Market Pulse | 29th March, 2024

ECONOMIC HIGHLIGHTS

INDIA

?India current account gap narrows to 1.2% of GDP in Oct-Dec: India's current account deficit narrowed in the October-December quarter, largely due to higher service exports. The deficit was $10.5 billion, or 1.2% of GDP in the third quarter of fiscal 2023/24, compared with $11.4 billion, or 1.3% of GDP, in the preceding quarter.

?India's core sector growth rises to 6.7% in Feb vs 4.1% in Jan: India’s eight key infrastructure industries - coal, crude oil, steel, cement, electricity, fertilisers, refinery products and natural gas posted a growth of 6.7% in February.

?India's March gold imports set to drop 90% as prices surge: India's gold imports are set to plunge by more than 90% in March from the previous month to hit their lowest level since the COVID pandemic as banks cut imports after record-high prices hit demand. Lower imports by India, the world's second biggest consumer of the precious metal, could limit a rally in global prices that hit a record high earlier this month on expectations that the Federal Reserve will cut interest rates this year.

GLOBAL HIGHLIGHTS

?US inflation increases moderately in February; consumer spending surges: U.S. prices increased moderately in February and the cost of services outside housing slowed considerably, keeping a June interest rate cut from the Federal Reserve on the table. The personal consumption expenditures (PCE) price index rose 0.3% last month. Core inflation increased 2.8% year-on-year in February after rising 2.9% in January. The Fed tracks the PCE price measures for its 2% inflation target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.

?US stock market rocketed through the first quarter: The U.S. stock market is off to a soaring start in 2024, as optimism over the economy and interest rate cuts has combined with exuberance about the business opportunity in artificial intelligence to stir up a potent cocktail for equities. The S&P 500 has climbed more than 10% so far this year to post its biggest first-quarter gain since 2019. The benchmark index in late January hit its first record high in two years, as it built on a surge in late 2023, and has not looked back, setting more than a dozen highs without a significant pullback so far in 2024.

?Japan's mixed inflation picture complicates BOJ rate hike path: Japan's business-to-business service prices continued to rise steadily but a key measure of trend inflation slowed in February, painting a mixed picture on the price outlook that may complicate the central bank's interest rate hike path.The services producer price index, which measures what companies charge each other for services, rose 2.1% in February from a year earlier, unchanged from January in a sign companies continued to pass on labour costs thanks to prospects for sustained wage gains. But separate data released on Tuesday showed Japan's weighted median inflation rate, which is closely watched as an indicator on whether price rises are broadening, slowed to 1.4% in February from 1.9% in the previous month. The Bank of Japan ended eight years of negative interest rates and other remnants of its unorthodox policy last week, making a historic shift away from decades of massive stimulus that was aimed at reviving the economy.

MARKET HIGHLIGHTS

?Indian shares close the financial year with weekly, quarterly gains. Nifty gains 29% in FY24. The Nifty 50 has gained about 29% in the financial year that ends March 31, its best performance in three fiscal years. The benchmark has advanced 2.74% in the January-March quarter, extending gains for four straight quarters in a row, besides logging a second straight weekly gain of 1.04%.

?Reliance Industries rally after Goldman Sachs target: Reliance gained 3.6% on Wednesday as Goldman Sachs its raised the price target on Reliance to a Street-high citing favorable valuations and a potential earnings boost with capital expenditure peaking. The brokerage raised its 1-year target price on RIL to Rs 3,400 from Rs 2,925 in a base-case scenario, reflecting a potential upside of 14% over Wednesday's close. In a bull-case scenario, the stock can leap to Rs 4,495 by FY26, implying a 50% increase.

?ABB India rallies to record highs as UBS raises stock's price target: ABB India, which provides technology automation products and services, jumped 8% this week after UBS raised its price target to a Street-high 7,550 rupees, citing sustainable earnings and growth in its electrification business.

