Market Pulse | 22nd November, 2024
Prabhudas Lilladher Private Limited
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ECONOMIC HIGHLIGHTS
INDIA
·India will offer up to $5 billion in incentives to companies to make components locally for gadgets from mobiles to laptops, two government officials said, in a bid to bolster the burgeoning industry and wean off supplies from China.
·India's electronic production has more than doubled in the last six years to $115 billion in 2024, led by growth in mobile manufacturing by global firms such as Apple and Samsung.
·It is now the world's fourth-largest smart phone supplier. But the sector faces criticism for its heavy reliance on imported components from countries such as China. The plan, designed by the India's electronics ministry, has identified components eligible for incentives and is in its final stages.
·The finance ministry will approve the scheme's final allocation soon, the first official added, with the sources expecting it to be launched in the next 2-3 months.
·HSBC's flash India Composite Purchasing Managers' Index, compiled by S&P Global, rose to 59.5 this month from October's final reading of 59.1, taking the expansionary streak to 40 months.
·The 50-level separates growth from contraction. "Services saw a pick-up in growth, while the manufacturing sector managed to outperform expectations despite a marginal slowdown from its October final PMI reading," noted Pranjul Bhandari, chief India economist at HSBC.
·Overall domestic demand rose thanks to better sales in the services industry offsetting slower manufacturing orders growth, but overseas demand improved for both sectors with the latter's exports accelerating to a four-month high.
·That boosted the business outlook for the coming year as overall optimism rose to the highest since May, prompting companies to ramp up hiring.
·Led by services firms, employment generation rose at the fastest pace since the survey began in December 2005, a positive indicator of economic health and consumer spending power.
?The Indian rupee weakened to its lowest level on record on Friday before ending higher as the central bank's intervention supported the currency in the face of the U.S. dollar jumping to a two-year high.
?The rupee weakened to a low of 84.5075 against the U.S. dollar before closing at 84.4450, up 0.06% on the day. The currency was marginally lower week-on-week.
?The dollar index climbed to a peak of 108.09 on Friday, its highest since November 2022, before paring gains to last quote up 0.5% at 107.69. The greenback was boosted by weakness in the euro and British pound following weak economic data for Germany and the?UK.
?The rupee, meanwhile, faced some pressure but managed to hold its ground, supported by the Reserve Bank of India's (RBI) dollar-selling interventions and its instructions to some banks to cut speculative bets against the local currency, Reuters?reported earlier.
?The Indian currency has outperformed its regional peers this month. Other Asian currencies have declined 0.9% to 2.2% so far in November.
?The RBI's routine interventions have helped the rupee weather the negative cues, traders said. Asian currencies were mostly weaker on the day, with the Korean won down 0.3% and leading losses.
?GLOBAL HIGHLIGHTS
?Gold jumps, on track for best week in over a year on safe-haven demand: Gold prices rose over 1% to hit a two-week peak on Friday, heading for the best weekly performance in more than a year, buoyed by safe-haven demand as Russia-Ukraine tensions intensified. Spot gold jumped 1.3% to $2,703.05 per ounce as of 1245 GMT, hitting its highest since Nov. 8. U.S. gold futures gained 1.1% to $2,705.30.Bullion rose despite the U.S. dollar hitting a 13-month high, while bitcoin hit a record peak and neared the $100,000 level.
?US weekly jobless claims at seven-month low; home resales rebound in October:? The number of Americans filing new applications for unemployment benefits fell to a seven-month low last week, suggesting that job growth likely rebounded in November after abruptly slowing last month amid hurricanes and strikes. Initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 213,000 for the week ended Nov. 16, the lowest reading since April. Labor market slack keeps the door open to a third interest rate cut from the Federal Reserve next month, despite a recent lack of progress lowering inflation to its 2% target.
?Solid US retail sales in October underscore economy's resilience: U.S. retail sales increased slightly more than expected in October as households boosted purchases of motor vehicles and electronic goods, suggesting the economy kicked off the fourth quarter on a strong note. Retail sales rose 0.4% last month after an upwardly revised 0.8% advance in September.?
?Japan's inflation holds above BOJ target, fanning Dec rate hike bets: Japan's core inflation in October held above the central bank's 2% target and a key index stripping away the effect of fuel accelerated keeping pressure on the central bank to raise its still-low interest rates. The data also showed continued gains in service prices, which are closely watched by the Bank of Japan (BOJ) for clues on whether firms were passing on rising labour costs, suggesting conditions for further rate hikes were falling into place. The readings will be among factors the BOJ will discuss at its next policy meeting on Dec. 18-19, when some analysts expect a hike in short-term rates to 0.5% from 0.25% as the central bank unwinds years of ultra-low rates.
