Month: September 2023

OYO’s valuation drops in private market

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Around two weeks after OYO refuted claims of SoftBank reportedly lowering its valuation, the IPO-bound company’s valuation in the private market has dropped to around $6.5 billion, news agency PTI reported citing industry players.

On September 22, Bloomberg reported that Softbank — OYO’s largest investor — had lowered the hospitality and travel tech company’s valuation by over 20% to roughly $2.7 billion on its private books after benchmarking OYO against peers with similar operations. OYO had, however, rejected the markdown, terming it “patently incorrect”.

Also Read: Electronics Mart India IPO subscribed 1.69 times on first day of offer

After the company showed its losses had narrowed and reported an Ebitda-positive quarter, the company’s share price in the private market had risen to Rs 94 per share. But following SoftBank’s reported slash in valuation, OYO’s shares sold off in the unlisted markets and the share price fell by 13% to Rs 81 apiece. In the week ended September 30, nearly 1.23 million shares of the company were sold in the private market compared with over 0.16 million sold in the previous week, the PTI report added.

“Last year, transactions (of OYO shares) in private markets happened at around $8 billion range, but in the recent past transactions are happening up to $6.5 billion valuation,” Analah Capital CEO and founder Vaishali Dhankani said.

Dhankani, who is also the CEO of Tradeunlisted.com, a tech-based distribution platform for private equity, said some of OYO’s “past distractions seem to have gone away and one anticipates a stronger bottom line and sticking to its knitting”.

These developments come at a time when OYO has been readying itself for an IPO, likely for early next year. The company had filed its preliminary papers with Sebi to raise Rs 8,430 crore through an initial share sale in October 2021. When it filed the draft prospectus for its IPO, OYO was eying a valuation of around $10 billion but later prepared to settle for a lower valuation of around $7-8 billion.

British Council to organise ‘Ready, Set, Read’ challenge to inculcate reading habit among childrens

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British Council, UK’s international organisation for cultural relations and educational opportunities, is organising the Reading Challenge for children. It is designed for children aged five to 12 years, aiming to help them become confident and engaged readers, according to an official announcement.

As per the release, in this programme, children are challenged to read six books, specially selected by the British Council, within a span of 6 weeks. The essence of the challenge is to read one book in one week.

It also claims that the students will also have the opportunity to join a superstar team and embark on an adventure in a fictional summer obstacle course brought to life through the enchanting illustrations of renowned children’s illustrator, Loretta Schauer.

This challenge is designed to instil the love for reading as a lifelong habit. Children will also have the opportunity to participate in expert-curated activities to enhance their writing skills and vocabulary development, as outlined in the release.

Council claims that as part of the activities, students will learn to write book reviews and plan and organise the key elements of a story in a more compelling and structured manner. These interactive workshops aim to enhance the overall reading experience, encouraging children to not only enjoy the books they read but also to express their thoughts more eloquently and create captivating stories of their own.

As informed in the release, the last date to register is 4 November 2023.

Will bears drag Nifty to 16800 amid high volatility, uncertainty? 5 things to know before market opening bell

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The sell-off in the domestic share market is likely to continue as SGX Nifty hinted at a gap-down open for NSE Nifty 50 and BSE Sensex with a loss of 101 pts or 0.5%. “We expect market volatility to continue until RBI MPC outcome and monthly derivatives expiry. We expect stock related to domestic consumption to perform well with strong festive season. Also sectors like Paint, FMCG would see momentum on the back of sharp fall in crude oil prices,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

Also Read: Reliance, HCL Tech, Dish TV, Torrent Pharma, Birla Corporation, IDBI Bank, Adani Group stocks in focus

Nifty technical view: “A reasonable negative candle was formed on the daily chart, that has placed beside the similar negative candle of previous session. Technically, this pattern signal broader range bound action in the market with weak bias. It also indicates a lack of strength in the intraday upside bounce. This is not a good sign and one may expect further weakness in the short term. The area of 16800 has acted as an important value area, and has resulted in significant movement from its support/resistance/breakouts in the past. Hence, having declined swiftly from the highs of 18K mark this time, there is a possibility of a sustainable upside bounce from near this support,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Levels to watch for: As Nifty remains below 17150 zones, weakness may be seen towards 16850-16800 zones whereas hurdles are placed at 17250. As Banknifty suggested more weakness in line, heavy weights Bank showed no resilience to free fall. So, closing below 38000 levels would stretch towards 37200. Increasing exposure in quality stocks would be advisable for coming weeks, according to Om Mehra, Technical Associate, Choice Broking.