?Gravita India shares jump 30% in four sessions: Metals processor Gravita India climbed 10.5% on Wednesday after Kotak Institutional Equities initiated coverage with a "buy," calling it a leader in the domestic recycling industry. Over the next three years, Kotak is forecasting Gravita's revenue and net profit to grow at a Compounded Annual Growth Rate (CAGR) of 20% and 22% respectively. It also sees the potential for a Return on Capital Employed (ROCE) of over 20% resulting in a multi-year compounding growth

?Maruti becomes 19th listed Indian firm and first automobile firm to cross Rs 4 lakh crore m-cap: Shares of Maruti Suzuki India Ltd hit a record high on Wednesday. At the day's high of ?12,724, the stock's market capitalization crossed the mark of ?4 lakh crore. The stock has risen 12% in the month of March so far. However, its price dropped 0.71% on Tuesday easing off record-high levels, after recalling more than 16,000 cars due to a defect in their fuel pump motors.

?VIP Industries shares jump over 13% after management stresses on innovation, margin target: Shares of VIP Industries are trading with gains of over 13% on Thursday, marking their best single day gain that the stock has seen since August 12, 2021. The company held an analyst meet on Wednesday in which it highlighted that it is aiming for double digit revenue growth from the March quarter of the current financial year and its aspiration to achieve 15% margin from the second quarter of financial year 2025.

?State Bank of India, Bajaj Auto among 25 stocks eligible for same-day settlement: Within a year of moving fully into the T+1 trade settlement cycle, market regulator SEBI is introducing same-day settlement of trades to increase liquidity in the market and lower risk. BSE has released a list of these 25 stocks that will be eligible for the shortened settlement cycle from March 28 2024 with a limited number of brokers. The 25 scrips that will be available for the T+0 cycle are - Ambuja Cements, Ashok Leyland, Bajaj Auto, Bank of Baroda, Bharat Petroleum Corporation Ltd, Birlasoft, Cipla, Coforge, Divi’s Laboratories, Hindalco Industries, Indian Hotels, JSW Steel, LIC Housing Finance, LTIMindtree, MRF, Nestle India, NMDC, Oil and Natural Gas Corporation, Petronet LNG, Samvardhana Motherson International, State Bank of India, Tata Communications, Trent, Union Bank of India and Vedanta.

?Nifty rejig: Highest inflows likely in Shriram Finance, HDFC Bank, Jio Financial: The semi-annual rebalancing of Nifty indices, effective 28 March is expected to significantly impact stock flows. Shriram Finance (which is replacing UPL), HDFC Bank, Jio Financial Services, NTPC, Adani Power, Power Finance Corporation, among others, are expected to see the biggest inflows. Among Nifty constituents that are likely to see outflows as part of the rejig include — State Bank of India (SBI), UPL, ICICI Bank, ONGC, PI Industries, Coal India, Reliance Industries, Kotak Mahindra Bank, Bharat Electronics and Infosys.

?India beats rest of Asia with highest foreign funds flow, domestic buying hits 4-year high in March: India has beaten rest of the Asian markets by attracting the highest foreign funds flow in March, defying geopolitical crises and concerns that the higher interest rate regime will continue for some more time. Foreign Institutional Investors (FIIs) pumped $3.63 billion into Indian equities in their biggest buying binge since December 2023. Domestic institutions continued to be net buyers, investing around Rs 52,467 crore in the market to hit a four-year high.

?Indian bonds see biggest selloff in a year by global investors: The Rupee’s decline to a record low on Friday pushed foreign investors to reassess their frenzied buying of the country’s assets, triggering the biggest selloff in Indian bonds in a year. Global funds sold a net $425.3 million of rupee-denominated bonds Friday. Selling was concentrated in index-eligible government bonds, with foreign holdings dropping by 38.81 billion rupees ($466 million) on the day.

SECTOR HIGHLIGHTS

?Financials rose in the final trading session of fiscal year 2024, after the central bank eased recently-tightened rules for lenders' investments in alternative investment funds (AIFs). Nifty financial services rose 0.95%, while Nifty Bank, state-owned lenders Nifty PSU Bank and Nifty Private Bank added between 0.35% and 3% as heavyweights Bajaj Finance and Bajaj Finserv rose about 4% each after news reports said housing finance arm Bajaj Housing Finance had initiated preliminary talks with several investment banks about a potential initial public offer. ICICI Bank and State Bank of India were among the top ten gainers on Nifty 50, adding 1.6% and 1.9%, respectively.