?UK firms report first contraction since 2023 after budget, PMI shows: The new British government's plan to increase taxes on businesses contributed to the first contraction in private sector activity in over a year, after signs the economy was losing momentum even before last month's budget. The preliminary S&P Global Flash Composite Purchasing Managers' Index, published on Friday, fell to 49.9 in November from 51.8 in October.?It is the first time the index has been below the 50.0 no-change level in 13 months.The PMI also showed employers cut staffing levels for a second month in a row while the measure of overall new business was the weakest in a year. Investors have almost fully pricing in the Bank of England cutting interest rates to 4% by the end of 2025 from 4.75% now.
??? MARKET HIGHLIGHTS
?Biggest rally in five months: After seven weeks of correction, bulls roared back to life, delivering a stunning rebound and shrugging off fears, including Gautam Adani's bribery case, which rattled investors on November 21. Benchmark indices surged, with the Sensex gaining?nearly 2,000 points and the Nifty rising?over 550 points, marking their biggest single-day rally in five months as renewed buying swept across all sectors, fuelling the dramatic turnaround. Today’s rebound suggests the market has moved past the Adani issues and is looking ahead, said traders. While uncertainty over the Russia-Ukraine conflict and relentless FII sell-offs continues to loom, traders believe decisive triggers could shape the market's trajectory. In the near term, the Maharashtra election results are expected to play a pivotal role in steering sentiment, with the market seemingly pricing in a BJP win.
?Adani Group stocks go into a tailspin, crash up to 23% after US indicts Chairman and 7 others on bribery charges: Several Adani Group shares, including those of the flagship firm Adani Enterprises, suffered massive losses and hit their lower circuits in early trade on Thursday, November 21. This was after Gautam Adani had been indicted in New York over his role in an alleged multibillion-dollar bribery and fraud scheme. "A five-count criminal indictment was unsealed today in federal court in Brooklyn charging Gautam S. Adani, Sagar R. Adani and Vneet S. Jaain, executives of an Indian renewable-energy company (the Indian Energy Company), with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements," said a statement from US Attorney's Office, Eastern District of New York.
?One 97 Communications stock gains 3% as Paytm unveils UPI International: Shares of fintech giant One 97 Communications, owner of digital payment platform Paytm, jumped 3.02% to the day's high of Rs 839.30 on the BSE during intra-day deals on Thursday. The northward move in the stock price is fuelled by the news that the company has launched UPI International, allowing Indian traveller’s to make Unified Payments Interface (UPI) transactions in the 6 foreign countries. The new feature allows users to make cashless payments using the Paytm app in the Singapore, France, UAE, Mauritius, Bhutan, and Nepal. “As pioneers in mobile payments, we are thrilled to extend UPI International to Indian travellers. With this launch, we aim to enhance the convenience of foreign travel, empowering users to make secure, cashless payments across countries like the UAE, France, Singapore, and more. The upcoming holiday season will see this feature as a game-changer for travel enthusiasts,” a Paytm spokesperson said.
?Indian rupee hits fresh low amid US dollar rally and ongoing FPI selloff: The Indian rupee slipped to another fresh low of 84.50 against the US dollar in trade on November 22 as the greenback’s steady rise, persistent selling by foreign portfolio investors (FPIs), and escalating geopolitical tensions continued to weigh heavily on the local currency. The US Dollar index, which tracks the dollar’s performance against six major currencies, has gained 3.10% this month so far, nearing its highest level in two years. The dollar’s strength has been fuelled by expectations that President – elect Donal Trump’s policies could reignite inflation and reduce the likelihood of future US interest rate cuts.
?Adani group shares stage a sharp rebound; Adani Green Energy, Adani Enterprises, Adani Ports shares surge up to 6%: Adani group stocks, including Adani Enterprises, Adani Ports & SEZ, Adani Power and Adani Total Gas, staged a decent rebound from early losses to trade in the green on Friday. The price movement in Adani group shares comes after a sharp slump seen in the previous session following the latest news on Gautam Adani’s scrutiny by the US court. Adani Green Energy shares spiked over 6%, Adani Enterprises share price rallied nearly 4%, Adani Power shares,?Adani Total Gas shares gained over 3% each, while Adani Ports stock price gained over 2%. Ambuja Cement shares jumped more than 6%, while?ACC stock price spiked over 4% and NDTV share price gained over 2%.
