In the minutes of the MPC published on 21st December, the RBI governor was categorical that there was no question of pausing on rate hikes. According to Das, the outlook was still uncertain and hence it would be too premature to talk about the end of rate hikes. Out of the six members of the MPC, five had voted for a 35 bps rate hike with only Jayanth Varma dissenting. The MPC has underlined that inflation would likely remain near 6% in the last two quarters of FY23. However, inflation could fall sharply in fiscal FY24.
China may be up against a financial challenge with the latest data hinting at budget deficit of $1.1 trillion for the January to November period of 2022. This is not only larger than the budget deficit of 2020 but more than twice that of 2021. Apart from the slowest growth in decades, China has been hit badly by the spate of lockdowns announced by the government to bring the nation to a COVID zero situation. Now that China has scrapped its COVID policy, the cases are rising. It looks like China is on the horns of a dilemma.
As oil companies discover their mojo and technology stocks are being looked at with suspicious eyes, the market cap of Exxon has once again crossed that of Tesla. That sounds like poetic justice. This is the first time since 2020 that the market cap of Exxon has exceeded that of Tesla. With strong oil prices, the stock of Exxon is up nearly 75% since the start of 2022. Investors are now dumping risky assets and preferring assets with more reliable cash flows. The market cap of Tesla is down more than 65% over the last 1 year.
Healthcare stocks in India had a surprise rally on Wednesday on the back of a surge in COVID cases in China and Japan. Even countries like South Korea, Brazil and the US have seen a surge in COVID cases. This created a rally on the lines of what we saw from the lows of 2020, when COVID had first reared its head. Some of the stocks that rallied hard included Vijaya Diagnostics, Thyrocare, Dr. Lal Pathlabs, Metropolis Healthcare etc. Most of the pharmaceutical stocks like Sun Pharma, Cipla and Lupin also rallied in trade.
Reliance is likely to acquire Metro AG for a valuation of less than $500 million. The deal will also result in Reliance taking over the debt of Metro AG and is expected to be announced soon. Metro AG, one of the leading wholesalers in the world, had set up shop in India about 20 years ago, but has not decided to call it a day. The acquisition is likely to help Reliance Retail ramp up its B2B trade segment. One of the big plans at Reliance Retail is to dominate the retail ecosystem from Kirana stores to wholesale distribution.
With Piramal group opting out of the bid at the last minute, it looks like the Torrent group of Gujarat may emerge as the highest bidder for taking over Reliance Capital. Torrent group, a leading player in the power segment and the pharma segment, had put in a bid of Rs8,640 crore for Reliance Capital, which is currently the highest bid. Reliance Capital is the NBFC entity of the ADAG group which went bankrupt under a pile of Rs24,000 crore of debt. Prior to the bankruptcy, RCAP had already sold the AMC business to Nippon.
KFIN Technologies got 2.59 times subscription as of the close on 21st December. The KFIN Tech IPO was entirely an OFS of Rs1,500 crore. The QIB portion got subscribed 4.17 times, which is not too great if you look at the sterling response to its anchor placement. The retail portion got just about subscribed a little over one time while the HNI NII portion got undersubscribed, with just 23% of the book filled up. However, since the overall issue was oversubscribed, the HNI balance shares are likely to be reallocated to others.
Tata Motors has hinted that it would raise the prices of its EV motor vehicles. This has become essential due to a rise in battery prices, new battery standards for EVs and the implementation of BS-VI emission norms for IC engines. Tata Motors has indicated that it may hike prices in two tranches. With the launch of the Nexon, Tata Motors has already emerged as the undisputed leader in the EV segment and the recent offer to customers had already got 20,000 bookings. Price increases may be to the tune of 3-4%.
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