Market Pulse | 9th February, 2024

ECONOMIC HIGHLIGHTS

India

•RBI holds rates, keeps focus on 'last mile of disinflation’: RBI left rates unchanged at 6.5% signaling that interest rate cuts may be some time away as it focuses on the last mile of disinflation towards its 4% medium-term target and the economy remains resilient.

•January services growth at a six-month high on robust demand –PMI: New business expanded at a faster pace and managers' expectations for future activity was strong. The new export business index accelerated, signaling that India's services exports remained robust.

Global Highlights

•China's consumer prices suffer biggest fall since 2009 as deflation risks stalk economy: China's consumer prices fell at their steepest pace in more than 14 years in January while producer prices also dropped, ramping up pressure on policymakers to do more to revive an economy low on confidence and facing deflationary risks.

•US weekly jobless claims stay low despite high-profile layoff announcements: The number of Americans filing new claims for unemployment benefits fell slightly more than expected last week, pointing to underlying labor market strength despite a recent surge in announced layoffs, mostly in the technology industry.

•US credit issuance breaking records as healthy economy emboldens investors:  The U.S. corporate bond market is set to break new issuance records as borrowers take advantage of lower financing costs than last year and investors, emboldened by the prospect of an economic "soft landing," pile into the asset class.

•UK labour market loosens in January, pay growth ebbs: Britain's labour market cooled in January as pay growth in new permanent jobs eased to the lowest level in almost three years. This might boost Bank of England officials' confidence that inflation pressures are subsiding.

•BOJ on track for policy shift by April, helped by wage outlook: The Bank of Japan is laying the groundwork to end negative interest rates by April and overhaul other parts of its ultra-loose monetary framework but is likely to go slow on any subsequent policy tightening amid lingering risks.

MARKET HIGHLIGHTS

•SIP At Record Levels: ₹18k Cr For 1st Time, Equity mutual fund inflows jump to nearly two-year high in Jan: Small-cap funds recorded the highest investments among equity-oriented schemes for the 16th straight month at 32.57 billion rupees. Inflows into mid-caps rose 48% month-on-month to 20.61 billion rupees, while large-caps inflows hit a 19-month high in January. Moreover, monthly Systematic Investment Plan (SIP) contributions reached an all-time high of Rs 18,838 crore, surpassing December’s Rs 17,610 crore. SIP accounts surged to 7.92 crore in January along with a 51.84 lakh new SIP registrations milestone.

•Tata Group becomes 1st Indian conglomerate to cross Rs. 30 lakh crore mcap: The market capitalization of the Tata Group, comprising 18 firms, crossed ₹30 lakh crore intra-day on Tuesday. Shares of Tata Motors India's most valuable carmaker, hit a record high after it reported a more than two-fold increase in third-quarter profit, driven by strong sales in its British luxury car unit, Jaguar Land Rover (JLR). TCS, which accounts for half of the group’s market value, its market-cap went past ₹15 lakh crore for the first time

•ITC posts worst single-day percentage fall in two years: ITC tumbled 4%, marking its worst day in two years, after its top shareholder, British American Tobacco announced plans to monetize some of its stake.

•Dynamatic Tech shares hit record high as it is to make all Airbus A220 door variants in India: Aviation parts maker Dynamatic Technologies and Airbus inked a deal to make all door variants for its A220 planes in India as the French planemaker looks to boost its sourcing of parts from the country. The contract awarded to Dynamatic is the biggest one so far by Airbus for doors.

•Indigo, SpiceJet shares fall on proposal to cap airfares: A Parliamentary panel proposed route-specific capping of airfares and setting up of a separate entity to exercise control over air ticket prices, amid concerns in various quarters about surging fares.

•Inox Wind to execute India's single largest wind project order of 1,500 MW from CESC, stock hits all-time high: Inox Wind shares hit their all-time high on February 8 after the company said it has signed a binding framework agreement with power utility CESC Limited to install 1,500 MW wind capacity over the next three to four years. This is India's single largest wind order by any wind original equipment manufacturer (OEM).

•IOB rallies 42% since last Friday, 70% in 2024: Last month, the bank reported a 30% increase in its net profit to Rs 723 crore for the December quarter of 2023–24, compared to Rs 555 crore logged in the same quarter a year ago. This was mainly due to core income improvement and a decline in bad loans.

QUARTERLY RESULT HIGHLIGHTS

•Welspun Corp posts skyrocketing Q3 profit on strong demand: Steel pipes maker reported an over twelve-fold jump in third-quarter profit as strong demand for its pipes across sectors more than offset a surge in costs. Steel consumption in India, the world's second-biggest crude steel producer, jumped during the period, reflecting buoyant demand in one of the world's fastest-growing economies as pre-election spending by the government remained strong.

