Friday, 28th January 2022

US GDP growth for the fourth quarter ended Dec-21 accelerated to 6.9% annualized resulting in full year GDP growth of 5.7% for 2021. This is the best fourth quarter performance in nearly 40 years. To a large extend the growth has been fuelled by the massive stimulus by the Fed and the US government. This paves the way for the Fed to go ahead and indulge in aggressive rate hikes from March onwards. In its policy statement, Jerome Powell already hinted at rate hikes in possibly every Fed meeting in this year.

Canara Bank net profit more than doubled to Rs.1,502 crore for the Dec-21 quarter on the back of a sharp rise in net interest income (NII) and lower provisioning in the quarter. Treasury income was impaired by hardening of yields. NII was up 14.1% at Rs6,946cr. NIMs expanded marginally from 2.79% to 2.83% yoy. Gross NPAs are relatively comfortable at 7.8% while slippages in the quarter stood at Rs.2,699 crore. The big boost to profits came from a 35.6% fall in provisions for loan losses at Rs.2,946 crore. Loans were up.

Coforge Ltd, formerly NIIT Technologies, reported 50.7% higher yoy profit and 39.3% higher yoy revenues. The board of Coforge has recommended interim dividend of Rs.13 per share. While total revenues for the quarter stood at Rs.1,658 crore, the net profits in the quarter stood at Rs.184 crore. Coforge showed growth in sales and profits in rupee terms and in constant currency terms. EBITDA margin for the quarter expanded to 19.5%. Attrition at 16.3% may look high, but is the new normal for most IT companies in Q3. 

SEBI announced new mutual fund norms under which, the trustees will be obligated to obtain the consent of unitholders on any decision by the AMC and the trustees to wind up any scheme or prematurely redeem units of a close-ended scheme. This was necessitated after the Templeton fiasco in Apr-20. The vote will be based on one vote per unit held. If the vote fails to get consent, it must revert to normal purchase and redemption from the next day. This amendment is based on the Supreme Court order on prior consent.

With Brent Crude crossing $90/bbl, India has been dialling up oil producers and its major suppliers to quickly push up supply. India relies on crude imports for 85% of its crude requirements and this puts more pressure on the Indian economy. The Indian Basket of Crude oil, an estimate of the average price at which domestic refiners buy crude oil, has touched a 7-year high of $88.23/bbl. Normally, such a spike in crude would induce OMCs to raise prices but they are putting off the decision due to five state assembly polls.

NCLAT has ordered the committee of creditors (COC) of DHFL to reconsider Piramal Capital ascribing a value of only Re.1 to the Rs.45,000 crore bad loans of DHFL. This order came after one of the lenders to DHFL, 63 Moons Technologies, had moved the NCLAT citing that any recovery would now go to Piramal and not to the creditors. DHFL had been referred by the RBI to debt resolution in Nov-19. Piramal won a mandate to buy DHFL in Mar-21 for Rs.37,250 crore. Total exposure of 63 Moons stands at Rs.200 crore.

Imagine Marketing, which owns consumer electronics brand BoAt, filed DRHP with SEBI to raise Rs.2,000 crore via an IPO. This will comprise of a fresh issue of Rs.900 crore and an offer for sale of Rs.1,100 crore. The company will use the proceeds from fresh issue to pay off debt. BoAt has grown revenues at a CAGR of 141% between FY19 and FY21. The company was founded in 2013 while the flagship BoAt brand was launched in 2014. It offers products in high-growth consumer categories like audio and smartwatches.

It was a day when bears put pressure on the Indian markets after a hawkish statement from Fed chair, Jerome Powell. Markets saw nearly Rs.2.60 trillion wiped of and despite an 800 point recovery from lower levels, the Sensex still closed nearly 600 points lower. The other factor pushing the markets lower, apart from the Fed hawkishness, was the spike in prices of Brent Crude to above $90/bbl. The BSE MidCap and the BSE SmallCap indices also slumped by 2% and 1% respectively and oil prices could be the real worry.

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