Global Market Roundup
For the week ended 10-December, a total of 7 out of the 10 most valuable companies on the Nifty added Rs.228,367 crore in market capitalization. Reliance Industries was the biggest market cap gainer, although it had a lot do with the 41.9 crore fresh fully-paid shares that got listed. During the week Reliance gained Rs.135,205 crore in market cap, ICICI Bank Rs.28,817 crore, Bajaj Finance Rs.22,994 crore, SBI Rs.19,188 crore and Infosys Rs.9,988 crore. Among the losers, HUVR lost Rs.2,396 crore and TCS lost Rs.1,147 crore.
The coming week promises to be a critical week on the macro data front. The all-important Fed meet will conclude on 15-Dec with, possibly, the first indication of front-ending of taper and rate hikes. The week will also see the CPI inflation and WPI inflation being announced. While the CPI inflation is expected to rise with the waning of base effect, the WPI inflation will give a picture of producer inflation. Finally, there will be the trade data for Nov-21, which will be specifically tracked for the record trade deficit this month.
Air travel appears to be picking up with domestic air passenger traffic crossing the 1 crore mark in Nov-21. This is the first time since Mar-20 that this level is being crossed. However, the return of the Omicron variant could be a risk for December numbers. The previous record was 1.23 crore domestic passengers flying in Feb-20. In Nov-21, the sequential growth over Oct-21 was 16%. However, the corporate and business travel demand is still subdued. December normally sees a surge in travel demand due to holidays.
Foreign portfolio investors were net sellers in Indian markets worth Rs.8,879 crore in the first 10 days of Dec-21. During this period, the FPIs withdrew Rs.7,462 crore from equities and Rs.1,417 crore from debt and hybrids. In Nov-21, FPIs were net sellers of Rs.2,521 crore but this was largely due to the secondary market equity outflows being neutralized by the IPO inflows. FPI flows are still tentative due to concerns over Omicron variant, hawkishness of the Fed, inflation concerns and the Chinese Evergrande debt crisis.
Franklin Templeton AMC has paid out the 8th tranche of Rs.985 crore to unitholders of its 6 shuttered debt funds. Till date, the total disbursal to unitholders of the 6 funds has been Rs.26,098 crore, or 103.5% of the AUM as on 23-April 2020. These pay-outs will extinguish proportionate units at NAV. SBI MF had been appointed by the Supreme Court as liquidator for the schemes under winding up. It suddenly opted to shutter 6 debt schemes in Apr-20 due to redemption pressures and tepid liquidity in the bond markets.
Reliance Industries may bid to take over Sintex Industries, a bankrupt textiles company. RIL will partner with ACRE to bid for Sintex Industries under a court-appointed bankruptcy resolution. Other bidders for Sintex include Easygo Textiles, GHCL and Himatsingka Ventures. Sintex supplies fabric to global fashion brands including marquee houses like Armani, Hugo Boss, Diesel and Burberry. Reliance’s recent interest in textiles can be attributed to its broader foray into the mid-street and high-street fashion segments.
Siemens Ltd touched a high of Rs.2,454 last week as the stock continued its sharp rally since the announcement of quarterly results. For the Sep-21 quarter, Siemens had announced 32.4% growth in new orders, 33% uptick in revenues and 40.3% surge in net profits. Siemens has been a direct beneficiary of the rising capex in the private sector, which is expected to get better over time. Siemens has an order backlog of Rs.13,520 crore. Siemens is looking to expand capacity utilization from the current 70% levels.
One thing that will be missing in the 01-Feb Union Budget will be the capital infusion into PSU banks. Instead, banks will be encouraged to raise funds from the open market and by hiving off non-core assets. PSU banks as a whole have announced net profits of Rs.17,132 crore in the Sep-21 quarter. In addition, the CAR has improved to 14.3% while the provision coverage ratio stands at a healthy 84%. Banks will also focus on enhanced recovery measures. With the legacy of bad loans done, it was time to stop the funding.