Monday, 6th June 2022

As the MPC meet commences on Monday, the street consensus is that there will be another 35-50 bps rate hike by the RBI. The view on CRR hike is more divided. The 3-day MPC meet will culminate with the presentation of the monetary policy on Wednesday 08th June. For April, the retail inflation had touched a level of 7.79%., while WPI inflation was at 15.08%. Das has already indicated that a reversal to the pre-COVID repo rate of 5.15% would be the target. However, MPC is likely to raise inflation forecast for FY23.

For the previous week ended 03rd June, 4 out of the 10 most valuable Indian companies by market cap saw market value accretion to the tune of Rs231,320 crore. Big daddy Reliance Industries led the way with gains of Rs138,223 crore. TCS also added Rs64,619 crore while Infosys added Rs25,729 crore to its market cap. Among losers; Bharti Airtel lost Rs25,955 crore, LIC Rs13,472 crore, HDFC Rs9,355 crore, Hindustan Unilever Rs8,964 crore, HDFC Bank Rs6,200 crore and SBI Rs4,195 crore. Nifty was up over 1.4% last week.

The Prime Minister announced that India had already achieved its target of 10% ethanol blending in petrol almost 5 months ahead of schedule. He also affirmed that the increase in ethanol blending from 2% in 2014 to 10% in 2022 reduced carbon emission by 27 lakh tonnes and saved Rs 41,000 crore of forex reserves. It had also enhanced farm incomes by Rs40,000 crore. In one more of such green initiatives, the prime minister confirmed that India had achieved its target of 40% renewable installed power capacity. 

There was no let-up in FPI selling with nearly Rs40,000 crore pulled out from secondary equity markets in May 2022. FPIs continue to be wary of Fed hawkishness. They have now withdrawn nearly Rs1.77 trillion in the current calendar year 2022 and more than Rs2.25 trillion if you count from October 2021. Russia is adding to the geopolitical risk, oil is getting expensive and Indian inflation is getting harder to control. The US Fed has hiked rates by 75 bps till date and has guided for rates to rise another 200 bps by end of 2022.

A slew of companies are announcing bonus issues in next few days. Varun Beverages has announced 1:2 bonus with record date of 07th June. AU Small Finance Bank has also announced 1:1 bonus with 10th June as the record date. Cosmo Films is one more company that is issuing bonus in the ratio of 1:2 with record date of 17th June. The big ticket bonus of IOCL in ratio of 1:2 will have July 01st as the record date. Finally, Ratnamani Metals has also announced 1:2 bonus with record date of 01st July. All are subject to approval.

Vedanta Ltd approved raising up to Rs4,089 crore via debentures on a private placement basis.  The board has approved raising funds via issue of 40,890 secured NCDs at a face value of Rs10 lakh each. Vedanta, it needs no reiteration, has business interests spread across zinc, lead, silver, iron ore, steel, copper, aluminium, power, oil and gas. Vedanta has also announced plans to diversify into chip manufacturing to bridge the big global gap. Its total planned outlays for chips and displays alone is to the tune of $20 billion.

Electrical vehicle (EV) manufacturers are now increasingly focussing on the sub-Rs1 crore premium passenger car segment. Till date, the focus was more on the economy and the mid-economy segment of EVs priced under Rs25 lakhs. Some of the popular brands in this segment include the Tata Nexon, Tigor EV, MG ZS EV and the Hyundai Kona. Now there are relatively more premium offerings from Kia and BMW slated to hit the market. Hyundai is ready to roll out the Loniq 5 with a price tag of close to Rs40-50 lakhs.

Vivriti Asset Management, a fixed-income AIF is targeting to grow its AUM to $5 billion by FY26. Vivriti provides debt financing to domestic mid-market segment. According to Vivriti, this segment was relatively under-served with limited players. Vivriti gives loans to small-and-mid-sized financial institutions to on lend to microenterprises. Vivriti has already raised funding from investors like Lightrock, TVS Capital and Creation Investments. Vivriti Capital is investing in technology to pick early distress signals in investments.

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