Foreign portfolio investors (FPIs) turned net buyers in the last week, infusing Rs7,666 crore into Indian equities. This comes after outflows of Rs3,920 crore in the week before that from FPIs. With the Adani dust now almost settled, FPIs are back to looking India, which has since narrowed its valuation gap with China. Looking at the growth promise, FPIs are once again willing to pay a premium for Indian equities. FPIs had sold equities worth $3.52 billion in January, over and above selling $16 billion of equities in 2022.
For the previous week ended 17th February, 5 of the 10 most valuable Indian companies by market cap, added value of Rs95,338 crore. Reliance made the bulk of the contribution to the rise. Among stocks, RIL gained Rs70,023 crore in the week, ITC Ltd Rs14,835 crore, ICICI Bank Rs6,035 crore, Bharti Airtel Rs3,288 crore and HDFC Ltd Rs1,157 crore. Among losers, SBI ceded Rs19,679 crore, Hindustan Unilever Rs 14,826 crore, TCS Rs13,099 crore, Infosys Rs10,310 crore and HDFC Bank Rs1430 crore. RIL was the big difference.
Mutual fund NFO collection for 2022 stood at Rs62,187 crore (38% lower than in 2021). However, a total of 228 NFOs were launched in 2022 again just 140 in 2021. In 2022, most of the NFOs gravitated towards the passive fund category. Out of the 228 NFOs in 2022, 179 were open ended funds and 49 were closed ended funds. NFOs had mobilized Rs99,704 crore in 2021 and Rs53,703 crore via NFOs in 2020. Also, the comparisons may be inappropriate since mutual fund NFOs were shut down for 3 months during 2022.
GAIL India Ltd, India’s largest gas distributor, plans to buy equity stake of up to 26% in an LNG liquefaction plant in the United States. The finer details are awaited. GAIL is current facing severe supply disruptions after Russian Gazprom Marketing and Trading (GMTS) could not deliver LNG cargoes, following western sanctions. This stake buy will resolve their short term supply challenges. GAIL is also looking to source up to 1 MTPA of LNG from the LNG liquefaction plant on a FOB basis for 15 years and extendable further.
Cement stocks have been in the midst of a rally after news of a 4-6% spike likely in price per 50 KG bag. On Friday, several cement companies like Star Cement, Ultratech, Ambuja, Dalmia Bharat, Shree Cements, and others rallied up to 4%, despite weakness in the indices. Cement demand is also expected to pick up sharply on the back of aggressive infrastructure spending by the government. In fact, cement demand from government projects was projected to rise 33% yoy in 2023. Also, the 28% GST is likely to be reduced.
NSE tweaked the constituents of major indices last week. Adani Wilmar and Adani Power will find their way into some of the Nifty indices effective 31st March. There are no changes made to the Nifty 50 index. In the Nifty Next 50, Adani Wilmar, ABB India, Canara Bank, Page and Varun Beverages find a place while
Bandhan Bank, Biocon, Gland Pharma, Mphasis and Paytm move out. However, none of the Adani stocks were removed from the Nifty 50 index, in the light of the allegations made by Hindenburg Research.
For the December 2022 quarter, net interest income (NII) of Indian banks grew a record 25.5% to Rs1.78 trillion, driven by healthy credit off-take and higher yield on advances. Most of the banks gained from the fact that interest rates on loans had gone up but the interest cost of deposits had not moved in tandem. Even the net interest margins (NIM) of Indian banks expanded by 17 bps in Q3FY23 to 3.28%. Private bank NIMs expanded by 15 bps to 4.03% while PSB NIMs expanded by 17 bps to 2.85% in the December quarter.
Hindustan Unilever signed a definitive agreement for sale of atta and salt businesses under the Annapurna and Captain Cook brands for Rs60 crore. The buyer is a unit of Reactivate Brands International of Singapore. These two brands had combined sales of Rs127 crore in FY22. This is in line with HUL’s policy to exit non-core categories and focus on core food business. This will include the transfer of trademarks, copyrights and associated intellectual properties. Reactivate Brands will unlock its true product potential.