Stock Market Investment Shot,2 August 2022

Equities have rallied for the last 4 days in succession and in this period investors ended richer by Rs12.74 trillion. Sensex crossed the 58,000 mark during the day. On Monday, the stock markets were buoyed by robust global cues and strong vehicle sales numbers. FPIs have turned buyers and that has continued on the first day of August too, which boosted sentiments overall. Reliance Industries, Maruti, Kotak Bank, Bharti Airtel, NTPC and UltraTech were among the major gainers. Power and utilities sharply on Monday.

ITC reported 33.98% yoy jump in net profits at Rs4,390 crore for the June 2022 quarter while sales grew by 39.2% at Rs18,353 crore. The numbers are much better than street expectations. The performance of ITC in the June 2022 quarter was reflective of normalisation of business across segments. ITC was also helped by the stability in the cigarette tax regime, which has helped volume recovery. Meanwhile, the hotels segment clocked best quarterly profits in last 14 years. Paperboards and FMCG also did very well.

The GST collections for the month of July 2022 stood at an impressive Rs1.49 trillion, the second highest level achieved till date. The sharply higher collections can be attributed to improved economic activity and better compliance measures. It is still way below the April 2022 figure of Rs1.68 trillion. Out of the total mop-up in July 2022, Central GST (CGST) stood at Rs25,751 crore, state GST (SGST) at Rs32,807 crore, integrated GST (IGST) led the way with Rs79,518 crore while the cess mop-up stood at Rs 10,920 crore.

Zomato, India’s leading food aggregator app, reported net loss of Rs186 crore in the June 2022 quarter. However, losses are much lower compared to Rs359 crore in June 2021 quarter and Rs360 crore in the March 2022 quarter. Revenues showed robust growth of 67.45% at Rs1,414 crore. On a sequential basis, there was 10% growth in the gross order value (GOV) at Rs6,430 crore in Q1FY23. There was also sharp growth in revenue per order. Food delivery has already touched EBITDA breakeven in the March quarter.

Maruti Suzuki reported an 8.28% higher sales at 175,916 units in July 2022. Domestic passenger vehicle sales were up 6.82% at 142,850 units. The microchip shortage has been largely overcome so the impact of the chip shortage was minimal in the current quarter. At the entry level, the sales of mini cars like the Alto and S-Presso grew 3.3% yoy at 20,333 units. Compact cars like Baleno, Celerio, Dzire, Ignis and Swift grew 20.7% to 84,818 units. However, the sales of utility vehicles fell sharply by 27.9% to 23,272 units.

India’s gas distribution major, GAIL (India), started cutting supplies of gas to fertilizer and industrial clients after imports were negatively hit under its deal with Gazprom of Russia. It is apprehended that lower gas supplies could seriously impact the domestic supply of fertilizers in India. Gazprom unit failed to deliver some LNG cargoes to GAIL. It is also operating its petchem complex in Pata at 60% capacity to save gas for other clients. GAIL will reduce gas supplies to clients by nearly 6.5 million cubic metres (MCM) per day.

Finance minister, Nirmala Sitharaman, has affirmed that India was unlikely to either slip into a recession or even stagflation. The FM went to the extent of claiming that India had not only kept inflation under check but had also efficiently managed the national debt. While she did admit that growth would slow, she hastened to add that even the IMF had projected India to be the fastest growing large economy. She also added that India’s forex position was very comfortable in terms of reserves and import cover months.

The 5G spectrum auctions finally closed with Reliance Jio acquired spectrum aggregating Rs88,078 crore. It will empower Jio to build the most advanced 5G network. This will also enable next generation digital solutions. The spectrum bands across frequencies were acquired for 20 years. Spectrum payments have to be made over 20 equated annual instalments, with interest computed at 7.2% per annum. Thus Jio will make an annual payment of Rs7,877 crore for spectrum. Jio will be able to provide 5G services pan-India.