Foreign investors have now upgraded India as a dedicated portfolio allocation. Previously, only China was a dedicated country allocation and the rest were clubbed under the category of Emerging Markets. Now, India will be a distinct asset class for global investors. India equities have outperformed most global markets and is supported by 7% GDP growth, which makes India the fastest growing large economy. This is also a bet on growing equity cult in India and its ability to boost market cap as GDP races to $5 trillion.
For the previous week ended 02nd December, 8 out of the top-10 most valuable Indian companies by market cap, added Rs115,837 crore in value. All stocks other than HDFC twins surged in the week. The big gainer was Reliance Industries which added Rs71,462 crore in market cap. Among others, HUL gained Rs18,491 crore in value, TCS Rs18,442 crore, Infosys Rs3,304 crore and Adani Enterprises Rs2,063 crore. Among value losers, HDFC Bank ceded Rs5,418 crore while HDFC gave up Rs2,283 crore in market cap.
With G7 and EU zeroing in on an oil price cap of $60/bbl for Russian crude, battle lines are drawn. Russia has refused to accept this price cap; and it was relatively OK with $70/bbl indicated last week. Now, Russia is also willing to shut the taps supply oil to Europe, which could trigger a major crisis in global oil markets. The EU itself is divided on how harsh it should be on Russia. The price cap comes with restrictions on banks, insurers and ships accepting any oil cargo from Russia where the crude is priced at above $60/bbl.
State Bank of India raised Rs10,000 crore through its first issue of infrastructure bonds. This will fund the projects in power and roads. The coupon is attractive at 7.51%, which is 17 bps above the 10-year yields. The 10-year paper had an original collection target of Rs5,000 crore with Greenshoe option to retain another Rs5,000 crore. The issue overall got subscribed 3.27 times, which is not surprising considering the rather attractive yields and the AAA credit rating assigned. It will also help its maturity profile of funding.
The government launched the fourth tranche of Bharat Bond ETF on (Dec 02nd-08th) and maturing in April 2033. Edelweiss AMC is managing the Bharat Bond ETF. For investors, the Bharat Bond ETF offers reliability and tax-efficiency as well as the stability of debt. Till date Bharat Bond ETFs have AUM of Rs50,000 crore and the latest tranche plans to raise Rs1,000 crore with a Greenshoe option for another Rs4,000 crore. It will comprise AAA-rated public sector undertakings with indicative yield of 7.5% and works like an FMP.
FPIs pumped Rs36,239 crore into equities in November 2022, the second best flow this year since infusing over Rs51,000 crore in August. Indian equities saw a fair share of money from FPIs, even amidst high valuations. On the last day of November, the net FPI inflows were over Rs9,700 crore on account of MSCI realignment flows. The FPI buying in November 2022 was focused on financials, IT, autos, FMCG, capital goods and telecom. FPI flows got a boost from Powell talking of rates peaking and dollar index retreating.
NTPC is talking to investors for capitalizing its subsidiary, NTPC Green Energy Ltd (NGEL). It may look to raise around Rs3,000 crore by March 2023. Several pension funds and equity investors evinced interest about investing in NGEL. By 2032, NTPC targets that 45% of its total proposed power capacity of 60 GW will be in renewable energy. Obviously, NGEL has a big role to play. The government wants that NTPC must contribute not less than 25% to the total national capacity. NTPC will be raising capacity aggressively.
Apple is accelerating plans to shift production out of China. For long, China was the dominant country in the Apple supply chain. They now want to focus less on China and Taiwan and more on Vietnam and India for sourcing. The recent protests at its Foxconn factory in China has made Apple cautious about betting too much on China. Post COVID, China’s claims to being the preferred global factory has been fading. Also, recent COVID restrictions in China have caused huge disruption to the supply chains. The action is shifting.