Foreign Portfolio Investors (FPIs) infused a sum of Rs4,773 crore into equities in the first week of January 2024. On a weekly basis, this is sharply lower than the average of $1.8 billion infused in each of the five previous weeks. In addition, the FPIs also infused Rs4,000 crore into debt. With the US likely to show a slowdown in GDP in Q4 and subsequent quarters, there is a rush to lock into high growth markets like India. There is likely to be some uncertainty in the coming months due to the upcoming general elections.
The combined market cap of 6 out of the 10 most valued companies on the NSE fell by Rs57,408 crore in the first week of January. Among the major losers, TCS lost Rs20,930 crore, HDFC Bank Rs20,537 crore and Hindustan Unilever Rs10,115 crore. In addition, the market cap of Infosys dipped by Rs4,130 crore and that of ICICI Bank fell Rs1,608 crore. Among the gainers, Reliance Industries added market value of Rs14,817 crore, ITC added Rs14,409, Bharti Airtel Rs8,201 crore and LIC also added Rs7,021 crore in value.
Tata Group remained India’s largest business group by market cap at the close of 2023. Following closely in the second and third positions were the Reliance group and the Adani group. Tata group leads the market cap stakes at Rs28.7 trillion followed by Reliance at Rs19.42 trillion and Adani group at Rs15.5 trillion. HDFC group and Bajaj group also have market cap in excess of Rs10 trillion. There were two new entrants in the Top-10 list; with the JSW group of the Sajjan Jindal and the Murugappa group making it in.
In one of the biggest deal in telecom towers M&A, Brookfield Asset Management will acquire 100% stake in the Indian business of American Tower Corporation’s (ATC). The total consideration for the deal will be $2.5 billion or approximately Rs21,000 crore. This is substantially higher than the $1.75 billion offered by I-Squared Capital for the ATC tower assets. This deal will make Brookfield, the largest telecom tower operator in India, surpassing Indus Towers. With ATC’s 78,000 towers, Brookfield now has 253,000 towers.
Indian IT companies are likely to report a “soft” third quarter as revenue growth in constant currency terms is likely to be tepid. December quarter is when tech spending is generally relatively tepid for the IT companies. Big numbers of TCS, Infosys, Wipro, and HCL Tech are expected to be out this week. While TCS does not give guidance, the focus will be on the management commentary across the board. Wage hikes are likely to have had an impact on profit margins. However, IT spending is set to improve in FY25.
The first advance estimate of FY24 GDP growth at 7.3% has come as a positive surprise. This is a lot better than the 7.2% reported for FY23 and the 7.0% upgraded estimate of the RBI. The stellar growth was led by manufacturing and construction sectors, while agriculture continued to lag at 1.8%. Contact intensive services like trade, retail and hospitality have seen some tapering of growth after the frenetic bounce of last year. However, nominal growth rate is sharply lower in FY24, which raises questions over fiscal deficit.
Global Trade Research Institute (GTRI) predicted that the Red Sea crisis would spike shipping costs by 40%-60%, and insurance by 15%-20%. GTRI has called on the Indian government to intervene and support exporters in these tough times. Delays up to 20 days are normal, as ships take the Horn of Africa route. The Baltic Index, which tracks global shipping costs, spiked by 85% in the last 10 days. Shipping costs are up 5-fold on some routes. Red Sea crisis was exacerbated by the Houthi Rebels, after Israel attacked Gaza.
UniCommerce has filed DRHP with SEBI for the proposed IPO. The issue is entirely an offer for sale (OFS) of up to 2.98 crore equity shares. There is no fresh issue component in the IPO. SoftBank will offload 1.61 crore shares in the OFS, while promoter (Ace Vector), formerly Snapdeal Ltd, will offer 1.14 crore shares and B2 Capital Partners will offer 22 lakh shares. It is the fifth digital IPO coming up and this space has seen a rise in IPO filings after MobiKwik also decided to renew IPO plans. UniCommerce is a SAAS platform.
