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Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW Private Equity:
The market has been facing downward pressure post touching its all-time high in October. While, the economy has been recovering on expected lines, the global cues indicating the unwinding of balance sheet expansion by central banks around the world have been a major factor.
In this context, the US Fed’s hawkish stance has not been a surprise, but the negative market reaction today is primarily due to the indication of balance sheet reduction in the Fed minutes released yesterday. Almost all members showed concern on rising inflation and the possibility of accelerating rate hikes followed by a reduction in the balance sheet.
Although the timing remains uncertain, market participants are now expecting this to happen sooner than later. In addition, the rising cases of COVID-19 around the globe has also increased the risk levels. Overall, we remain cautious in the markets right now.
Buzzing:
Shares of NHPC advanced 3 percent on January 6 after company signed an agreement with Green Energy Development Corporation of Odisha (GEDCOL) for formation of a JV company for development of 500 MW floating Solar Power Projects in various water reservoirs in the State of Odisha.
ADF Foods gets govt approval under PLI scheme for food processing industries
ADF Foods Industries share price rose 2 percent on January 6 after company received approval from the Government of India under Production Linked Incentive (PLI) scheme for food processing industries.
“ADF Foods Industries has received approval from the Government of India under Category III pf the PLI scheme for food processing industries – incentive for undertaking branding and marketing activities abroad,” company said in its release.
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SBI Life Insurance, Godrej Consumer Products, UPL, Cipla, Bajaj Auto and Tata Consultancy Services are among the top chart picks of KRChoksey for an upside of up to 40 percent.
Market at 12 PMBenchmark indices extended the fall and trading at day’s low level with Nifty below 17,700.The Sensex was down 872.80 points or 1.45% at 59350.35, and the Nifty was down 253.70 points or 1.42% at 17671.60. About 1548 shares have advanced, 1488 shares declined, and 99 shares are unchanged.
Reliance Industries raises USD 4 billion in US dollar bonds in 3 tranches
Reliance Industries successfully priced fixed rate senior unsecured notes for an aggregate amount of USD 4 billion across three tranches.
The Notes were nearly 3 times oversubscribed with a peak order book aggregating ~ USD 11.5 billion and were priced through RIL’s secondary curve
“We are extremely pleased with the strong outcome on our multi-tranche long dated USD bond issuance, having issued not only the largest debt capital market transaction at US$4 billion but also the tightest credit spreads across each of the long-dated tenors for any corporate in India,” said Srikanth Venkatachari, Joint Chief Financial Officer, RI.”
Reliance Industries was quoting at Rs 2,425.20, down Rs 40.85, or 1.66 percent on the BSE.
Asian shares fall after hawkish Fed minutes
Asian shares fell on Thursday, extending a global slump after Federal Reserve meeting minutes pointed to a faster-than-expected rise in US interest rates due to concerns about persistent inflation.
Worries over higher US rates combined with growing concerns about the rapid spread of the Omicron coronavirus variant to weigh on riskier assets.
Asian shares took their cue from overnight losses on Wall Street. The Nasdaq plunged more than 3% on Wednesday in its biggest one-day percentage drop since February and the S&P 500 fell the most since Nov. 26, when news of the Omicron variant first hit global markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.95%, Australian shares slid 1.53% and Japan’s Nikkei stock index fell 2.08%.
Chinese blue-chips fell 1.37% as a private sector survey showed China’s service sector activity expanded more quickly in December, but continuing COVID-19 outbreaks weighed on the outlook.
Amit Pabari, MD at CR Forex Advisors
After trading on a positive note yesterday due to the selling of dollars by a couple of big corporates, today the Indian Rupee is expected to trade in the range of 74.25 to 74.75 with a depreciating bias.
Fed meeting minutes suggest that officials are ready to aggressively dial back their bond-buying and go for rate hike immediately. Chances of a rate hike in March jumped to 70% from near 25% a month ago. The US yield curve is flattening again, 10-year yield rising to 1.71% – highest level since Apr-2021. Following a hawkish minutes, equities fell sharply, especially Tech stocks on the back of rising yields.
Locally, depreciating factors could be widening trade deficit for the fourth straight month above $19 billion, sluggish services PMI data and a double digit food prices. Further, domestic COVID cases are increasing exponentially and could lead to tighter state-wise restrictions. This could hamper the business activity and cut down the growth by atleast 40-50 bps.
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HDFC Securities on Thyrocare Technologies: We believe Thyrocare Tech is on a strong footing on the back of steady recovery in core business, likely increase in B2C share, opening of regional labs and expansion of branded franchisee centres which would aid volume growth. API Holding’s technology and digital products will also bring necessary digital capabilities to Thyrocare’s business. Wider product/service offerings and inclusion of specialised test profiles would
improve its realisations once it reaches scale.
Structural tailwind around shift from unorganized business to organized players, potential consolidation, likely increase in preventive check-ups and sizeable scale would benefit large organized players like TTL. Revenue from Covid tests which has been a large proportion of revenues in FY21 and likely in FY22 (given the recent spread of Omnicron variant) may not recur in FY23/FY24 to the same extent and hence the revenue growth post FY22 may not be very exciting unless compensated by other initiatives/synergy benefits with PharmEasy.
Considering the strong historic growth profile, well-established brand image and robust return ratios, we believe that there is a scope for re-rating of this stock. We think the base case fair value of the stock is Rs 1208 (35.5x Dec’23E EPS) and the bull case fair value is Rs 1310 (38.5x Dec’23E EPS) over the next two quarters. Investors can buy the stock in the band of Rs 1082-1088 (31.8x Dec’23E EPS) and add on dips to Rs 968-972 band (28.5x Dec’23E EPS).
Market at 11 AMBenchmark indices were trading near the day’s low point with Nifty below 17700.The Sensex was down 825.75 points or 1.37% at 59397.40, and the Nifty was down 233.90 points or 1.30% at 17691.40. About 1396 shares have advanced, 1607 shares declined, and 81 shares are unchanged
