For the week ended 14th October, combined market value of 6 out of the 10 most valuable companies on the NSE by market lost Rs78,163 crore. The big loser for the week was Reliance Industries ceding Rs42,113 crore. Among others; Bharti Airtel lost Rs15,160 crore, ICICI Bank Rs8,272 crore, Hindustan Unilever Rs5,404 crore, Bajaj Finance Rs4,268 crore and SBI Rs2,945 crore. Among gainers, TCS added Rs11,965 crore, Infosys Rs9,384 crore, HDFC Bank Rs5,793 crore and HDFC Ltd Rs3,326 crore, in a data heavy week.
The proposed merger between HDFC Bank and HDFC Ltd may be completed a few months earlier as per the CFO of HDFC Bank. NCLT has already approved the shareholder meeting on 25th November to approve the merger. The total merger deal is valued at $40 billion. HDFC Bank has requested RBI for permission to meet the CRR and priority sector targets in a phased manner, considering the size of the combined entity. The latest quarter results of HDFC Bank saw a spike in NIMs and a fall in the gross NPAs for the quarter.
Having tasted success in its production linked incentives (PLI) scheme, the government is now planning to extend Rs35,000 crore more under the PLI scheme to sectors like leather, bicycles, vaccine materials, toys and telecom products. The idea of the PLI scheme is to boost domestic manufacture. The PLI scheme is currently operational for 14 sectors with a total outlay of Rs2 trillion, which will now stand enhanced to Rs2.35 trillion. The PLI scheme also aims to make Indian manufacturers globally competitive and get FDI.
The recession may hit IT spending but it is a blessing in disguise for IT companies in a different way. It is likely to reduce the attrition rates in IT sector. For the Q2FY23, attrition is over 20% on an average, with Infosys facing attrition of over 27%. The technology job market had awfully overheated in the last few quarters, but now it has started cooling down. With supply catching up, the pressure to poach talent at any price, is vanishing. Most of the IT companies have also trimmed their fresher recruiting programme.
Foreign portfolio investors (FPIs) pulled out almost Rs7,500 crore from Indian equities in the first half of October 2022. This is amidst concerns over monetary policy tightening by the US Fed and fears that the RBI would also follow suite. The weakness in the Indian rupee to 82.5/$ is also dampening the sentiments of the FPIs. The risk off trade is still own with concerns of lower profits in Q2FY23 also worrying FPIs. The month of September was a big disappointed where FPI sold $2.4 billion in last 10 days to end as net sellers.
India plans to totally end import of thermal coal by FY25. For FY23, India will produce 900 million tons of coal with another 163 mines being auctioned. India has been one of the few countries among the EMs to actually make a big commitment towards arresting the impact of climate change. As of now thermal coal is the key input to fire coal based plants, and the global prices of coal have shot through the roof due to a global shortage of commodities. Currently, coal imports are leading to inflation being imported into India.
It looks like the festive season has brought cheer to the consumer good industry. As per data put out by CAIT, total sales of consumer goods in the current festive season till December is expected to be Rs2.50 trillion. There has been double digit volume growth in home appliances, television sets, FMCG products, apparel etc. The recent 4% hike in the DA to government is also likely to boost entry level spending by the government servants and pensioners. Last 2 years had been weak festive seasons due to the COVID scare.
With the OPEC supply cut and risks of global oil prices going up, the government raised the windfall tax. The tax on extracted crude oil was raised 37% to Rs11,000 crore by about 37% to ₹11,000 per tonne. The government reimposed SAD on ATF at Rs3.50 per litre with the additional excise duty on diesel exports has been doubled to Rs10.50 per litre. Russia has already pressured the OPEC Plus to cut supplies of crude by 2 million bpd. Since recession fears may not keep oil prices low, a hike in windfall tax was inevitable.