Stock Market Investment Shot, 22nd August 2022

For the previous week ended on 19th August, 5 out of the 10 most valuable companies on the NSE saw value depletion of Rs30,738 crore. The markets ended 0.3% higher for the week, but there was a lot of unwinding in a shortened week. Among value losers, Reliance lost Rs12,884 crore, SBI Rs9,148 crore, TCS Rs5,324 crore and ICICI Bank Rs2,922 crore. Among the key gainers were Hindustan Unilever gaining Rs9,128 crore, HDFC Bank Rs4,835 crore, LIC Rs2,309 crore, HDFC Rs1,916 crore and Infosys Rs1,220

Vijay Shekhar Sharma had a breather at the AGM as the shareholders of Paytm voted to retain him as the CEO and MD. Nearly 99.67% shareholders backed his staying on. It was a clear show of faith in Sharma as the driver of Paytm after the proxy firms called for his removal. The call from proxy firms came to push for separation of role of CEO & MD and also due to stock price performance of Paytm as well as the delay in turnaround to profits. The stock is still trading at about one-third of its issue price of Rs2,150 in the IPO.

Foreign portfolio investors continued to repose faith in Indian equities infusing close to Rs44,500 crore in the first 3 weeks of August 2022. FPIs have been enthused by the softening inflation in the US and India, less hawkish noises from the central banks and a possible bottoming out of the rupee. After 9 months of consistent selling, FPIs had turned marginal net buyers in July. However, the equity buying by FPIs in the month of August has been robust and affirmative. FPIs infused Rs1,673 crore into debt in
August 2022.

For now it looks like Reliance Industries will be the sole bidder for troubled JBF Petrochemicals. The company was up for sale after defaulting on bank loans to the tune of Rs5,000 crore. Many companies that had submitted their EOI opted out of the race after the due diligence. IDBI Bank had lent $464 million to the company to set up the 1.25 million TPA plant to manufacture purified terephthalic Acid. Reliance, has already acquired the secured assets of JBF Industries, from CFM Asset Reconstruction Private Limited.

Larsen & Toubro plans to invest $2.5 billion across the green energy value chain over the next 3-4 years. However, the actual investment will be based on how the green energy business evolves. L&T had already announced plans to achieve carbon neutrality by 2035 and water neutrality by 2040. Its green energy plans include the manufacture of electrolysers, advanced cell batteries and fuel cells. L&T also plans to make a major foray into EPC projects in green energy. IOCL, L&T and ReNew Power already have a JV.

Central Bank of India will be the last PSU lender to exit RBI’s prompt corrective action (PCA) framework. This will do away with restrictions on its business growth and other rewards to stakeholders. For Q1FY23, Central Bank reported 14.2% higher profits at Rs234.78 crore. Gross NPAs also fell 102 bps to 14.9%, but it is still too steep in absolute terms. The last 2 banks to be removed from the PCA were IOB and UCO Bank. Central Bank had been put under the PCA in June 2017 due to high level of gross NPAs
and low ROA.

The second issue of Sovereign Gold Bonds for FY23 will open for subscription on Monday, 22nd August. The price of gold for the latest issue has been set at Rs5,197 per gram with a discount of Rs50 for digital
applications. The SGB will have a tenure of 8 years with exit option after 5 years. However, the benefit of tax free capital gains will only be available if held for 8 years. The SGBs are sold through banks, SHCIL, NSE, BSE and post offices. The minimum investment is 1 gram and the maximum is 4 KG for the full fiscal year.

The highly anticipated IPO of digital pharma marketplace, PharmEasy, is withdrawn. This was announced by the holding company of PharmEasy, API Holdings Ltd. The IPO was withdrawn citing market conditions. PharmEasy plans to raise funds through a rights issue and the details will be announced soon. PharmEasy may settle for valuations that are 20-25% lower than the valuations sought in the IPO RHP. Due to weak listings of digital IPOs, PharmEasy has opted to play it safe. PharmEasy is backed by
TPG and Temasek.

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