Stock Market Investment Shot,1st August 2022

The government did not extend the last date for income tax filing and as of the close of Sunday 10 PM, a total of 5.74 crore returns had already been filed on the Income Tax website. Till the close of 30th August, a total of 5.1 crore returns had been filed and there were another 64 lakh returns filed till 10 PM on the last day of the month. Technically the ITR filing can go on till midnight post which penalty will be payable on delayed filings. Penalties for late filings are Rs5,000 if income is above Rs5 lakhs and Rs1,000 for others.

It looks like NFO or new fund offers of mutual funds are back with a bang. For a period of 3 months between April and June, there was a virtual lull in NFOs due to a SEBI diktat on pool monies being used for MF applications. As per AMFI data, a total of 28 NFOs were launched in July by 18 AMCs but 24 of these funds were still underway so we do not have the picture of total collections in July still. Most of the AMCs are making a beeline for passive fund NFOs, where there are no outer limits and are in demand too.

Indian Oil Corporation (IOCL), which had reported a net loss of Rs1,914 crore in the June 2022 quarter, confirmed that during the quarter it had sold petrol and diesel at a deep loss. In fact, IOCL made a loss of Rs10 per litre on petrol and a loss of Rs14 per litre on diesel. This is ironic as its refining margins (GRM) in the quarter stood at a record level of $31.8/bbl. However, the entire advantage of GRM was offset by the loss in marketing margins as the companies had to sell petrol and diesel at a loss amidst high crude prices.

The market of the 10 largest companies on the NSE by market cap gained a total of Rs1.91 trillion during the previous week ended 29th July. Bajaj Finance and TCS led the week in terms of gains. Bajaj Finance saw market cap accretion of Rs57,673 crore, TCS Rs47,495 crore while HDFC Bank added Rs23,481 crore. Among other value additions, we saw HDFC Ltd Rs14,978 crore, ICICI Bank Rs12,874 crore and Reliance Rs3,963 crore. However, LIC lost Rs7,071 crore while Hindustan Unilever was a loser during the last week.

The good news is, the foreign portfolio investors (FPIs) are back with a bang. For the month of July, the FPIs infused $618 million into equities, although they were net sellers in debt. However, the equity story was gratifying since it came after a full 9 months of persistent FPI selling. During that period, FPIs had sold Indian equities to the tune of $35 billion. This figure could have been much worse had it not been for the positive flows from some big ticket IPOs. The turnaround could be attributed to sobering of Fed stance.

As the RBI gets ready for its 3-day policy meet from 03rd August to 05th August, the street expectation is that the MPC may hike the rates by 25-35 basis points. The RBI has already hiked rates by 90 bps between May and June, which included an unscheduled MPC meeting in May. In addition, the RBI had also hiked the CRR by 50 bps to amplify the impact of the rate hikes. With the Fed hiking by another 75 bps in July and hinting at another 100-125 bps in year 2022, the RBI would not want to get caught on the wrong foot.

DLF, India’s key real estate player, has reduced its net debt by 16% in the June quarter from Rs2,680 crore to Rs2,259 crore. Net debt is the debt of the company adjusted for cash and marketable securities in the balance sheet. In the June quarter, the gross debt also fell from Rs4,755 crore to Rs3,900 crore. DLF has affirmed that most of its current and future projects were likely to be cash positive and the company had enough of receivables to take care of all its current liabilities. Its sales bookings doubled in June quarter.

Piramal and Oaktree sought more time to make the offer for Reliance Capital. The first priority for these bidders is to be able to identify and ringfence the assets of the company. The resolution plan has already been extended 4 times in the past. Several lenders, including LIC, have made claims worth Rs25,333 crore against Reliance Capital. In addition, its home finance and commercial finance units also have debt to the tune of Rs25,000 crore, taking total debt to well above Rs50,300 crore. Only four bidders remain now.