The market cap 5 out of the 10 most valuable companies on the Nifty dropped by Rs.1,42,880 crore in the previous week ended 22-Oct. Among the big value losers, Hindustan Unilever fell Rs 45,523 crore while Reliance lost Rs.45,127 and TCS saw erosion of Rs.41,152 crore during the week. Other stocks to lose value were Bajaj Finance at Rs.8,891 crore and HDFC Bank Rs.2,187 crore. Among gainers, Kotak Bank gained Rs.30,748 crore, ICICI Bank zoomedRs.22,248 crore, HDFC Rs.17,015 crore and SBI adding Rs.11,111 crore.
JSW Steel is planning to levy a surcharge on sale of steel products to its OEM customers to offset the rising input costs. JSW Steel will be pioneering this concept in India. According to JSW Steel, the cost of steel production per tonne has gone up 19% in the quarter or Rs.6,600 per tonne accretion. That has made such levies inevitable. Coking coal, which accounts for 40% of the cost of steel, has gone up from $120/tonne to $400/tonne in 4 weeks. CFO, Seshagiri Rao, stated that this practice is common in Europe.
Foreign portfolio investors turned net sellers in Indian market as they pulled out Rs.3,825 crore in the first 3 weeks of October. In October they pulled out Rs.1,494 crore from debt on fears of widening yield spread between the US and Indian bond yields. Even the equities saw outflows of Rs.2,331 crore taking the total outflows to Rs.3,825 crore in October so far. Interestingly, FPIs had infused Rs.13,363 crore into debt in Sep-21 and Rs.14,376 crore in Aug-21. FPIs have been concerned about inflation and input costs in Q2.
A revolt by Yes Bank, which holds 26% stake in Dish TV, is restricting Dish from reappointing directors despite their tenures ending. This is likely to impact the ability of Dish TV in their battle against Yes Bank if they continue to see depletion of board strength. Yes Banks has sought the removal of Jawahar Goel from the post of MD and CEO of Dish TV. Goel’s term will expire in March 2022. As per the new rules that will come in force from Jan-21, reappointment of directors will have to be stamped by 75% shareholders.
Honda Motorcycle & Scooter India or HMSI, what was formed after the alliance between Hero and Honda ended, is all set to launch its first electric vehicle by next fiscal year. Honda plans to start feasibility run of electric scooter with its dealer partners by the end of this fiscal. The Honda top brass has commented that they were extremely positive about the application of green technologies in India, considering the early signals of EV demand in India as well as the supportive state investments in green infrastructure space.
Indian government is likely to launch the next tranche of the Bharat Bond ETF by end of this year to raise over Rs.10,000 crore. The fund needs of various CPSEs are currently being evaluated before finalizing the actually amount and break-up of the ETF bond issue. Bharat Bond ETF is an exchange-traded fund that invests in AAA rated debt of public sector companies. The first two offers of the Bharat Bond ETF had raised Rs.12,400 crore and Rs.11,100 crore respectively. Edelweiss AMC will be fund manager for the ETF.
The pressure is intense on consumer-focused FMCG and durables companies as they are finding it hard to offset soaring commodity inflation via price hikes. This is already evident in Sep-21 quarter earnings. In addition, there are also signal of slowing rural demand. The growth in rural demand for HUL was just 2.5% in the Sep-21 quarter compared to 12.5% in Jun-Jul period. For Nestle, the raw material costs rose 20.4% sequentially leading to a 11% spike in total expenditure. This combination of trouble is pressuring FMCG.
A wave of IPOs is helping private equity firms to cash out at a record pace. In the first 9 months of 2021, PE funds and VC investors sold shares worth $2.6 billion via IPO exits. In fact, the Sep-21 quarter alone saw 13 PE backed IPOs collecting $1.3 billion. This momentum could gather further pace with mega IPOs of Nykaa which opens this week and Paytm, opening shortly after that. Among the big PE deals, Blackstone made a Rs.5,250 crore exit from Sona BLW, JP Morgan from CarTrade Tech and Temasek from KIMS.