Stock Market Investment Shot, 10th August 2022

On World Biofuel Day, there was an effort to reiterate the importance of an integrated energy approach in India by the producers and the consumers. The day creates awareness of the merits of non-fossil fuels and celebrates Rudolf Diesel, who ran his first engine with peanut oil. In FY21, India was a net importer of petroleum to the tune of 185 MT costing $551 million. Even a simple ethanol blending program saves billions of dollars for India. BPCL is not just the coordinator, but also the leader of ethanol in the industry.

MRF, the tyre major, reported 36% rise in revenues from operations at Rs5,599 crore for the June 2022 quarter. However, standalone net profits fell by 30% to Rs112 crore due to a sharp spike in material
costs. However, other income nearly fell to a third at Rs34 crore in the June 2022 quarter. Raw material costs accounted for nearly 75% of total expenditure and accounted for a major chunk of the spike in spending
by MRF. The economic crisis in Sri Lanka had also resulted in losses in its subsidiary in the island nation.

Bharti Airtel, India’s second largest telecom company, will start rolling out 5G services across all towns and key rural areas of India from August 2022 and complete the activity by March 2024. However, Airtel CEO also added that telecom tariffs needed to go up in line with the technology upgradations. Vittal even confirmed that this would be the biggest telecom rollouts by Bharti ever. In the recent spectrum auctions, Bharti Airtel had acquired 19,867.8 MHz frequencies across 3.5 GHz and 26 GHz bands for Rs43,040 crore.

Warren Buffett may have booked a huge MTM loss of $53 billion in the June 2022 quarter but that has not reduced his appetite for identifying rightly priced stocks. In the current year, Berkshire bought more than $11 billion of Occidental Petroleum and now controls over 20% of the company. In the latest quarter, Buffett had added 6.7 million shares of Occidental amounting to $400 million. They also hold more than $24 billion worth of shares in Chevron Corporation. Overall, Berkshire has $45 billion invested in oil sector.

EPFO invested Rs159,300 crore in ETFs till March 2022 and the notional market value of investments stood at Rs226,919 crore. EPFO had started invested in equities via the ETF route in 2015 and since then the permissible annual equity investment limit for EPFO has been raised from 5% to 15% of incremental flows. In the last 3 years; the EPFO invested in ETFs to the tune of Rs43,568 crore in FY22, Rs32,071 crore in FY21 and Rs31,501 crore in FY19. ETF investments by EPFO are based on Nifty, CPSE and the
Bharat-22 indices.

In an encouraging piece of news flow, India’s 12 leading PSU banks earned cumulative net profit of nearly Rs15,306 crore. That is 9.2% higher on a yoy basis, despite heavy MTM write-offs by SBI in Q1FY23. These banks had recorded net profits of Rs14,013 crore in Q1FY22. Among the big PSU banking names, SBI, PNB and Bank of India reported sharp fall in profits in the quarter on MTM losses amidst hardening yields. BOB led the show with 79% higher net profits at Rs2,168 crore while Bank of Maharashtra earned Rs452 crore.

Goldman Sachs continues to bet on higher crude oil price amidst supply shortfalls. Despite recession fears, they expect the oil sector to be undersupplied. Of late, oil has been hovering around the $95/bbl
levels. According to Goldman, more than recession the oil market needed demand destruction to really see the prices fall on a sustained basis. Goldman has trimmed Brent price forecasts for the third and fourth
quarters to $110 and $125 a barrel. Goldman also expects the US gasoline retail prices to rebound in Q4.

There were big political developments in Bihar on Tuesday as Nitish Kumar walked out of the NDA and decided to form the government with the support of the RJD alliance. This is the fourth time that Nitish was doing an about-turn in just about 6 years. After his resignation, Nitish went to the residence of the RJD leader, Tejaswi Yadav regarding government formation. Nitish claimed that the ruling NDA was fomenting trouble against him. Relations between BJP and the JD(U) were worsening for quite some time.

Exit mobile version