April-June 2023 (Q1FY24) was a mixed quarter for India's top family-owned business groups. Three of the big five in terms of revenue reported a year-on-year (Y-o-Y) decline in combined net sales and two saw a Y-o-Y fall in net profits. Combined net sales of all listed companies in the five groups were up just 2.2 per cent Y-o-Y at Rs 6.6 trillion in the quarter, down sharply from the 10.3 per cent in the March 2023 quarter (Q4FY23) and 42.8 per cent in Q1FY23.
The next auction for bauxite blocks in Odisha may see heightened interest with Adani Group charting an entry into alumina refining and existing players looking to boost capacity. Hemant Sharma, principal secretary, Odisha industries department, said that three bauxite blocks have been scheduled for auctions this year. Adani Group - which will be setting up a 4-MMTPA alumina refinery and may enter aluminium production - is expected to bid for mines, though raw material linkages shall be available from Odisha Mining Corporation (OMC).
With the markets scaling new highs, as many as 43 stocks from the Nifty50 index and 27 of the 30 scrips that are part of the S&P BSE Sensex are trading above their respective 200-day moving average (DMA). The 200-DMA is seen as one of the most relevant trend indicators by investors and traders, who believe that stocks and indices trading above this level possess strength and are likely to rally in the short to medium term, while the ones trading below this level are viewed as bearish and expected to see a sell-off. Wipro, UPL, Kotak Mahindra Bank, Hindalco, Infosys, Cipla, and Adani Enterprises are the only stocks from the Nifty50 pack that are still below their respective 200-DMA, the exchange data suggests.
Brokerages expect Nifty50 companies to have cumulatively witnessed strong double-digit growth in their earnings in the first quarter of FY24 (Q1FY24). This growth in the combined earnings is expected to have been driven by banks, automakers, and oil & gas companies. Other sectors may report muted profit growth.
The domestic benchmark indices - the S&P BSE Sensex and the National Stock Exchange Nifty50 - had lost close to 1.5 per cent in three days recently before gaining slightly. Notwithstanding weakness and volatility, the Nifty50 has managed to hold on to the 18,000 mark, while the Sensex has managed to stay above the 61,000 level. The performance of the stocks that comprise these front-line indices remains polarised.
Given wild swings, investors are wondering where the metal market is going. There was a strong uptrend in industrial metal through much of the last three years due to fears of supply chain issues - first due to Covid-19 and then due to the Ukraine War. That uptrend broke down as it became apparent that global growth would moderate as inflation rose and Western Europe (the EU plus the UK) went into a near-recession and China was in a rolling lockdown.
The sharp correction in the Indian markets from their peak levels has made valuations attractive, say analysts, who advise buying selectively, but only from a long-term perspective. Fifty-six of the Nifty 100 stocks, according to Mahesh Nandurkar, managing director at Jefferies, now trade below the 10-year historical averages, including stocks in financial, select auto, and pharma sectors. "Valuation (one-year forward consensus price-to-earnings, PE) has declined 25 per cent from October 2021 peak, almost matching the 33 per cent price-earnings contraction during the 2011 tightening cycle when repo rates went up by 375 basis points (bps) versus 250 bps this cycle.
Notwithstanding expectations of a pick-up in construction activity during a seasonally strong January-March quarter (fourth quarter) of 2022-23 (FY23), analysts are cautiously optimistic about the building material sector - encompassing paints, pipes, wood panels, tiles, metals, and cement - as volatile input costs, coupled with fears of a global slowdown, are making demand projections uncertain. Against this backdrop, analysts suggest investors stay selective and pick stocks of companies with stronger brand recall, expanding distribution network, diversified product profile, healthier balance sheet, and sustainable cash flow. "The government's various proposals under Budget 2023-24 (FY24) may lead to the building material segment growing between 8 per cent and 12 per cent for the next five years.
The FPI holding in India's top 100 companies, which are part of the Nifty 100 index, declined to 24.23 per cent on average at the end of March this year, from a high of 27.5 per cent at the end of March 2021. This is the lowest FPI holdings in India's top listed companies in at least three years. A general sell-off by FPIs has weighed on stock prices and the benchmark S&P BSE Sensex is down 8.5 per cent, from its 52-week high made in October 2021. Most analysts expect FPI flows to remain weak in FY23 as well, given rising bond yields in the US and an expected earnings slowdown in India due to high inflation and commodity prices.
After a turnaround in performance by Indian equity markets since July that has seen the S&P BSE Sensex and the Nifty50 wipe out the year-to-date losses, analysts suggest investors start nibbling into stocks that are focused on the domestic economy. While they say intermittent corrections, led by policies of global central banks and other economic data, cannot be ruled out, analysts expect India's relative outperformance among global equity markets to continue as it looks better placed with a healthy economic recovery, and remains one of the fastest growing major economies. In this backdrop, Neeraj Chadawar, head of quantitative equity strategy at Axis Securities, believes that amid global slowdown, aggressive tightening by the central banks, and preference for domestic interests first (by the local government), export-oriented themes are likely to be muted or will deliver conservative returns in the near-term.
The Sensex finally ended on a flat note (down two points) at 17,824. The NSE Nifty moved up 17 points to end at 5,285.
While Reliance put up a good show, NTPC nosedived on the BSE on Monday.