?Realty stocks advanced almost 5% extending gains for the fifth session, after data from property consultancy firm ANAROCK showed India's housing sales jumped 14% in the January-March quarter.

?Oil marketing companies Bharat Petroleum, Hindustan Petroleum, and Indian Oil gained about 2% each on Wednesday as crude oil prices continued to decline, which supports their refining margins.

BUSINESS-INDUSTRY UPDATES

?RBI relaxes rules on lenders’ investment in AIFs: In December, RBI ordered banks and non-bank lenders to sell their investments in AIFs, which had further invested in companies to which the lenders had given loans in the previous 12 months; otherwise, they had to make 100% provisions against them. On Wednesday, the central bank clarified that lenders need to provide for only the amount the AIF invested in the debtor company, and not the entire amount the lender invested in the AIF. RBI also said its directive does not cover equity shares of the debtor company, but all other investments, including hybrid instruments.

?ICICI Securities gets shareholder nod to delist, setting up merger with ICICI Bank: ICICI Securities has secured shareholders' nod to delist its stock, paving the way to merge with parent and majority shareholder ICICI Bank, which would pay about 59 billion rupees ($707.9 million) for the stake.

?Wipro GE Healthcare to invest $960 mln in R&D, manufacturing in India: Bengaluru-based medical technology company Wipro GE Healthcare said it would invest 80 billion rupees ($960 million) over the next five years to boost local manufacturing as it focuses on growing its footprint in the country in line with the government's "Make in India" initiative.

?Adani Ports to buy 95% of Odisha's Gopalpur Port for 13.49 billion rupees: Largest private port operator Adani Ports and Special Economic Zone said it will buy a 95% stake in Odisha's Gopalpur Port for an equity value of 13.49 billion rupees ($161.74 million) to bolster its east coast presence. Adani Ports will purchase a 56% stake in Gopalpur Port from real-estate conglomerate Shapoorji Pallonji Group (SP Group) and a 39% stake from Orissa Stevedores.

?Kotak Mahindra Bank acquires 100% stake in Sonata Finance for ?537 crore: With Thursday's acquisition, Sonata Finance has become a wholly-owned subsidiary of the lender. Sonata operates in 10 states across the country and has 549 branches. Its assets under management are pegged at around ?2,620 crore as of December 31, 2023

?L&T Construction bags multiple orders in the ?2,500 crore to ?5,000 crore range: The 'large' range of orders the company has bagged includes building a 165-bed hospital in Oman, a temple corridor in Assam, a polymer manufacturing unit and a solar glass manufacturing plant in Gujarat.

?BHEL wins ?4,000 crore order from Adani Power for Chhattisgarh plant: State-run Bharat Heavy Electricals Ltd. (BHEL) has secured an order from Adani Power for the construction of the 2x800 MW Raigarh Phase-II Thermal Power Plant in Chhattisgarh. This marks BHEL's second significant contract win in March and its fourth for the year.

?Hinduja Group-led GOCL Corp hits 20% upper circuit on Rs 3,402-crore land deal: Shares of GOCL Corp hit the 20% upper circuit in trade on March 28. The Hinduja Group-led company entered into an agreement with Squarespace Builders to sell a piece of land worth Rs 3,402 crore. GOCL Corp will monetise approximately 264.50 acres of land at Kukatpally, Hyderabad, where 32 acres are under joint development agreement (JDA).

?India sizzles in global equity capital markets amid Asia deals drought: India has emerged as the second busiest market in the world for equity capital market (ECM) deals after the United States. Indian companies raised $2.3 billion in the first quarter of 2024 in IPOs, according to LSEG data, up more than 12 times the $166.5 million raised in the same period last year, the data showed. Total ECM deals rose 139%, making it the most active market across Asia Pacific, including Japan, where activity was down 46.8%, and accounted for 10.05% of the global total in the first three months, a record high for any quarter.