Stocks under F&O ban on NSE: Vodafone Idea, and Zee Entertainment Enterprises are the two stocks under the NSE F&O ban list for 28 September. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 per cent of the market-wide position limit.

Also Read: Sensex falls for 4th day straight, Nifty support at 16907; investors eye crude oil prices, RBI MPC meet

Global slowdown threat looms: The head of the World Trade Organization told Reuters on Tuesday that she expects that global trade forecasts will be revised lower from the current 3 per cent for 2022, citing the ongoing Russia-Ukraine war and related food and energy crises. “We are in the middle of revising our forecasts now but it’s not looking very promising. All the indicators are pointing to downside numbers,” Director-General Ngozi Okonjo-Iweala said adding “Grosso modo the outlook is looking gloomy. The WTO already revised down its forecast for global trade growth this year to 3 per cent from 4.7 per cent in April.

Indian rupee likely to trade in 78.70-80.10 range against US Dollar amid global uncertainties

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By Dilip Parmar

The rupee could start the day on a positive note amid foreign fund inflows, risk-on sentiments and lower crude oil prices. Risk sentiment was bolstered by developments in Europe, where Ukraine was making progress in its counteroffensive against Russia. While investors now appear comfortable with the prospect of a 75-basis point interest rate rise by the Federal Reserve.

Also read: Petrol, Diesel Price Today, 13 Sep 2022: Fuel cost steady; Check rates in Delhi, Noida, Mumbai, other cities

Foreign institutions have bought $8.08 billion worth of equities in the last three months while the rupee is down by 0.69% following broad-based strength in the dollar index. Spot USDINR has been finding resistance around 80 following the central bank’s aggressive intervention while pullback in the dollar index and foreign fund inflows pushing the pair lower. Looking at the recent high-frequency data and global uncertainties, the pair is expected to trade within the range of 78.70 to 80.10.

The dollar’s pullback in recent days is prompting speculation about whether the currency’s march higher is coming to an end. With the Federal Reserve set to continue its tightening cycle at next week’s policy meeting, Wall Street is expressing growing optimism that the current inflationary dust-up will soon settle down. However, it is still in the advanced stage to say so as economic data and fear of recession will support the dollar bulls. 

Also read: MCX Crude oil September futures may trade at Rs 6500-7250/bbl this week; OPEC cuts output, US CPI focus

(Dilip Parmar, Research Analyst, HDFC Securities, Views expressed are the author’s own.)

Studying Abroad: UK’s crackdown on poor quality degrees

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By Matthew McLellan

The UK Government’s decision to bring University courses that fail to deliver good outcomes under strict control ( those with high drop-out rates and poor employment prospects) is a step that signifies the woes of an intricately related academia-industry–economy troika, and underscores the importance of quality education in preparing students for successful careers and productive lives.

Higher education is crucial in determining the composition of the future labour force and fostering economic growth in a society where information and innovation are increasingly becoming the fundamental driving forces.

Governments all around the world are realising how crucial it is to guarantee that their institutions issue degrees that offer meaningful education and value to international students.

Degrees with Real World Relevance

Degrees must now be carefully matched to the demands of the labour market. Aligning degrees with the needs of the labour market starts a positive feedback loop for economic expansion.

As education becomes more tailored to the skills and knowledge demanded by industries, students graduate with expertise that caters to the need of the economy. This ensures a seamless transition from academia to employment, reducing the skills gap that often plagues economies and enhances social mobility by bridging the gap among students from different socio-economic backgrounds.

