Stock Market Investment Shot, 18th April 2023

Stock Market Investment Shot, 18th April 2023

Stock Market Investment Shot, 18th April 2023

WPI inflation for March 2023 fell to a 29-month low of 1.34% compared to 3.85% in February 2023. There was a fall across manufacturing inflation, fuel inflation and primary inflation with manufacturing inflation even dipping into the negative zone. While the WPI inflation has fallen more than 1,500 bps from its peak of May 2022, the CPI inflation is still to catch up. However, food inflation, excluding manufactured food products actually rose to 5.48%, showing the lag effect of a weak Kharif. A lot will depend on monsoons.

India’s 4th largest pharmaceutical company by domestic sales, Mankind Pharma, will open its IPO for subscription on April 25th and close on April 27th. The stock is expected to list on 09th May 2023. The IPO will entirely be by way of an offer for sale (OFS) of 40.06 million shares by existing promoters and early investor shareholders. Mankind Pharma is quite popular for its marquee brands like Manforce and Prega News, among others. It gets more than 97% of revenues from India, something unique in pharma sector.

The largest public shareholder in Zee Entertainment, Invesco group, has taken a total exit from Zee by offloading its last tranche of 5.11% shares in the market. It collected Rs1,004 crore from the sale. A total of 4.91 crore shares changed hands on the exchange with Morgan Stanley, Goldman Sachs and Segantii absorbing most of the float in the market. Invesco had been consistently cutting its shareholding in Zee since it withdrew the demand seeking removal of Punit Goenka and reconstitution of the company board.

Mainboard IPOs may have disappointed in FY23 but SME IPOs had their best year in FY23. The SME segment on the NSE and BSE combined mopped up Rs2,232 crore across 125 SME IPO offerings in FY23. This is in contrast to the 37 mainboard IPOs in FY23. It also comfortably surpassed the Rs1,722 crore garnered in FY22 from SME IPOs. FY23 also marginally bettered the record SME IPO collections in FY18. Incidentally, 20% of the IPOs were oversubscribed over 100X while 15 IPOs were subscribed over 200x.

Banks and NBFCs are expected to sign co-lending agreements worth Rs1 trillion in FY24, which is likely to be about four times the col-lending done in FY23. Co-lending is a partnership between a bank and an NBFC to offer loans to economically weaker sections under priority sector lending programme. In this model, 20% of the credit risk is on the NBFC’s book till maturity, while the balance is on the bank’s books. This is an incentive for the NBFCs to leverage their rural networks even as banks meet priority lending targets.

The government is considering fresh measures to crack down on shell companies by making the process of incorporation tougher for non-genuine entities. The MCA is in discussions over various proposals including geo-tagging of registered offices and setting limits on the number of companies incorporated by a single person. The idea is that the ease of doing business must not be misused here. This comes after the MCA initiated action against Chinese shell companies operating in India as domestic Indian companies.

The IT index cracked sharply on Monday after Infosys went into a free fall following a tepid guidance for FY24. Infosys has been cautious in its guidance due to the fear of BFSI segment revenues getting impacted by the banking crisis in the US. On Monday, the Nifty IT index fell 4.71% and even touched the 52-week low during the day. Other IT names like LTI Mindtree, Tech Mahindra and Persistent Systems also slipped sharply on Monday. The gist of Infosys results was weak demand and an inability to tweak on the margins.

Elon Musk has an answer to Microsoft’s ChatGPT and it will be called TruthGPT. Musk accused ChatGPT of not being open enough while Google did not pay adequate attention to AI safety. Musk has warned that a badly designed AI platform has the potential for civilizational destruction. Incidentally, OpenAI was co-founded by Musk but he had stepped down from the board in 2018. Microsoft has announced a further multi-billion dollar investment in OpenAI, intensifying competition with rival Google in the global AI race.

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