Stock Market Investment Shot, 17th March 2023

Stock Market Investment Shot, 17th March 2023

Stock Market Investment Shot, 17th March 2023

In a rather surprising move, Rajesh Gopinathan stepped down from the role of MD and CEO of TCS, making way for K Krithivasan to take on the role as interim CEO. Gopinathan will be pursuing other interests. He will continue till September 2023 to ensure smooth transition. Rajesh Gopinathan must be a happy man as TCS added $70 billion in market cap during his 6-year tenure and $10 billion in incremental revenues. TCS top managers have normally stuck on with the company; and in 55 years history, TCS had only 4 CEOs.

On 16ths March, the Enforcement Directorate (ED) conducted searches at the residence of senior FT MF executives including Vivek Kudva, Roopa Kudva, Sanjay Sapre, and Santosh Kamath. The raids were conducted in Mumbai and in Chennai. While Santosh Kamath was the CIO-Debt, Sapre was the President of Franklin Templeton during the crisis in 2020. Roopa Kudva was formerly the head of CRISIL India and currently heads Omidyar Networks. The latest ED action is a follow up to the order passed by SEBI in 2021.

In a move that would be music to the ears of the Indian defence sector, the Defence Acquisition Council (DAC), cleared weapons procurement worth Rs70,500 crore from Indian manufacturers. Nearly 80% of these are priority orders listed for the Indian Navy. These include indigenous BrahMos missiles, Shakti Electronic Warfare (EW) systems, and Maritime Utility Helicopters. This heavy indigenization is likely to be a big boost for Indian defence companies like HAL, Mazagon Shipyards, BDL, Larsen & Toubro, BEL etc.

State-owned OMCs were in focus after crude prices fell to a 1-year low amidst the global uncertainty and fears of a slowdown in demand. OMCs rallied up to 5% after the price of crude fell to as low as $73/bbl amid fears that the banking crisis in the US and Europe could spill over to other markets too. Lower crude prices are likely to improve marketing margins for the three OMCs in India viz. IOCL, BPCL and HPCL. OMCs are likely to report net profits of around Rs12,800 crore in Q4FY23, due to improved operating margins.

ICICI Prudential Life rallied 9% after it announced the appointment of Anup Bagchi as MD & CEO of the insurer. He takes over from N Kannan, who turns 58 and retires from the group. The appointment will be valid for a period of 5 years starting June 2023. Bagchi, an alumnus of IIM Bangalore, joined ICICI group in 1992 and has worked across retail banking, corporate banking and treasury and was also the head of ICICI Securities for a long time. The challenge for Bagchi will be putting APE and VNB at par with competition.

JPMorgan sees Reliance Industries as an outperformer in 2023, even amidst sluggish earnings. JPM sees sustained strength in refining business, rebound in petchem spreads and the benefits from multiple growth triggers across oil, gas, retail, telecom and digital. JPM is also positive about the impact that Jio Financial can have on the SOTP valuation of RIL. From the current levels, JPM sees 30-35% upside in the stock by March 2024. It also sees RIL’s foray into the FMCG business and wholesaling to be value accretive.

Amid the controversy surrounding Vinod Adani, the elder brother of Gautam Adani, the group confirmed that Vinod Adani was very much part of the promoter group. The role of Vinod Adani had been one of the bones of contention in the Hindenburg report. Hindenburg had alleged brazen stock manipulation and accounting opacity, although it could not produce any evidence to that effect. Adani has stated that the role of Vinod Adani in the Adani group had been adequately clarified and also explained to the regulators.

Credit Suisse is strengthening its liquidity on a war footing by borrowing $54 billion from the Swiss central bank (SNB). In the aftermath of the SVB Financial crisis in the US, the problems with Credit Suisse have also come home to roost. UBS refused to be drawn into a forced merger with Credit Suisse as it would be unfair to their shareholders. Over the last few years, the quality of assets of Credit Suisse and its exposure to high-risk clients came in for a lot of flak. SNB has ruled out any contagion effect on the financial system.

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