Focusing on Student Success

The powerful message emanating from the recent development highlights the importance of supporting student success. Universities and colleges must create environments that nurture learning and engagement in order to ensure that students have the tools and resources they need to thrive not just during the course of their academic journey but also in the aftermath of their degree’s completion.

This approach nurtures among students a sense of accomplishment and incentivises students to stay motivated to complete their degrees. For coaching platforms, this highlights the significance of providing comprehensive support that addresses academic challenges and promotes well-being.

Mitigating Student Debt

An important subtext here is to alleviate the burden of student debt. High levels of student debt can hinder graduates from pursuing opportunities that align with their passions, as they are compelled to prioritise financial stability. To create a more economically empowered workforce, we need to encourage study programs that offer a reasonable balance between cost and potential earnings. Study abroad coaching platforms can contribute by assisting students in making informed decisions while choosing a course.

Call for International Efforts

Global cooperation between governments, institutions, and study-abroad coaching platforms is another noteworthy lesson. To address the challenge of subpar education and create an environment that caters to the needs of industry and students, governments may take this as a ripe opportunity to start exchanging data on effective degree programmes and best practices.

The fact that the number of students looking for possibilities outside of their national boundaries is witnessing exponential growth accentuates that countries and their governments need to collaborate to provide students with a conducive environment that includes their well-being even after the completion of their education, to ensure that irrespective of national origin, every student obtain a top-notch and economically rewarding education wherever they decide to enrol.

Studying abroad is a complex journey that requires investment at all levels of a student’s existence- physical, mental, financial and emotional. Without a doubt, when so much is invested, the outcome must be rewarding in all aspects as well. Degrees that are not economically rewarding are an impediment to that goal.

The recent happenings in the UK vis-a-vis ‘rip-off degrees’ hold valuable lessons for others. We need to act fast to ensure that not a single student from now onwards falls prey to a degree, that costs a fortune and doesn’t yield the desired outcomes, by concentrating our efforts on making education a transformative force for individuals and economies alike.

(Author is CEO and Co-Founder of Halp.co.)

Rupee opens lower, may depreciate further on strong dollar, elevated crude prices and risk aversion in markets

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Rupee depreciated on Monday as it opened 24 paise lower at 81.58 per dollar amid rising crude prices, risk aversion in equity markets, strong dollar and weak Asian peers. In the previous session, rupee extended its initial gains and settled 37 paise higher at 81.36 against US dollar, after the Reserve Bank of India raised the benchmark lending rate by 50 basis points. At the interbank forex market, the local unit opened at 81.60 against the greenback, and ended at 81.36, up 37 paise from its previous close. Rupee has fallen to around Rs 81.50 from roughly Rs 73.21 a year ago, a decline of about 9.5%. In other words, over the past 12 months, the US dollar has appreciated 9.5% against the Indian rupee.

Also Read: Petrol, Diesel Price Today, 3 Oct 2022: Fuel cost static; check rates in Delhi, Mumbai, Noida, other cities

“Rupee retraced from its all-time lows after the RBI raised rates by 50bps, the fourth straight increase, as policymakers extended their battle to tame stubbornly high inflation. The RBI has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May. The U.S. Federal Reserve’s relentless and aggressive rate hikes over recent months to curb inflation have battered the rupee, and most other emerging and developed market currencies. The MPC lowered its GDP growth projection for financial year 2023 to 7% from 7.2% earlier, while its retail inflation forecast was held steady at 6.7%.”

“Data released on Friday showed FX reserves fell to $537.52 billion in the week through Sept. 23, notching their steepest weekly fall in six months. The RBI governor in his commentary mentioned that about 67% of the drop in reserves during the current financial year was due to valuation changes as the U.S. dollar strengthened. Today, focus will be on the ISM manufacturing number that will be released from the US; better-than-expected data could extend gains for the dollar. We expect the USDINR(Spot) to trade sideways and quote in the range of 81.20 and 81.80.”

Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas

“Indian rupee appreciated by 0.42% on Friday on sharp rise in domestic equity markets as RBI hiked repo rate by 50 bps to 5.9%. Rupee also appreciated on reports that the central bank is encouraging state-run refiners to reduce dollar buying and has been asked to lean on a special credit line. India’s current account deficit rose to $23.9 billion in Q1 FY23. Though it is higher than $13.4 billion in the previous quarter, it was much better than estimates of $30.5 billion. Weak US Dollar also supported Rupee. Dollar index is trading 111.848 (-0.36%).”

“We expect Rupee to trade with a positive bias on jump in domestic equities and rise in risk appetite in European markets. Weak US Dollar and overall weak tone in crude oil prices may also support Rupee. However, concerns over global economic recovery may cap sharp upside. Investors may also remain cautious ahead of Core PCE Price Index, Personal Income and Chicago PMI from US. USDINR spot price is expected to trade in a range of Rs 80.30 to Rs 82.50 in next couple of sessions.”

Also Read: Reliance, Suzlon Energy, Bharti Airtel, Zydus Lifesciences, Poonawalla Fincorp, APL Apollo stocks in focus

Amit Pabari, MD, CR Forex Advisors

“The impact of RBI policy on the Rupee remained muted as RBI didn’t surprise any new tool for liquidity or borrowing. However, in the final hour of the interbank trading, RBI surprisingly asked state-run refiners (IOCL, HPCL, BPCL) to lean on the $9 bln credit line instead of the spot market for dollars. This resulted in a sharp appreciation in Rupee from 81.50 to 81.15, but weekly, monthly, quarterly and financial half-yearly closing resulted in a strong dollar demand, which took it back to 81.45. Overall, we expect the USDINR pair to remain well supported near 81-81.20 levels. On the flip side, 82 will act as a crucial resistance. If that is taken out then we could see a sharp jump towards 83 in a short span of time.”

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

US Stocks: Wall Street set for subdued open after Fed-driven selloff

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Wall Street’s main indexes were set for a muted open on Thursday as investors assessed the impact on U.S. economic growth from the Federal Reserve’s unwavering focus to rein in inflation through aggressive interest rate hikes.

The three main indexes finished more than 1.7% lower on Wednesday, with the Dow posting its lowest close since June 17. The Nasdaq and the S&P 500 ended at their lowest point since July 1 and June 30, respectively.

Investors fear the aggressive path could add to volatility in stocks and bonds in a year that has already seen bear markets in both asset classes and could potentially cause an economic downturn.

Goldman Sachs, Barclays and a bunch of investment banks have raised their estimates for U.S. policy rates following Fed’s hawkish message, with Societe Generale economists also projecting a mild recession in early 2024.

“There are a lot of risks at this level, but the Fed has decided that they’re going to go the Volcker way, which is to stay the course and try to nip it now,” said Eric Schiffer, chief executive of PE firm Patriarch Organization in California.

Also Read: Infosys share price hits 52-week low tracking fall in US IT stocks, tanks 28% YTD; should you buy, sell, hold?

Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased moderately last week, suggesting the labor market remains tight.

“You’re not going to get unemployment to where it needs to be to get inflation in check unless (Fed) stays disciplined and there’s a period of pain in the short term for markets,” Schiffer added.

The benchmark S&P 500 is less than 4% away from its mid-June low, its weakest point of the year. Recent set of dismal outlooks from companies including FedEx Corp and Ford Motor Co have raised concerns about the health of corporate America.

“I definitely see the market testing the June lows … as indicated by the rise in the two-year yield, and the widening of the inversion of the two-year and 10-year yield curve,” said Sam Stovall, chief investment strategist at CFRA Research.

“The near-term catalyst (for the market) will be third-quarter earnings. If earnings don’t come in as bad as currently expected, that could be an initial support for the market.”

The closely watched yield curve inverted as much as minus 57.80 bps earlier in the day, the steepest inversion since June 2000, amplifying concerns about a recession in the next one to two years.

Rate-sensitive bank stocks edged higher in premarket trading, while heavyweights such as Tesla Inc, Microsoft Corp and Meta Platforms Inc were mixed.

