For the month of Jan-22, the US inflation came in at a 40-year high of 7.5%, which makes a rate hike by the US Fed in its next meeting almost inevitable. The sharp spike in inflation from 7% in Dec-21 to 7.5% in Jan-22, could fuel a 50 basis points interest rate hike by the Fed next month. Old economy stocks fell on Thursday after the inflation data was out but tech stocks gained in the US markets. However, economists pointed out that a large part of the inflation was still coming from shortages rather than a demand spike.
The Monetary Policy Committee (MPC) of the RBI kept rates and repo rates constant. While the former decision was not surprising, the latter decision was. The MPC also voted 5:1 in favour of maintaining the accommodative stance of the policy. While the RBI has lowered the GDP estimate for FY22 by 30 bps to 9.2%, it has kept inflation estimate for FY22 constant at 5.3%. For FY23, the GDP growth has been pegged at 7.8% and inflation at 4.5%. The lowering of inflation is surprising considering the rally in crude prices.
Piramal Enterprises reported 11% growth in net profits for the Dec-21 quarter at Rs.888 crore for. Sales for the quarter were 20.4% higher yoy at Rs.3,816 crore. While the pharma vertical clocked revenues of Rs.1,578 crore, the financial services vertical saw revenues at Rs.2,238 crore. There was palpable growth in both the key verticals of PEL. Piramal admitted that the acquisition of DHFL has been value accretive for the company. PEL has made further investments for expanding capacity in niche capabilities in pharma.
Mutual fund managers are pencilling in lower bond yields and a rise in a bond prices as an outcome of the status quo on rates maintained by the RBI in its Feb-22 monetary policy. This is likely to improve returns on debt funds. Unlike other central banks globally, which are distinctly hawkish, the RBI treated inflation as transitory. This policy announcement is being interpreted by many debt fund manages as a signal that no rate hikes may happen in the near future. 10-year bond yields have fallen sharply from 6.93% to 6.73%.
Finance Minister announced that the GDP deflator projection for FY23 was around 3.5%. That means the real GDP growth of 7.8% assumes nominal GDP growth of around 11.3% in FY23. GDP deflator measures inflation as the difference between nominal GDP and real GDP. The GDP estimates for the current fiscal and the next fiscal year have been slightly toned down due to the likely Omicron effect. The GDP deflator combines the wholesale and retail inflation and in the last 1 year, it is WPI inflation that has risen steeply.
Recently listed Adani Wilmar was locked in 20% upper circuit for the second straight day crossing the level of Rs.386, as against the IPO price of Rs.230. That is a 67% spike in just 3 trading days. In the process, the market cap of Adani Wilmar crossed Rs.50,000 crore. Adani Wilmar is the seventh listed company from the Adani fold and is currently the smallest in terms of market cap. Adani Green Energy market cap crossed the Rs.3 trillion mark while Adani Transmission, Adani Total Gas and Adani Enterprises are at Rs.2 trillion.
The LIC IPO details may be gradually trickling in as the Indian government is now considering selling 5% stake in LIC with no fresh issue component. Government plans to offer 31.60 crore shares out of the 632 crore shares it owns in LIC. The embedded value of LIC has been estimated at around Rs.540,000 crore or $72 billion. The LIC board is expected to meet on Friday 11-Feb to take a final call. LIC has assets under management of $500 billion and the IPO size of LIC is expected to be around 3.6 times the size of Paytm.
Zomato saw net losses narrow by 81% to Rs.66 crore in the Dec-21 quarter. On the positive side, the total revenues were 86% higher at Rs.1,112 crore. Even on a sequential basis, revenues were 9% higher and losses sharply lower. Zomato is also planning to launch its NBFC and offer its own BNPL scheme. Gross Merchandise Value (GMV) for Q3 was 84.5% higher yoy at Rs.5,500 crore. At the same time, number of orders grew 93% but average order value (AOV) shrank 3% QOQ due to lower customer delivery charges.