FPIs pulled out Rs.4,515 crore from equities in the first two weeks of July, after being net buyers in June. It looks like FPIs are playing it cautious with markets close to a peak. Also, the potential risk of a third wave is keeping the FPIs on tenterhooks. In addition, FPIs are also perturbed by the strength of the US Dollar as well as rising bond yields in the US. However, while FPIs pulled out Rs.4,515 from equities, they infused Rs.3,033 crore in debt resulting in net outflows of just Rs.1,482 crore in first 16 days of the month of July.
Happy days are here again for automobile exports, exhibiting a sharp recovery in the first quarter ended Jun-21. The positive growth was seen across vehicle segments. According to data put out by SIAM, India exported 14.19 lakh vehicles in Jun-21 quarter compared to 4.37 lakh in the Jun-20 quarter. However, this yoy comparison may not be appropriate due to the pandemic last year. If you look at 2-wheeler exports, Jun-21 quarter was better than Jun-19 quarter but passenger cars were still below Jun-19 quarter levels.
The big story about HDFC Bank in the Jun-21 quarter has been the bad loans. Write-offs doubled to Rs.3,100 crore in the Jun-21 quarter. To improve its credit profile, HDFC Bank also got rid of NPAs worth Rs.1,800 crore compare to just Rs.1,000 crore in Jun-20 quarter. However, HDFC Bank underlined that the slippages were high due to COVID 2.0 preventing employees from going to the field for collections. Gross NPAs in the Jun-21 quarter were sequentially up by 15 bps at 1.47%, still a very reasonable level of stress.
Among the most valuable companies in the Nifty, 6 out of 10 companies added Rs.69,612 crore in market cap, with RIL playing the role of Big Daddy. Reliance added market value of Rs.24,470 crore during the previous week. Among other gainers, ICICI Bank added Rs.14,967 crore, HDFC Bank Rs.10,998 crore, HDFC Rs.7,259 crore, Kotak Bank Rs.6,027 crore and SBI Rs.5,890 crore. Among weekly losers, HUL lost Rs.8,224 crore, TCS Rs.4,846 crore and Infosys Rs.3,642 crore. Infosys is the fourth most valuable Indian company.
It looks like good news for India after UAE and Saudi Arabia agreed to boost supply after crude prices had touched a 30-month high. Apart from the traditional OPEC members, the OPEC+ also includes other oil exporters like Russia, Mexico and Kazakhstan. The oil rally was triggered after OPEC+ cut output by nearly 10 million bpd amidst the pandemic, while the reduction now stands at 5.8 million bpd. Between August and December, OPEC+ will hike supply by another 2 million bpd, which should bring relief to crude prices.
With Ambani committing Rs.75,000 crore investment to green energy initiatives, experts estimate that the New Energy business would be worth nearly $36 billion or Rs.260,000 crore. New Energy will be the fourth major vertical of Reliance; other than O2C, Digital and Retail. Based, on the investments, Bernstein expects the New Energy business to add $36 billion to the market cap of RIL. This would enhance the total valuation of all Reliance business lines combined to $261 billion, leaving room for substantial price upside.
FedEx Express, one of the world’s largest logistics company, announced an investment of $100 million in Delhivery, a leading logistics and supply chain services company based in India. FedEx plans to bring in the $100 million as equity investment in Delhivery. In turn, Delhivery will act as the India marketing arm of FedEx, which will also give Delhivery a huge captive market. Fulfilment is the name of the game. Delhivery can now leverage the global network of FedEx as well as their global technology and best practices.
If one sector that is having the best time of its life, it is steel. The steel prices globally have set new records with robust industrial demand giving wings to the steel rally. There is also a global shortage of steel with China and Russia cutting down steel exports to focus on their domestic markets. Biden will spend his way out of the slowdown and EU wants to reach zero-emissions. Both are driving the demand for steel. US alone is likely to generate additional steel demand of 5 million TPA. It looks like a steel supercycle for now.