At 8:36 a.m. ET, Dow e-minis were up 66 points, or 0.22%, S&P 500 e-minis were up 3 points, or 0.08%, and Nasdaq 100 e-minis were down 11 points, or 0.09%.Salesforce Inc rose 2.8% after the enterprise software company set its fiscal year 2026 revenue target at $50 billion.

Eli Lilly and Co gained 2.2% after the U.S. FDA approved the company’s drug Retevmo for treatment of advanced tumor and non-small-cell lung cancers.

Darden Restaurants Inc fell 3.8% after the Olive Garden parent reported downbeat first-quarter sales.

Equity investors poorer by Rs 4.90 lakh cr as Sensex tumbles nearly 2 pc

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Investors’ wealth eroded by over Rs 4.90 lakh crore on Friday amid a sharp fall in equities.

The 30-share BSE Sensex tanked 1,020.80 points or 1.73 per cent to settle at 58,098.92. During the day, it tumbled 1,137.77 points or 1.92 per cent to 57,981.95.

This is the third day of decline for the equity market and the BSE benchmark has fallen by 1,620.82 points or 2.71 per cent during this time.

In three days, investors wealth has eroded by Rs 6,77,646.74 crore.

“With the latest round of interest rate tinkering by the US central bank, investors have turned risk averse and are dumping shares at will. Traders are also worried about the escalation in Russia-Ukraine conflict, which is prompting them to exit equities and park funds in safe haven dollar assets,” said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Ltd.

Also Read: US Stocks: Futures slide more than 1% on growth concerns

Among the 30-share Sensex pack, Power Grid slumped 7.93 per cent. The other major laggards were Mahindra & Mahindra, State Bank of India, Bajaj Finserv, Bajaj Finance, NTPC, HDFC and IndusInd Bank.

Sun Pharma, Tata Steel and ITC were the only gainers.

In the broader market, the BSE midcap gauge declined 2.28 per cent and smallcap went lower by 1.92 per cent.

All the BSE sectoral indices ended in the red, with utilities tumbling 3.48 per cent, power by 3.40 per cent, realty (2.97 per cent), financial services (2.56 per cent), telecommunication (2.17 per cent), capital goods (2.06 per cent) and consumer discretionary (1.82 per cent).

“Indian equity markets witnessed a sharp fall on weekend due to weak global cues. We were outperforming but the level of 112 in the dollar index and the level of 82 in USD INR spooked the market sentiments. FIIs have started selling again in the Indian equity market therefore we are seeing selling pressure in large-cap stocks,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.

Elsewhere in Asia, markets in Seoul, Tokyo, Shanghai and Hong Kong ended lower.

European bourses were trading in the red in mid-session deals. The US markets ended in the negative territory on Thursday.

Major output cut expectations uptick global crude prices ahead of OPEC+ meet

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Oil prices rose on Tuesday as expectations that OPEC+ may agree to a large cut in crude output on Wednesday offset concerns about the global economy. Brent crude was up 64 cents, or 0.7%, to $89.50 per barrel by 0823 GMT after gaining more than 4% in the previous session. U.S. crude futures rose 46 cents, or 0.6%, to $84.09 a barrel, having gained more than 5% in the previous session. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, is expected to cut output by more than 1 million barrels per day (bpd) at their first in-person meeting since 2020 on Wednesday, according to OPEC sources.

Also Read: Petrol, Diesel Price Today, 4 October 2022: Fuel prices unchanged; check rates in Delhi, Mumbai, other cities

OPEC+ has boosted output this year after record cuts put in place in 2020 when the pandemic slashed demand. But in recent months, the organisation has failed to meet its planned output increases, missing in August by 3.6 million bpd. The production target cut being considered was justified by the sharp decline in oil prices from recent highs, said Goldman Sachs, adding that this reinforced its bullish outlook on oil. Oil prices have dropped for four straight months as COVID-19 lockdowns in top oil importer China curbed demand while interest rate hikes and a soaring U.S. dollar pressured global financial markets.

