus Towers said it is keeping a close eye on Vodafone Idea’s fundraising plan, any clearance of past dues by the telecom operator would come only when they raise funds.

Owing to higher capex, Indus Towers witnessed a negative flow of Rs 1,027 crore in the September quarter.

According to Sah, on the back of a healthy order book with Bharti Airtel expanding aggressively in rural areas as well as 5G rollouts, the capex will continue to be elevated.

Analysts said Indus Towers incurred a capex of Rs 2,300 crore in the September quarter, up from Rs 2,200 crore in the preceding quarter.

During the quarter, Indus Towers added 5,928 towers, taking total macro towers to 204,212. The company’s co-locations rose by 5,583 to 353,462.

“The quarter marked Indus Towers reaching a milestone of 200,000 macro towers, reaffirming its leadership position,” Sah said.

Indus Towers’ revenue from operations rose 0.8% quarter-on-quarter (q-o-q) to Rs 7,132.5 crore. The company’s net profit fell 4% q-o-q to Rs 1,295 crore in the July-September quarter.

Top i-banks under Sebi lens over possible disclosure lapses

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The Securities and Exchange Board of India (Sebi) has initiated inspections of top investment banks on past deals spanning initial public offerings, qualified institutional placements, rights issues and offers for sale, said three people familiar with the matter.

The inspections are being carried out by the capital markets regulator’s surveillance teams and encompass a granular check on disclosures and due diligence on past deals, especially with regard to issue objectives, capital structure and litigation.

Also read: S&P 500 companies earnings growth in the next quarter to be in focus from now on

“The inspections began about a month back and will cover several of the top i-banks. The aim is to ascertain if regulations governing merchant banking activity have been adhered to or not,” said a senior banker.

At the time of filing, lead managers have to certify that the disclosures made in the offer document are generally adequate and in conformity with Sebi regulations for disclosures and investor protection. Sebi, however, reserves the right to take up, at any point of time, any irregularities or lapses in the offer document with the managers. Also, the filing of offer documents does not absolve the company from any liabilities under section 34 of the Companies Act, 2013.

“Three to four surveillance officers are being deployed at banker premises for 2-3 days for deals going as far back as five years or more,” said another person familiar with the matter. “Sebi is taking a closer look at disclosures that were given, the kind of due diligence that was done and the back-up, or supporting documents, provided during the deals.”

The regulator may or may not give a heads-up to the banker for the inspection of a particular deal. The banker has to give live responses to the extent possible. In some cases, bankers have to reach out to the company for clarification or back-up documents, said the person quoted above.

The inspections can result in warning letters being issued to bankers, penalties or even show-cause notices. In case of gross negligence or wilful misconduct, the regulator can cancel the registration certificate of the investment banks.

In 2016, for instance, Edelweiss Financial Services, SBI Capital Markets and Axis Capital were fined `1 crore each for non-disclosure of important facts in the 2010 IPO prospectus of Electrosteel Steels.

Also read: Our growth in FY23 will be 30% higher than last year: Sanjay Dutt, MD and CEO, Tata Realty & Infastructure

“While inspections have happened in the past, the process was more ad-hoc. Sebi seems to be trying to make the process far more stringent and formalise it similar to RBI’s inspection of banks. You may see a lot more show-cause notices being issued this time around, and not just warning letters,” said a third person.

An email sent to Sebi did not immediately get a response.

The Banking Regulation Act, 1949, empowers the RBI to inspect and supervise commercial banks. These powers are exercised through on-site inspection and off-site surveillance. On-site inspection of banks is carried out annually.

Sebi had recently carried out a few inspections at offices of alternative investment funds to examine whether the funds complied with portfolio concentration norms and timely disclosures to investors, among other things.

McCain Foods’ 2 new launches: McCain popcorn fries and McCain cheesy pizza fingers

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McCain Foods, a frozen food brand, announced the launch of two new products, thus expanding their portfolio, McCain Popcorn Fries and McCain Cheesy Pizza Fingers.

The company promises to deliver unparalleled taste and crunchy delight in every bite, a snacking experience for Indian consumers, loved by kids and adults alike.

McCain Cheesy Pizza Fingers is a blend of two all-time favorites- Mozzarella Cheese and Pizza, making consumers’ get-togethers extra ‘cheeeesy’. A sumptuous combination of cheese and taste of pizza.

Loved by kids and adults alike, it is the ultimate party companion, effortlessly bringing the joy of pizza and the creaminess of cheese in one bite. In less than 3 minutes, consumers can experience this distinctive cheesy snack with Italian-style herbs, all from the comfort of their homes.

The two new products have been launched via Digital Video Campaigns (DVCs) highlighting the deliciousness, irresistibility and universality of both the products. There is more to come with consumer contests and influencer integrations to continue the buzz around the launches. Popcorn Fries can even be spotted on bus shelters around major cities in a OOH campaign.

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Sanjiv Bhasin’s stock picks for next 5 months; sees Nifty at 15,000, Bank Nifty near 34,250 by May-end

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Indian share market benchmarks BSE Sensex and Nifty 50 have been witnessing volatility amid the second COVID-19 wave. Due to this, foreign institutional investors (FIIs) turned net sellers in the month of April, after being net buyers for six consecutive months. Sanjiv Bhasin, Director, IIFL Securities Ltd, told Surbhi Jain of Financial Express Online in an interview that the US and other developed markets outperformed in the previous month, which encouraged near term shift of money. In April, US stock indices surged up to 5.4 per cent, while Sensex and Nifty fell as much as 1.5 per cent. Sanjiv Bhasin said that he is overweight on pharmaceuticals, banking sector stocks among others. Here are edited excerpts from the interview:

FIIs turned net sellers and sold Rs 10,000 cr shares in April after remaining net buyers for the 6 straight months. What fuelled FIIs selling in April?

How do you see Indian share markets in May? Do you see more downside, which sectors should investors watch?

Range bound, as local funds will support the downside with marginal selling by foreign investors. However, as soon as you peak in Covid cases which could be by the second week May, expect last week’s rally which could take you back to 15,000. Pharma, metals, banks, and autos will lead the rebound.

A record number of demat accounts opened in FY21, do you expect the same in this fiscal and why?

There is no better asset class than equities for the Indian context over the next 10 years as growth rebound strongly with double-digit GDP growth which implies that in all asset classes equities will see retail interest growing manifold.

Where do you see the Nifty 50 and Bank Nifty in May series? What would be an appropriate strategy for traders?

Nifty 50 index at 15,000 level by end May and Bank Nifty close to 34,250 levels. Do a SIP (systematic investment plan) in select stocks or indices.

What are your overweight and underweight sectors? Which stocks do you expect to deliver decent returns in the 3-5 months horizon?

Overweight sectors are Pharma, Midcaps, Banks and Auto. While underweight sectors are Metals and Consumer Discretionary. The top stock picks for the 3-5 months horizon are Lupin, Escorts, RBL Bank, HDFC Bank, Tech Mahindra and NBCC (India) Ltd.

Going ahead, what factors would drive the stock markets and what are the key risks?

Missing the next wave of reopening which could see huge spending from consumers and unleash huge profit for Corporate India, global liquidity in abundance and huge impetus to buy stocks as global markets led by the US hit new all-time highs. Rise in cases persisting, with vaccine drive seeing obstacles could derail the recovery temporarily.