The rupee breached the 80-mark against the dollar on Tuesday. The steady depreciation in the value of the rupee against the US dollar is likely to prove expensive for corporate India. The listed companies' revenue expenses in foreign currency or imports exceed their export revenues or revenue earnings in forex. In their latest financial year, BSE500 companies, excluding banks and non-banking finance companies and insurance (BFSI), reported combined forex expenses of Rs 12.31 trillion against forex earnings of around Rs 10 trillion.
Coal production by Coal India (CIL) has grown slower than the captive mines, awarded over the last six years. During 2020-22, production from the captive mines jumped by 38.5 per cent while CIL saw a tepid growth of 3.4 per cent, according to government data. In terms of dispatch to the power sector, captive mines have raced ahead, witnessing a growth of 72 per cent compared to 15 per cent for CIL. For the current fiscal year, CIL's production is expected to be around 565 million tonnes.
The NSE Nifty ended flat at 2807. The market breadth was marginally positive at close - out of 2,569 stocks traded, 1,245 advanced and 1,219 declined.
However, selling pressure at higher levels forced the index slip into the negative zone. The index dropped to a low of 13,764 - down 283 points from the day's high. The Sensex recovered some ground and finally settled with a marginaly loss of 38 points at 13,926. The market breadth was posititve - out of 2,696 stocks traded, 1,445 advanced, 1,181 declined and 70 were unchanged on Thursday.
The market breadth was extremely negative - out of 2,697 stocks traded, 2,222 declined, 425 advanced and 50 were unchanged on Monday. The NSE Nifty shed 81 points and ended at 4,266.
The Sensex opened with a negative gap of 137 points at 15,950 on the back of weak cues from the global markets. The index, however, recovered and rebouned into the positive zone. It however, could not hold gains and slipped back into red to finish with a loss of 71 points at 16,016. The NSE Nifty ended almost unchanged at 4,830 - up a point. Tata Motors, Satyam, TCS, Ranbaxy, L&T, ICICI Bank, Reliance and Maruti were major losers. Hindalco, Cipla, RCom, ITC, etc were gainers.
Fresh buying at lower levels saw the index recover some ground and touch a high of 19,210. Persistent weakness in select counters - ONGC, Bharti Airtel and banking stocks - saw the index slip back below the 19,000-mark again to a low of 18,917. The index finally closed with a loss of 231 points at 19,059. The NSE Nifty ended at 5,699, down 83 points.
The index, however, could not hold gains and slipped into negative zone by mid-noon trades. Aggressive profit-taking in the market saw the index slip to 19,338 -- down 581 points from the day's high. The NSE Nifty ended at 5,786, down 61 points.
Agressive buying towards the end saw the index zoom to a high of 14,663 - up 158 points. The Sensex finally ended with a gain of 146 points at 14,651.
Hindalco is currently one of the frontrunners in the coal auction
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
Chinese alumina refining and metal smelting technologies have emerged as a match for the best anywhere in the world. In fact, Vedanta and Hindalco have bought technologies from China. Our aluminium makers will be haunted by twin fears of rising imports and low metal prices squeezing margins over a long time.
India's equity markets are on a roller-coaster ride, after delivering spectacular returns for two consecutive years - in 2020 and 2021. The benchmark National Stock Exchange's (NSE's) Nifty50 is down 1.5 per cent in the first nine months of the current calendar year 2022 (CY22) as foreign portfolio investors sold Indian stocks due to rising bond yields in the US and across global markets, including India. The sell-off in the Indian equity markets has, however, not been broad-based and largely limited to sectors facing earnings headwinds from rising interest rates, lower commodity and energy prices, and likely economic recession in advanced economies.
The Sensex finally ended with a marginal gain of 11 points at 15,301. The NSE Nifty ended up 3 points at 4500.
A special court on Monday asked the Central Bureau of Investigation to clarify whether "rule of law" was followed in allocation of coal blocks to top industrialist Kumar Mangalam Birla's Hindalco.
The Central Bureau of Investigation will question at least two former officials of the Prime Minister's Office who were involved in the processing of the file related to coal block allocation to Hindalco.
This is the first time India is offering coalmines to private companies for commercial sale.
Odisha Chief Minister Naveen Patnaik may be questioned by CBI for writing a letter of support in favour of Hindalco, an Aditya Birla group company, after its bid for coal mines was rejected by coal ministry.
A change in recommendation in favour of Birla did certainly happen but the question is whether it was a bona fide decision. Jyoti Mukul reports
The Central Bureau of Investigation could question Odisha Chief Minister Naveen Patnaik in connection with alleged irregularities in allocation of coal block to Hindalco as he had written a letter to the Coal Ministry after application of the Aditya Birla company was rejected in 2005.
According to industry experts, companies in sectors such as consumer durables (fans, air-conditioners), power cables and the electrical industry will be hit, given that they are big users of copper.
The judge summoned Birla as one of the accused in the case.
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
Factories are shutting down owing to a shortage of labour and raw materials, and a lack of logistical support amid the ongoing nationwide lockdown against the coronavirus pandemic.
Dr Singh said he was upset but expressed confidence that truth will prevail in a fair trial.
CBI is likely to examine soon Hindalco chairman Kumar Mangalam Birla and former Coal Secretary P C Parakh, who are named as accused in the FIR related to Talabira coal block allocation to Hindalco, as it wants to expedite probe.
After a 10-month probe, the Central Bureau of Investigation has decided to file a closure report in the coal block allocation case involving industrialist Kumar Mangalam Birla and former Coal Secretary P C Parakh as the agency could not find any evidence in this matter.
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
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