Stock Market Investment Shot,23rd November 2022

The PSU bank index touched a new high on Tuesday and has since surged by 73% from, is yearly lows. This is largely on the back of strong earnings in Q2FY23. In the last one month alone, PSU banks have rallied by 31% against the index rally of just 2.8%. Some of the banking stocks like Union Bank, Bank of India and UCO Bank have surged between 50% and 65% in the last one month. Apart from improved NIIs and wider NIMs, the PSU banks also benefitted from lower provisioning and a sharp fall in the level of gross NPAs.

Paytm, which trades as One97 Communications, touched a new life time low of Rs476 and closed the day just around that level. Its market cap at Rs30,971 crore has now lost more than Rs1 trillion since its listing last year. Compared to the issue price of Rs2,150, the stock is now down a full 77%. The lates sharp fall came from two factors. Firstly, there has been a surge in selling by early investors on the expiry of lock-in. Secondly, Macquarie has highlighted that Jio Finance could prove to be a very potent threat to Paytm.

Vedanta Ltd approved the 3rd interim dividend of Rs17.50 per share for FY23. The total dividend payout will be to the tune of Rs6,505 crore. Two Anil Agarwal group companies viz. Vedanta Ltd and Hindustan Zinc Ltd have been among the most liberal dividend payers in India. Dividends are normally value neutral since the cash goes out of the business and depletes overall value. For FY23, Vedanta had declared first and second interim dividends of Rs31.50 and Rs19.50 per share. Till date total dividends is Rs68.50/share.

FSN Ecommerce, the owner of beauty e-retailer Nykaa, has announced that its chief financial officer (CFO) Arvind Agarwal had resigned from the company. Nykaa has been in the thick of controversy after the sharp fall in price and also the rather controversial timing of the dividend declaration which prevented retail investors from selling due to the impact of capital gains tax, without benefit of set-off. Agarwal had joined as the CFO of Nykaa in July 2020. The digital space has seen a slew of senior exits in recent weeks.

Telecom companies asked the government to give clarity on definition of adjusted gross revenue (AGR), the basis for additional taxes imposed by government. Telecom players are seeking refund of Rs32,000 crore of input tax credit on goods and service tax. As part of their budget demands, the telecom sector has asked for removal of GST on license fees and spectrum usage charges, while seeking reduction in custom duties on imports of key 5G network equipment. These were all part of FM pre-budget interaction.

For the month of October 2022, domestic air passenger volumes grew 10% MOM with airlines carrying 114 lakh passengers. The data was released by DGCA. On a yoy basis, the growth was 27%. The domestic air traffic number stood at 103.55 lakh in September 2022. However, air traffic is still lower than the pre-COVID levels of 123.16 lakh passengers seen in October 2019. In terms of market share, Indigo share dipped to 56.7% and Vistara dropped to 9.2%. Akasa and Air Asia gained market share in October 2022.

If Meta, Twitter and Amazon can play mass lay-offs, then Google cannot be far behind. Now, Google is planning nearly 10,000 lay-offs although it calls it performance based. There has been pressure from a major hedge fund investor in Google to cut down on costs. Till date, the tech sector has already laid off around 135,000 workers. Normally, Google identifies 2% bottom performers, but this year manages have been asked to identify 6%. Average salaries at Google are nearly 70% higher than that of Microsoft staff.

Deal street is not doing too bad amidst global headwinds. For October 2022, number of deals by India Inc fell 42% while deal volumes fell 77%. A total of 129 deals were signed in October worth $2.1 billion. In contrast, October 2021 had seen deals worth $9.1 billion. There was an absence of big ticket transactions, which is understandable. However, YTD performance for 2022 has been at par with 2021, which is a good signal. The biggest in October was the $250 million deal between Torrent Pharma and Curatio Healthcare.

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