•Consumer goods sector sales slow down, but rural areas show recovery signs: Sales volume growth in the Oct-Dec quarter for the sector slowed even as rural regions bridged the gap with thriving urban areas. Packaged food manufacturers, including Saffola cooking oil-maker Marico and biscuits-maker Britannia Industries, have cut prices on the back of easing commodity prices to better compete with smaller rivals. Consumer goods majors Hindustan Unilever, Pepsi India bottler Varun Beverages, Adani Wilmar, and ITC have so far reported mixed results for the December quarter. Meanwhile, Dabur India said growth in rural areas outpaced urban pockets.

•State Bank of India misses forecast as Q3 net profit drops 35%: The country's largest lender SEBI reported an unexpectedly steep 35% drop in net profit for the October-December quarter, weighed down by higher pension costs and wage revisions.

•3M India posts smallest profit growth in nine quarters as costs bite: Diversified products maker 3M India posted its smallest profit growth in nine quarters, as surging input costs countered sustained demand for its core products.

•Pepsi India bottler Varun Beverages' Q4 profit surges 77% on upbeat demand: Varun Beverages saw a double-digit volume growth across domestic (urban markets especially) and international markets even as higher costs of essentials weighed on consumers.

•Delhivery posts first-ever quarterly profit on the back of festive season demand: Logistics firm Delhivery posted its first-ever quarterly profit since listing helped by healthy demand for online shopping during the festive season. Consolidated profit for the three months ended Dec. 31 was 117.1 million rupees ($1.41 million) compared with a loss of 1.96 billion rupees a year earlier

•Agro-chem firm UPL posts quarterly loss on weak demand: India's top agrochemicals firm, reported a quarterly loss as it continued to grapple with inventory destocking and weak demand for its crop protection products. The herbicides and insecticides maker reported a net loss of 12.17 billion rupees ($146.84 million) in the quarter ended on Dec. 31, compared to a profit of 10.87 billion rupees a year ago. This is the company's second consecutive quarterly loss.

SECTOR HIGHLIGHTS

•Public sector banks, which have rallied 20% in 2024 so far, gained this week as the sector’s reasonable valuations and stable earnings outlook have made it an attractive option in an otherwise expensive market 

•The IT index rose 3.6% after as IT bellwether TCS’ market value crossed the Rs 15 lakh crore milestone for the first time. Strong data from the U.S. services sector provided further evidence of strength in the world's largest economy, a key geography for India's software companies. Meanwhile, data showed foreign portfolio investors added IT stocks worth 44.85 billion rupees ($540.01 million) on a net basis in January despite selling in other major sectors, indicating steady inflows into IT. However, global major Cognizant reaffirmed weakness in client spending in its quarterly earnings results and gave a weak revenue forecast for 2024.

•Health insurance stocks jumped on February 6th after a government panel recommended a reduction in goods and services tax rate on health and term insurance products. HDFC Life Insurance added 5.22% and was the second-highest percentage gainer on Nifty 50.

•The oil and gas index surged as the Prime Minister at the Indian Energy Week said government reforms are helping boost domestic natural gas production, and the country will see investments to the tune of $67 billion (about Rs 5.5 lakh crore) over the next 5-6 years as it gears up to increase the share of gas in its primary energy mix. Since their quarterly results in the final two weeks of January, BPCL, HPCL, and IOC have climbed between 17% and 35%.

BUSINESS-INDUSTRY UPDATES

•India eyes $100 bln investment deal with Switzerland, Norway: India is close to finalizing a trade deal that could see the European Free Trade Association (EFTA), which includes Norway, Iceland, Liechtenstein and Switzerland to invest as much as $100 billion over 15 years for easier trade access to the country.

•HDFC Bank, group companies get RBI nod to acquire up to 9.5% stake in six banks: HDFC Bank, including group companies HDFC Mutual Fund, HDFC Life Insurance and HDFC ERGO General Insurance, have received the RBI's approval to acquire an aggregate stake of up to 9.5% in six banks- ICICI Bank, Axis Bank, IndusInd Bank, YES Bank, Bandhan Bank and small finance bank Suryoday SFB.

•More Indian asset managers shift overseas business to GIFT City: Several Indian asset managers said they are moving, or planning to move, some offshore fund business from financial centers such as Dubai and Singapore to a finance hub in the western state of Gujarat to gain better access to India's capital markets. The govt is promoting the Gujarat International Finance Tec-City, or GIFT City, as a "gateway for global capital and financial services for the economy" and is trying to attract companies through tax breaks and other incentives.

•IndianOil-Adani Gas JV to invest $300 mln to double gas sales: Indian Oil-Adani Gas Pvt Ltd will invest 25 billion rupees ($301.24 million) over four years as it looks to double gas sales to small industries and households