?Mphasis stock gains over 3% on signing pact with MoneyGram Haas F1 Team: Shares of Mphasis rose 2.54% at Rs 68.95 per share on the BSE in Friday’s intraday deals. The information technology (IT) firm's share price surged after the company was named the ‘Official Digital Partner’ of MoneyGram Haas F1 Team.?Haas Formula LLC, operating as the MoneyGram Haas F1 Team, is a US-licensed Formula One team founded by Gene Haas, co-owner of a NASCAR Cup Series team, in April 2014. Mphasis said that it will collaborate closely with MoneyGram Haas F1 Team to develop solutions aimed at enhancing the team's performance on the track and driving operational efficiency off the track.?
?Paytm stock rises 6%, extends rally for 5 consecutive day on positive outlook: Shares of Paytm parent One97 Communications rose 6% to Rs 893 in morning trade on November 22, extending its rally for the fifth trading session in a row after Bernstein recently dished out a positive call on the fintech player. On November 22, international brokerage Bernstein reaffirmed its bullishness on Paytm as the narrative for the beleaguered fintech player changes from survival to optimism.?Bernstein hiked its target price on Paytm to Rs 1,000 per share, up from Rs 750 earlier. The sentiment has also stemmed from the National Payments Corporation of India's (NPCI) nod to?on-board new UPI users, nearly nine months after the Reserve Bank of India (RBI) placed an embargo on the addition of new customers.?
?NLC India shares rise 5% after emerging as top bidder for Odisha coal mine: Shares of NLC India climbed as much as 5% on November 22 after the company announced its emergence as the highest quoted (H1) bidder for the New Patrapara South Coal Mine in Odisha's Angul district. The designation follows the commercial coal block e-auction conducted by the Ministry of Coal on November 21. The New Patrapara South Coal Mine boasts a total geological reserve of approximately 720.9 million tonnes, with a peak rated capacity of 12 million tonnes per annum. Official confirmation of NLC India's successful bid from the Ministry of Coal is awaited. This would mark the company's third commercial coal mine as it continues to expand its capacity.
?Forex reserves see sharpest weekly drop on record, hit over four-month low: India's foreign exchange reserves logged their sharpest weekly fall on record to a more-than-four-month low last week, as the dollar strengthened following the U.S. election verdict, and the central bank sold from its reserves to limit the rupee's decline. The reserves fell by $17.8 billion in the week of Nov. 15 - the most since available data starting 1998 - to $657.89 billion, data from the Reserve Bank of India (RBI) showed on Friday.?Forex reserves have fallen by a total of nearly $30 billion in the last six weeks and are down by $47 billion from the record high of $704.89 billion hit in late September.
?Praj Industries shares fly 11% as Co expects to triple revenues by 2030: Shares of Praj Industries were in demand on Friday, November 22, 2024 as the scrip rallied 11.23% to hit an intraday high of Rs 751.85 per share.?The rise in the Praj Industries scrip came after the company said that it is expecting to triple its revenues by 2030, during a press conference. Moreover, Praj Industries is eying opportunities in multiple sectors including sustainable aviation fuel (SAF), biopolymers and the energy transition & climate actions (ETCA). Dr Pramod Chaudhari said, “The energy transition & climate actions (ETCA) sector which has a global potential and contains segments like blue and green hydrogen, green ammonia and west to energy solutions is expected to drive the growth. Globally, the energy majors are likely to invest close to Rs 25 lakh crore in the clean energy sector by 2030, whereas the traditional oil and gas market will continue to attract new investments to the tune of Rs 21 lakh crore in the next 10 years' time on the global front.”
?Ola Electric's shares gain on reports of layoff over 500 employees: Ola Electric Mobility shares rose 2.54% at Rs 68.95 per share on the BSE in Friday’s intraday deals. This came after reports emerged of the company planning to lay off around 500 of its employees.?According to reports, BhavishAggarwal led Ola Electric is undergoing a restructuring exercise impacting over 500 employees, approximately 12% of its 4,000-strong workforce. The process, initiated months ago, is expected to conclude next month.?"The objective is to eliminate redundant roles, enhance efficiency, improve margins, and achieve profitability," a source stated.
