Stock Market Investment Shot,3rd August 2022

According to preliminary estimates, India’s July 2022 trade deficit may have crossed $31 billion, 20% higher than the trade deficit in June 2022. Exports fell even as imports were flat amidst rising fears of a recession in the US and much of the developed world. Merchandise exports have been pegged at $35.2 billion for July 2022 while merchandise imports were pegged at $66 billion. There was a slowdown in the exports of engineering good, petro products, jewellery and garments, while chemical exports were higher.

It is reported that Uber Holdings may put its entire 7.8% stake in Zomato on the block on Wednesday, 03rd August. The deal is being syndicated by Bank of America Securities. Interestingly, on Tuesday, Zomato closed the day at the upper circuit of 20%. The total size of the sale would be between Rs2,939
crore and Rs3,305 crore. Uber Holdings will have more than doubled its investment value in Zomato. The IPO lock-in period of 1 year, just got over for Zomato. Currently, Zomato shares are down 27% from the IPO price.

With the Adani group paying just about Rs212 crore at the 5G spectrum auctions, the game plan of the group is gradually crystallizing. Adani will use the 5G spectrum to digitally integrate its businesses, link its data centres and build a mega industrial cloud operation. Adani group also plans to develop a super app that offers a complete suite of services across its 400-million customers. Adani had acquired spectrum worth Rs212 crore in 26 GHz millimetre wave band. Adani will not offer any telecom services
to customers.

In the June 2022 quarter, the consumption of FMCG goods like packaged foods, beverages and toiletries revived in urban pockets. However, the pressure on rural consumption continued in the June quarter.
That was largely because rural customers preferred smaller packs. FMCG market grew 10.9% in the June quarter, higher than 6% in the March 2022 quarter. Sales through supermarkets clocked 7.8% growth in June 2022 quarter while sales by traditional Kirana stores fell -1.5%. Consolidation is the big story in FMCG.

PSU banking stocks rallied more than 2% on Tuesday as a slew of banks including BOB, BOI, Canara Bank, UCO Bank and Union Bank rallied sharply. Gains were between 2% and 5% on these stocks. In most PSU
banks, the profit growth has been robust in the June quarter due to lower provisioning. However, markets are also impressed by the sharp fall in gross NPAs across the board. Most banks are also gaining from a rising share of CASA deposits in the overall deposit mix. Earnings would get a boost from low credit costs.

It is now the turn of Edtech unicorn, Vedantu, to lay off more than 100 employees as part of a restructuring exercise. This is Vedantu’s third layoff since May this year. This time around, the lay-offs were across sales and training. The lay-off in May 2022 was much larger as they had laid off 625
employees at that point of time. The demand for online education solutions has slowed sharply post the pandemic as students are now returning to their classrooms. This is forcing aggressive cost cutting as funding sources also dry up.

After crossing the Rs80/$ mark on a couple of occasions last week, the rupee rallied sharply gaining nearly 1.50 paisa to close the day at 78.49/$. Most exporters were planning to offload their dollars in the range of 80-81/$, but rushed for cover after the rupee started appreciating. The rupee was also
helped by a weakening dollar amidst recessionary fears in the US. Steady positive flows from FPIs, robust flows into debt and the recent flow of money from the 5G telecom auctions have all contributed to a strong rupee.

Even as the ITC stock scales new highs, the company has decided to exit its lifestyle retailing business. ITC had recently touched a 52-week high this week. The ITC lifestyle retailing business was established via the Wills Lifestyle chain of exclusive stores. In addition, ITC had also established John Players as a brand targeted at the male youth. However, over the years, ITC never managed to make a serious dent in the branded apparel business and remained a marginal player. The exit is part of a larger restructuring plan.