It was Black Monday all over again on 14-February as the Sensex lost over 1,747 points or over 3%. The total wealth depletion in the day was close to Rs.847,000 crore. The VIX spiked by 23% in a single day on the back of global nervousness amidst rising tensions between Ukraine and Russia. The fears were made worse on expectations that the Fed would turn aggressive on rate hikes in March. Meanwhile, to add to India’s cup of woes, the price of Brent Crude crossed $96/bbl. Digital stocks took a hard hit on Monday.
CPI inflation for Jan-22 moved higher to 6.01%, slightly above the upper tolerance limit of the RBI. While fuel prices tapered in the month, food inflation remained elevated and core inflation shot up to over 6.2%. That was not too surprising considering that US inflation for Jan-22 had come in at 7.5%. This does raise questions about the feasibility of the RBI inflation target of 4.5% for FY23. In the Feb-22 policy, the MPC maintained status quo on rates, but it is unclear how long that stance can continue with 6.01% inflation.
Coal India reported 48% higher net profits at Rs.4,558 crore for the Dec-21 quarter. Even the revenue from operations on a consolidated basis rose 20% at Rs.28,434 crore. CIL also declared an interim dividend of Rs.5 per share. Raw coal output in the Dec-21 quarter was up 4.5% at 163.82 MT. The offtake of raw coal was sharply higher by 12.5% at 173.77 MT. Currently, Coal India accounts for almost 80% of the total domestic coal output, with the balance 20% coming from captive mines as well as Singareni Collieries Ltd.
Vedanta signed an agreement with Foxconn to manufacture semiconductors in India. Currently, the world is going through a tremendous shortage of semiconductors with fresh capacities likely to come up only in the next 3-4 years. Vedanta plans to avail the benefits of the Rs.76,000 crore PLI scheme. There has been a surge in demand for semiconductors from automobiles, electronic goods, white goods etc. Vedanta will be the majority stakeholder in the JV. This is the first electronics manufacturing JV post PLI announcement.
Eicher Motors reported 14% lower net profits at Rs.456 crore for the Dec-21 quarter. However, profits were 22% higher on a sequential basis. Revenues were higher by 2% at Rs.2,881 crore yoy. The decline in profits was due to a combination of raw material inflation, lower volumes and semiconductor shortages. The company did manage price hikes which boosted sales. Eicher is currently working on an alternative vendor ecosystem to mitigate supply chain constraints. EBITDA fell 13% to Rs.582 crore in Dec-21 quarter.
Tata Sons announced the appointment of Mehmet Ilker Ayci as the new CEO and Managing Director of Air India. Mehmet Ilker Ayci was formerly the Chairman of Turkish Airlines. Ayci will take charge in Apr-22. He is said to be the brain behind the turnaround of Turkish Airlines and its positioning among the preferred airlines in the world. Ayci has also been closely advising Erdogan of Turkey on critical economic and business policy matters. Air India had recently become part of Tata group via competitive bidding.
In the midst of the carnage in the markets, recent IPO listings took it on their chin. Many of the digital names like Zomato, Nykaa, and Paytm touched all-time lows on 14-Feb. Even other recent IPO listings like Data Patterns, Star Health, Glenmark Life, Nuvoco Vistas and Suryoday SFB touched new lows on Monday. The price of Zomato has more than halved since its recent peak and Paytm is down over 60% from its IPO price. Even Nykaa has now lost more than 40% from its recent peak levels. Margins are under pressure.
Jio Platforms invested $200 million in Glance, an artificial intelligence-powered lock-screen platform. The proposed investment will catalyse Glance’s launch in several key international markets, including the US, Brazil, Mexico and Russia. Glance creates live content and commerce ecosystem on the lock screen. Glance basically unlocks the power of the lock screen for live content, creator-driven entertainment commerce and gaming. Glance is the default option in 65% of new smartphones that are sold in India.