Stock Market Investment Shot, 22nd March 2023

Stock Market Investment Shot, 22nd March 2023

Stock Market Investment Shot, 22nd March 2023

A recent note by S&P Global Ratings has underlined that Indian lenders were capable of enduring any potential contagion effects from the US banking turmoil as well as the sale of Credit Suisse to UBS. S&P is of the view that Indian banks have a strong funding profile; which combined with high savings rate and state support were key positives for the Indian financial system. Even the spike in yields would be offset by existing buffers. S&P has pointed that only a significant worsening of the crisis could really impact India.

The latest RBI Bulletin has pointed out that amidst rising loan demand, there is stiff competition to attract deposits. This could lead to a spike in deposit rates. Most Indian banks have made record profits in the last two quarters as the cost of deposits did not grow as fast as the yield on loans. That may change now. Repricing of deposits has started, but RBI expects it to get more aggressive in the coming months. Most of the demand came from term deposits as yields are now substantially higher than savings accounts.

It is reported that N Chandrasekaran, chairman of Tata Sons, had discussed the possibility  of continued engagement with Rajesh Gopinathan post the end of his tenure in September. They were looking at more of an advisory role, although it is not clear if Rajesh Gopinathan is also keen on such a role. Post the exit of Rajesh Gopinathan, there were reports in sections of the press alleging that the TCS CEO did not get along with the chairman of Tata Sons. Gopinathan had built revenues of TCS by $10 billion in last 6 years.

Total installed renewable energy capacity in India touched 168.96 GW (gigawatts) in February 2023; as per disclosure made by the Union Minister of Power to Parliament. Out of the 168.96 GW capacity, solar accounted for 64.38 GW, hydro 51.79 GW and wind power 42.02 GW. As of date, another 82.62 GW green energy capacity is under implementation while an additional 40.89 GW is under stages of tendering. India has total power capacity of 412.21 GW, with 40% from renewable sources; targeted at 500 GW by 2030.

IndiaFirst Life Insurance Company got SEBI approval for its proposed IPO. The issue will comprise of Rs500 crore of fresh issue and an offer for sale (OFS) of up to 14.1 crore shares by promoters and early investors. BOB and Union Bank are two of the largest stakeholders in IndiaFirst Life, while Warburg Pincus has a stake through Carmel Point. In the OFS, BOB plans to offload 8.9 crore shares, Warburg Pincus 3.9 crore shares and Union Bank 1.3 crore shares. IndiaFirst Life will also consider a Rs100 crore private placement.

Hindustan Zinc Ltd (HZL) board approved the fourth interim dividend of Rs26 per equity share for FY23. This will lead to a pay-out of Rs10,986 crore. The company has fixed 29th March, 2023 as the record date for determining eligible shareholders for the proposed dividend. In the last 12 months, HZL has declared equity dividends of Rs49.50 per share, which at the current market price of Rs310.60, translates into a dividend yield of 15.94%. There is not much clarity on the government divesting its residual stake in HZL.

According to a recent report by BOFA Securities, the Nifty-50 index was likely to close flat in FY23, making it the worse yoy performance in the last 7 years. It is also likely to underperform other emerging markets. The sell-off has been quite intense in the front line stocks during the current fiscal, despite a recovery in FPI flows in the second half of 2022. However, fears of global recession combined with the recent banking crisis in the US has again triggered risk-off sentiments. Nifty would likely close marginally lower for FY23.

GMR Airports Infrastructure, the group holding company, announced its merger with GMR Airports Ltd. The latter operates the Delhi and Hyderabad airports; with French airport operator (Groupe ADP) the second largest shareholder. Post the merger, the GMR group will hold 33.7% in GMR Airports Infra Ltd, while Groupe ADP will hold 32.3%. This merger will help the group to simplify its corporate structure and strengthen the balance sheet. Both GMR and Groupe ADP have plans to aggressively scale up in India.

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