In the light of the Omicron virus and general global hawkishness, a recent report by SBI urged RBI to go slow on liquidity tightening. The view is that it would be best to put off any reverse repo hike in the December credit policy till the economic recovery gathered strength. This is in light of the fact that the RBI is already sucking out excess liquidity in the system ahead of the Fed taper and rising inflation in India. SBI has also argued that effective rates are already higher due to variable reverse rate repurchases (VRRR).
For the week ended 03-Dec, 7 out of the 10 most valuable companies on Nifty saw value gains of Rs.1,29,048 crore. TCS led the gains during the week. Among big gainers, TCS added Rs.71,762 crore while Infosys added Rs.18,694 crore. Other gainers were Bajaj Finance Rs.16,083 crore, HDFC Bank Rs.12,744 crore, HDFC Rs.5,394 crore and SBI Rs.2,410 crore. Among losers, Bharti Airtel lost Rs.10,490 crore, ICICI Bank Rs.3,687 crore and Reliance Rs.2,537 crore. Reliance remained the most valuable Indian company.
India’s foreign exchange reserves fell by $2.713 billion for the week ending 26-Nov to a level of $637.69 billion. In a way, the sharp outflow from FPIs was a reason for the fall in the forex reserves during the previous week. However, the forex reserves are still very close to the historic high of $643.51 billion. There was a fall in foreign currency assets as well as the gold reserves. The foreign currency assets also include appreciation / depreciation in the dollar. Gold reserves were down $1.57 billion during the recent week.
LIC has improved its asset quality for the FY21, just ahead of its proposed IPO during the current fiscal. The gross NPAs of LIC stand at Rs.35,130 crore on an overall portfolio of Rs.4,51,303 crore or 7.78%. This is lower than 8.17% in FY20, but the most important part is that adequate provisions have been made and the net NPAs stand at a mere 0.05%. The indicative actuarial valuation of LIC is already done and it is expected to be valued at around $150 billion. The NPAs in debt portfolio had been a bone of contention.
Tech Mahindra acquired 100% in Activus Connect for $62 million or Rs.466 crore. Activus provides work-from-home customer experience management solutions. The US based Activus Connect reported total revenues of $17 million in CY20. Tech Mahindra is betting big on workplace solutions and this buyout will bolster its solutions portfolio. Through this acquisition, Tech Mahindra will offer multi-lingual, multi-channel work from home solutions to customers across verticals. Revenues were $21.8 million in H1FY21.
ONGC signed an agreement with Solar Energy Corporation of India (SECI) for renewable energy projects. ONGC and SECI will jointly undertake renewable energy projects including solar, wind, solar parks, EV value chain, green hydrogen; among others. The installed power capacity of non-fossil fuels in India will scale to 66% by 2030. ONGC has set a target of producing at least 10 GW of renewable power by 2040 even as the focus on core E&P business will continue. India will cut net carbon emissions to zero by 2070.
Larsen & Toubro signed an agreement with ReNew Power to tap the $60 billion green hydrogen market in India. L&T is targeting business potential of $2 billion from the segment. While L&T brings to the table skills in designing, executing and delivering EPC projects, ReNew brings its utility-scale renewable energy projects capacity. Green hydrogen does not emit greenhouse gases and is the answer to help countries attain net-zero emission targets faster. India’s green hydrogen demand is estimated at 2 MTPA by 2030.
As input costs continue to rise, auto companies are bracing up for another price hike. Tata Motors, Honda and Renault will hike vehicle prices from January next year to offset this impact. Maruti, Audi and Mercedes-Benz have already announced hikes. In the case of Benz and Audi, the price hikes will be 2-3% across the board while Maruti price hikes will vary by model. Most auto companies witnessed a sharp impact on input cost due to commodity price spike. Renault may look at a rather substantial price hike.
