Stock Market Investment Shot, 7th June 2023

According to the latest World Bank Global Economic Outlook, the world economy is expected to sharply slow during the year due to high interest rates and the repercussions of the Ukraine war. Global growth is expected to fall to 2.1% in 2023 after growing at 3.1% in 2022. However, the World Bank expects growth to accelerate to 2.4% in 2024. While the US is expected to grow at 1.1% the Euro Zone is expected to grow at just about 0.4% this year. World Bank upgraded China GDP growth for 2023 to 5.6% from 3% in 2022.

Brent Crude prices lost more than $1/bbl on Tuesday as concerns over weak global economic growth outweighed the decision by Saudi Arabia to cut output further. This fall comes after Brent had rallied $2.60/bbl on Monday after Saudi Arabia had announced the supply cuts. The oil markets are concerned about lower than expected growth in China, which remains one of the biggest markets for oil. Also, higher interest rates in coming months are expected to weaken oil demand. Germany also reported slowdown.

In a relief to rating agency, Brickwork Ratings, the Securities Appellate Tribunal (SAT) quashed the SEBI order cancelling the license of Brickwork. While the SAT also admitted to lapses and violations, it felt that the cancellation of license was too draconian a measure. SAT felt that not meeting rating criteria or failing to comply with timelines could not be grounds for cancellation of license. Brickwork failed to recognize default in the case of companies like IKF Finance, SREI Infrastructure Finance, Sintex, and Reliance Capital.

After more than 20 years, Bank Nifty F&O contracts will move out of Thursday settlement and into Friday settlement. The changes will be effective from Friday, July 7, 2023 with the first Friday expiry falling on July 14, 2023. Going ahead, Friday will be the expiry for weekly, monthly, and quarterly F&O contracts of Bank Nifty. The Thursday expiry had been introduced in 2000 when the markets had not moved to rolling settlement cycle. The move is likely to benefit brokers and exchanges but is likely to be neutral for traders.

The government is expected to commence global roadshows for the sale of residual 29.54% stake in HZL. Currently, Hindustan Zinc Ltd (HZL) is majority owned by the Vedanta group with the government having just 29.54% in the company. Earlier, Vedanta had wanted to transfer all its zinc mining assets into HZL, a move which had been opposed by the Indian government. DIPAM is now looking at expediting an OFS, which will be sold to institutional and retail investors. Roadshows will be across Asia, Europe, and the US.

Indian government will offer incentives worth Rs3,760 crore to as incentives to companies setting up battery storage projects. It should have a minimum capacity of 4,000 megawatt hours (MWH) under the PLI scheme. This is likely to boost battery storage projects and cut costs sharply. Typically, in renewable energy, battery storage is used to back up intermittent renewable power supply to stabilise the grid. This is still an evolving technology and the supply of high quality and economical batteries is the key to success.

In a bid to control inflation, RBI has intensified its operations to suck out surplus liquidity from the banking system. In all, the RBI proposes to drain $9 billion of liquidity from the banking system through reverse repo auctions. Even as the RBI has stopped rate hikes, it is continuing its fight against inflation through the tightening of liquidity levers. Since the RBI is consistently buying dollars in the market to manage the rupee range, it is infusing a lot of rupee liquidity into the system. Liquidity will be key in the RBI policy.

Aditya Birla Group is foraying into the branded jewellery retail business with an outlay of Rs5,000 crore. It will build large-format exclusive jewellery retail stores across India. This is an area that is dominated by Titan in the organized space and now Reliance is getting into that space in a big way. Aditya Birla Group will be tapping the growing demand for design-led, bespoke, and high-quality jewellery in India.  Earlier, the group had diversified in a big way into paints and B2B ecommerce. Jewellery is the third such foray.

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