Major central banks have embarked on the most aggressive round of rate rises in decades, sparking fears of a global economic slowdown. However, Swiss lender UBS said going into the year-end it saw several bullish factors that could send crude prices higher, including “recovering Chinese demand, OPEC+ further supply cut, the end of the U.S. Strategic Petroleum Reserve (SPR) release and the upcoming EU ban on Russian crude exports.” U.S. crude oil stocks were estimated to have increased by around 2 million barrels in the week to Sept. 30, a preliminary Reuters poll showed on Monday.

Also Read: Rupee likely to remain steady amid positive cues; USDINR pair may trade sideways in this range

Gold, equity or debt? Here’s how retail investors should plan their investment portfolio for 2021 

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By R Venkataraman

As we approach the end of a somewhat difficult year, the common question running in investors mind is where to invest in 2021. I have always insisted that it is your financial goals, investment objectives and risk profile that are key factors for making an investment decision and arriving at your strategic asset allocation. Here is my outlook for the three common asset classes for 2021.  

Having the same expectations for CY2021, however, may lead to disappointment. This is because interest rate cycle has seemed to bottomed out and scope for further rate cuts is less because of rising inflation and higher government borrowing. In such a scenario it makes sense to gradually book profits from mutual funds holding long-dated bonds like gilt and long duration funds.

Though interest rates may not fall further, they are not expected to rise any time soon either. Investors may look at corporate FDs and secondary market bonds for chasing slightly higher returns (currently 6% to 7% p.a for AAA-rated FDs & bonds). However, such investors also need to consider the credit risk involved and should not go overboard. 7.15% RBI bond is another investment offering similar returns. Regular income instruments like Senior Citizen Saving Schemes, Post Office MIS currently offers 7.4% p.a & 6.6% p.a taxable interest respectively.

However, it is Sukanya Samriddhi Scheme, PPF & for employed – EPF offering tax-free returns of 7.6%, 7.1% & 8.5% that would score higher than most of above investments on parameters of safety, returns & tax efficiency, but the catch here is liquidity. For more liquid part of the debt portfolio, consider ultra-short-term and low duration mutual funds. 

Equity Investments: Since March lows, Indian indices are up by about 80%, driven by liquidity and low-interest rates. Liquidity, on account of massive fiscal stimulus by governments all over the world and monetary stimulus by global central banks has found its way to emerging markets. After initial gains in the indices led by safety sectors such as IT, Pharma and to some extent chemicals, telecom and FMCG and large-cap quality names such as reliance, now economy-related sectors have started participating in the rally as a vaccine is just around the corner and expected economic recovery. Banks the biggest beneficiaries of economic recovery, consumer discretionary, cyclicals, industrials and energy will do well. This trend is expected to continue in CY 2021 where you may see profit booking in defensives and money moving towards more economy-related themes.

Overall sectoral rotation that we have seen so far will continue into CY2021. In such a scenario multicap or flexi cap mutual funds that have the flexibility to invest across market cap & sectors can be good option for retail investors to take exposure to equity as rally gets more broad-based.

Value investing is another theme which would play out in the beginning of the coming year. Interest Is already seen in PSU space in this regard and couple of large AMCs have also raised money through NFOs of value funds to ride this theme.

Small and Mid-caps may very well make a comeback in CY 2021 as is also evident from their recent outperformance. They have severely underperformed large-cap indices since 2017, as the economy was in a mess even before pandemic & investors were staying away from them. Beaten down quality small caps available at good valuation compared to large caps sets up the stage for their comeback in CY 2021. 

Gold Investments: As a standard asset allocation, 10% to 12% of the portfolio is usually kept in gold as a hedge against riskier investments. Sovereign Gold bonds give 2.5% returns over and above gold price appreciation at the same time long term capital gains is exempt on maturity and hence is best way to take exposure to gold compared to any other physical, electronic or paper mode of holding gold.

Gold can provide a hedge, debt can provide safety, stability and liquidity.  With equity, retail investors should follow the mutual fund SIP route or invest in direct equity only with advise from qualified professional advisors.

(R Venkataraman is the Managing Director, IIFL Securities Ltd. The views expressed are the author’s own. Please consult your investment advisor before investing.)