During the week ended 26 February, 9 out of top 10 most valuable companies on the NSE lost Rs.219,920 crore. On Friday itself, the Sensex and Nifty corrected 3.8%. Reliance was the only stock to gain during the week among heavyweights. TCS lost Rs.81,506 crore and HDFC Bank lost Rs.32,202 crore. Among other big losers, HDFC lost Rs.35,390 crore, ICICI Bank Rs.18,099 crore, Infosys Rs.16,614 crore and HUVR Rs.11,536 crore. Bajaj Finance and Kotak Bank lost over Rs.46,000 crore between them. SBI saw minimal damage while Reliance gained a paltry Rs.2,092 crore. Bond yields spike was the reason for the fall.
In his annual letter to shareholders of Berkshire Hathaway, Warren Buffett informed that the company had bought back a record $24.7 billion of its own stock due to a huge pile of cash and limited investment options available in the market. Berkshire bought back $18 billion of its shares just in Q3 and Q4. During the year, Buffett did not make any sizable acquisition of shares. As usual, Buffett stood by his optimism for America, with his famous theme, “Never bet against America”. Berkshire’s cash pile stands at $138 bn. His $31 billion investment in Apple is worth $120 billion and Apple alone accounts for 50% of the MTM profits of the entire portfolio. Berkshire also wrote down $11 billion on Precision Castparts. Surprisingly, there was no reference to succession plans or his preferred investments for the current calendar year.
The pandemic appears to have taken its toll because nearly 96% of people surveyed under a food rights campaign in Maharashtra admitted to facing a drop in earnings during the lockdown last year. Job losses and non-availability of casual work were the major factors. The survey was done by a group of activists across 250 people across Mumbai, Thane, Raigad, Pune, Nandurbar, Solapur, Palghar, Nashik, Dhule and Jalgaon. The 96% chunk also admitted that their earnings remained at lower levels even 5 months after the lockdown. Most of the respondents belong to the poorer sections earning under Rs.7,000 per month.
Tata Motors owned Jaguar Land Rover will take a one-time write-off of £1.5 billion in the Mar-21 quarter as part of its restructuring exercise. In the Dec-20 quarter, JLR had taken a £3.7 billion write-off on account of a slowdown in China and Brexit uncertainties. However, JLR expects to offset this cost by a positive cash flow in FY22. JLR is currently in the process of reducing annual spending to about £2.50 billion. JLR has also targeted to increase EBIT margins by 4% to beyond the 10% mark led by new vehicle architecture. JLR expects to be cashflow positive by FY23 and generate net cash by FY25 by boosting margins.
NSE has stoutly defended its handling of the exchange shutdown on 24 February when the NSE trading only opened at 3.45 pm. Cash market positions could still be closed out on the BSE but in most cases the brokers force-closed intra-day equity positions on the BSE. However, F&O positions were stuck till late in the evening when trading resumed on the NSE. SEBI and MOF have asked for a detailed report. The NSE defended its decision to continue with its primary systems and not activate its disaster recovery site, saying it was only done after evaluating all options to resume trading and settling for the best option.
Nifty and Sensex dropped sharply during the week with most of the damage happening on Friday, which was the sharpest single-day fall in the Sensex. That makes the coming week extremely important in terms of setting the trajectory for March trading. Global cues will be critical as investors will keep an eye on FPI inflows, after the heavy selling on Friday, as well as the rising bond yields making equities unattractive. The market is also expected to react to GDP data growing at 0.4% for Dec-20 quarter. The only redeeming feature was that it came after 2 consecutive quarters of negative GDP growth. Another key data point will be the auto sales numbers on Monday where demand has shown traction. Apart from the PMI numbers, markets will also watch for global oil and commodity prices. Bond yields and FPI flows will hold the key.