It was a mixed week for the highly liquid stocks on the Nifty. In fact, 5 out of the 10 most valuable stocks by market cap added Rs.101,389 crore in market. It was the IT sector back with a vengeance during the week. During the week, the valuation of TCS jumped Rs.47,551, Infosys added Rs.26,227 crore, Reliance added Rs.14,200 crore, Bajaj Finance Rs.7,560 crore and Hindustan Unilever Rs.5,851 crore. Among big losers, HDFC dipped Rs.10,968 crore, HDFC Bank Rs.8,250 crore and ICICI Bank gave up Rs. 4,928 crore.
The stock exchanges have informed members that Dewan Housing would not be available for trading with effect from 14 June. Due to the liquidation of the company, it will not have any residual value. The final approval of the NCLT is still awaited but the exchanges clearly wanted to avoid unnecessary speculation in the stock. The NCLT Mumbai bench has already allowed Piramal Enterprises to take over DHFL for a consideration of Rs.37,500 crore. In Nov-19, DHFL became the first NBFC to be referred to NCLT by RBI.
Adani Enterprises has incorporated a new wholly-owned subsidiary, Adani Cement Industries. Adani Enterprises is the incubation and investment arm of the Adani Group. Adani Cements will carry on the business of manufacture and processing of all types of cements. Most of the Adani stocks have gained anywhere between 200% and 400% during the last one year. Adani Group had got a big boost after the MSCI included 3 Adani companies in its benchmark index. Adani is already India’s second wealthiest man.
GST Council retained GST on COVID-19 vaccines at 5% but cut tax rates on most supplies while exempting drugs treating black fungus. There were strident demands to abolish GST on all COVID related equipment. However, on a number of support products to COVID-19; the rates have been slashed from 18% and 12%, down to 5%. The demand for zero- tax on all COVID products was rejected by the GST Council. Taxes were also reduced on COVID essentials like medicines, oxygen, concentrators, COVID devices, testing kits, etc.
Nomura raised India’s GDP forecast for 2022 by 70 basis points to 7.7%. However, Nomura also raised their current account deficit estimates to 1.5% for 2021 and 1.3% of GDP for 2022. CPI inflation estimates were also increased by 10 bps and 40 bps for 2021 and 2022. Nomura has admitted that high frequency data was hinting at a hit to consumption and services. However, these data points also hint at more robust manufacturing and export sectors. However, it has flagged the third wave of COVID as a distinct risk.
Saint-Gobain India is making a big foray into the housing solutions segment with revenue targets of Rs.1,000 crore in the next 5 years from this service. Saint Gobain expects this housing solutions space to become a Rs.20,000 crore industry in next five years and are confident of a 5% market share. The company is also planning a massive investment of Rs.2,500 crore in India by FY23. The strategy is to gain a share of the fragmented downstream markets by combining physical stores with a very unique digital experience.
The coming week is likely to be guided by the CPI inflation data on Monday, the WPI inflation, lifting of curbs, US monetary policy and the slew of 4 IPOs slated for next week. The US Fed will be outlining its monetary policy on continuing stimulus measures. Another important data point will be the pace of vaccinations. In addition, the other key triggers will be the price of Brent, which is already at above $72/bbl, the rupee movement and the FII flows. Retail inflation is expected to be around 100 bps higher.
India is likely to see a slew of 4 IPOs during the week with a total of Rs.9,132 crore likely to be raised. The big IPOs during the week include steel producer Shyam Metalics, Sona BLW owned by Blackstone Group, Krishna Institute of Medical Sciences and Dodla Dairy. Between January and March, a total of 15 IPOs had raised Rs.12,500 crore but since April there has been only 1 IPO of Macrotech. The IPO markets had cooled off due to the new stringent guidelines proposed for merchant bankers. SEBI has since put off that plan.