SECTOR HIGHLIGHTS
?Real estate stocks, saw strong investor demand on Friday, 22nd November, with the Nifty Realty index posting a 3.17% gain—its biggest single-day increase in the last six months. Nine out of the ten constituents of the index closed in the positive, with Raymond leading the way, surging nearly 16%. Sobha emerged as the second-best performer in the index, gaining 7.4%, reaching???1,629.30 per share, after the domestic brokerage firm Investec initiated coverage on the stock with a target price of???2,150 apiece.?Other stocks such as Phoenix Mills, Godrej Properties, DLF, Mahindra Lifespace Developers, Oberoi Realty, Brigade Enterprises, and Macrotech Developers closed with gains ranging between 1% and 6.1%.
?The Nifty IT index surged over 3 % on November 22, buoyed by robust labour market data from the US. Initial jobless claims in the US fell by 6,000 to a seasonally adjusted 213,000 for the week ended November 16, marking a seven-month low. This data suggests that US job growth likely rebounded in November after last month's slowdown caused by hurricanes and strikes. A stronger labour market in the US bodes well for Indian IT firms, which derive a significant portion of their revenue from the region.
?Gautam Adani's indictment in New York for his alleged involvement in a multi-million-dollar bribery and fraud scandal sparked a steep sell-off in Adani Group stocks and those of its major lenders. While Adani Group shares dropped by up to 20%, public sector lenders such as State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank (PNB) saw their stocks fall by as much as 7% on November 21st, Thursday.
?The?Nifty PSU Bank index also staged a sharp recovery on Friday, 22nd November, rising 2.99 % after falling nearly 5 % in the previous session. Banking heavyweights like State Bank of India (SBI) led the recovery, buoyed by value buying and renewed investor interest.
BUSINESS-INDUSTRY UPDATES
?UPL shares in demand after Alpha Wave Global buys 12% stake in subsidiary: Shares of agrochemical firm, UPL gained up to 3% at Rs 563.30 a piece on the BSE in Thursday’s intraday deals after the company on Tuesday announced an investment of $350 million by Alpha Wave Global, a leading global investment firm.?UPL, the agriculture solutions provider said that it has signed an definitive agreement with the investment firm under which Alpha Wave Global will invest $350 million to acquire approximately 12.5% stake in Advanta Enterprises, a subsidiary of UPL and a seed company that delivers innovative farming solutions and technology to farmers around the world. The transaction is a combination of a primary investment of $100 million and a secondary sale of shares of $250 million in Advanta by UPL. This transaction marks the second investment by a global investor in Advanta, following a $300 million investment by global investment firm KKR in October 2022.
?Tata Power share price rises 2% on inking $4.25 billion deal with ADB Bank: Tata Power's stock gained 1.7% in trade on Friday, November 22 after the company announced a landmark partnership with the Asian Development Bank (ADB). The two organizations signed a Memorandum of Understanding (MoU) to evaluate financing worth $4.25 billion for clean energy and infrastructure projects, the Tata Group company informed in an exchange filing on November 21. The announcement was made during the COP29 Climate Conference in Baku, Azerbaijan. The deal focuses on projects aimed at boosting India's renewable energy capacity. These include a 966 MW solar-wind hybrid system, a pumped hydro storage project, and upgrades to? Tata Power’s distribution network.
?Raymond gains 7% as BSE, NSE give nod to demerger & listing of realty biz: Raymond shares gained 7.1% in morning deals on Friday and clocked an intraday high of Rs 1,528.9 per share on BSE. The stock climbed after bourses gave a 'no objection' letter to the company for scheme of arrangement between the company and Raymond Realty. Raymond announced the vertical demerger of its Real Estate Business into its subsidiary, Raymond Realty. Upon completion of the demerger, Raymond Ltd and Raymond Realty will operate as separate listed entities within the Raymond Group.?The new entity will seek listing on stock exchanges and according to the scheme of arrangement, each Raymond shareholder will receive 1 share of Raymond Realty for every 1 share held in Raymond Limited.
?SJVN shares surge 6.5% on signing 7 GW renewable energy project with Rajasthan government: Shares of?SJVN surged 6.65% to???110.30 apiece in intraday trade on Friday, November 22, after the state-owned firm signed a memorandum of understanding (MoU) with Rajasthan's Energy Department to develop 5 GW of pumped storage capacity and 2 GW of floating solar projects. This agreement aligns with the Rajasthan government's renewable energy expansion goals. In a filing on Thursday, the company stated, "SJVN has signed an MoU with the Energy Department, Government of Rajasthan, to spearhead the development of renewable energy in the state. Under the MoU, SJVN will develop 5 GW pumped storage projects and 2 GW floating solar projects. Both parties have agreed to collaborate on renewable energy development on a long-term basis."