The combined market-cap of all listed Adani group firms has plunged nearly Rs 7.11 trillion since January 24 when the Hindenburg report was made public.
The billionaire Mistry family's estate is likely to soon change hands. The assets in the name of Cyrus Mistry, who died in September last year, may soon be divided equally among his wife Rohiqa and sons Firoz and Zahan, according to sources. The reorganisation will also include the 9.2 per cent stake in Tata Sons, which is currently in Cyrus Mistry's name and held through his investment company Cyrus Investments.
Zomato has lost over 9 per cent thus far in calendar year 2023 (CY23) and has underperformed the S&P BSE Sensex that has slipped nearly 5.3 per cent during this period. Despite this underperformance, analysts at HSBC think that the stock can hit Rs 87 going ahead - up over 64 per cent from the current levels. The food delivery industry, wrote Yogesh Aggarwal and Abhishek Pathak of HSBC in a recent note, has slowed considerably in the last few months.
Historically, March has been a volatile month for Indian equity markets. To begin with, it marks the end of a financial year, wherein there is some compulsive portfolio rebalancing trade by large funds - domestic and foreign. Retail investors, too, prefer to 'cash in' on their gains and losses before the financial year runs out.
The Hinduja group is learnt to have backtracked from making a minimum Rs 8,950-crore offer for Reliance Capital (RCap) - a deal that it had belatedly put forth in December, after Torrent Investments emerged as the highest bidder for the bankrupt firm in the challenge process. The Hindujas' latest move has put Indian lenders, with an exposure of Rs 24,000 crore, in a spot as it was the former's revised offer that led to a call for a second auction and litigation by Torrent, which had placed a bid of Rs 8,649 crore in the first auction. Torrent has moved the Supreme Court and plans to wait for the apex court verdict before participating in any fresh auction. A banking source said there was an informal meeting of a few lenders of Reliance Capital with the bidders - the Torrent group and the Hinduja group on Friday when the latter changed its stand. The meeting of RCap's committee of creditors (CoC) is scheduled for Monday.
The global turmoil in the banking sector has made analysts cautious, who advise that investors stay away from stocks of this sector till the overall sentiment improves. The recent trouble for the banking sector started with the collapse of US-based Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank. On its part, Moody's Investors Service has also cut its outlook for the US banking system to 'negative' from 'stable', citing the run on deposits at these three banks that led to the collapse of these banking majors in less than a week.
However, in the last few sessions, the stock of Mukesh Ambani-controlled Reliance Industries Limited (RIL), hit its 52-week low level of Rs 2269.75, and has been one of the worst performers among the Sensex pack thus far in calendar year 2023 (CY23). Thus far in CY23, RIL has tanked nearly 11 per cent as compared to a fall of around 5 per cent in the S&P BSE Sensex. The fall in the stock, according to Gaurang Shah, senior vice-president at Geojit Financial Services is mostly due to the overall dip in the market sentiment, which in turn has impacted large-caps, including RIL.
'Markets could face uncertainty in the short to medium term.' 'It would be prudent to invest in alternative asset classes, especially debt, for about a year.' 'Bank fixed deposits are offering rates as high as 9 per cent per annum and these can be used as a great hedging tool until equity markets stabilise.'
'The Fed rate will peak in the range of 5.1-5.3 per cent during the second quarter of CY23 and will most likely stay there for a while before rate cuts start in CY24.'
An aggressive rate hike by the US Fed and the possibility of a recession can trigger a slide in these stocks, which will be a good opportunity to buy from a long-term perspective.
The Indian equity market is likely to remain under pressure and rangebound over the next few months. This comes as global central banks, led by the US Federal Reserve look at a possibility of hiking rates aggressively to tame inflation. Back home, the Reserve Bank of India, too, remains data dependent in its endeavour to keep inflation in check and pursue an aggressive monetary policy stance.
Domestic mutual funds (MFs) have kept their faith in the Indian stock market despite multiple headwinds all through 2022-23 (FY23), with their net flows into equities crossing the Rs 1.5-trillion mark for the second consecutive financial year. MFs pumped a net Rs 1.53 trillion into equities till March 1, 2023, the Securities and Exchange Board of India (Sebi) data shows, as compared to Rs 1.72 trillion in FY22. Since FY15, MFs have been net buyers of equities, except in FY21, when they sold a net Rs 1.21 trillion.
'While foreign institutional investor flows are still negative, they will turn positive in the latter part of 2023 as India's resilient growth becomes perceptible.'
Mergers and acquisitions (M&As) by Indian companies have declined sharply by 80 per cent so far this year, in contrast with the same period last year, as bankers predict lower deal volumes due to falling profit margins of Indian companies and feeble stock markets. The decline in Adani Group shares has also hit buyer sentiment. According to data from Refinitiv, M&As in India stood at $3.3 billion from 253 deals, year-to-date (YTD) - a fall of 80 per cent year-on-year (YoY). Cross-border deals by Indian companies were also down 84 per cent to just $1.5 billion.
'The market will focus on the fact that India does have strong earnings growth this year.'
Vedanta investors were jittery on Tuesday as its share price fell and bond yields of its parent firm rose following concerns raised by a rating agency on its capability to repay debt maturing later this year. Shares of the mining and metals major were down by 7 per cent on Tuesday to Rs 268 a piece on the BSE. The company has lost market valuation of 30 per cent in the last one year and 13 per cent since January 1 this year. Yields on the bonds of Vedanta Resources, the parent firm of the BSE-listed Vedanta, shot up to 39.8 per cent - showing investors' rising concern over the group's debt situation
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
Indian charitable trusts, including Tata Trusts and top corporate donors, are stumped by a new tax law proposed in the Budget, which reduces tax breaks for the donor organisations. The Finance Bill proposes that if a charitable organisation donates to another charity, then only 85 per cent of the donation will be considered as application of income for the donor organisation. Trust officials say this is a major setback for the donor organisations, including corporate foundations and intermediary organisations, which work with various implementing agencies at the grassroots level.
Adani Enterprises, the flagship of Adani Group, said on Wednesday new businesses of renewables, data centres, airports and roads account for more than 33 per cent of earnings and it will complete all infrastructure projects on time. "We are laser focused on continuing our business momentum, in this market volatility. "We are confident in our internal controls, compliance and corporate governance.
Despite the recent turmoil in the Indian markets after a scathing report on the Adani group from Hindenburg Research, American private equity major Blackstone is "bullish" on the India growth story and plans to invest more in the country's infrastructure and real estate projects. "We have a long-term view on India, as growth will be higher here. We have invested half of our Asia exposure in India. "Our extraordinary performance in India has made us bullish," said Jonathan Gray, president and chief operating officer of Blackstone.
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