Marching on in April

Stock Markets

Sensex surged 4% in the last week of April with 4 days of continuous increase despite turbulent times with Covid cases increasing significantly in India.  Surge is mainly due to better Q4 results of corporate (compared to 2020 Q4)

• IT & ITES stocks - Revenue growth of TCS 4.2%, Infosys 13.08%, Wipro 3.14%, Mindtree 5.2%  
• Bank stocks - Revenue growth of HDFC 13%, ICICI 17%, Axis Bank 10.98%  
• Automobile - Revenue growth of Maruti Suzuki 32%, TVS Motor 52.87%
• FMCG - Revenue growth of Britannia 9.68%, HUL 35%, Hatsun 23.89%  
• Manufacturing - Revenue growth of ACC 22.57%, Bajaj consumer 39.25%, Tata Steel 53.4%, ABB 7.02%, Biocon 16.3%, Carborandum 27.38%, Ambuja Cements 23.44%  

Overall corporate's are delivering better than expected results for Q4 2020-21 which keeps investors interested.   

Another major reason for the surge in sensex is that business sentiment is upbeat as can be seen by RBI survey  

        Source : RBI

Reserve Bank of India (RBI) Industrial outlook survey of the Manufacturing Sector for Q4 2020-21 was released on 7th April 2021, this shows a positive sentiment for Q4 2020-21 and Q1 2021-22.  Markets are factoring in this positive sentiment and gives a big thumbs up and consequently jump in sensex.    

As for Covid markets have already factored the same in 2020 and so more cases will not impact it unless it takes on monstrous proportion which I believe will never happen.  Though cases are on record levels good news is that till now 15 crore vaccination have been administered in India and there is a conscious push for faster vaccination in the days to come.  Government has realised vaccination is the only route out of this pandemic and stepping up all efforts which is appreciated.   

Rupee

Rupee in the last 4 days had an appreciating effect and appreciated 1.28% moving from 75.02 on 23.4.21 to 74.06 on 29.4.21, this primarily is due to a positive stock market which grew by 4% during the same time period.  Also the announcement that US Fed Reserve keeps its policy rates and assets purchases unchanged is pulling the dollar index down and it is at its one month low and currently at 90.63, this helps the Rupee to appreciate. 

US Dollar Index (DXY)

Goo

OIL

Good news is that petrol / diesel prices in India are unchanged since 15th April, which is a long record considering price movements in the last 1 year.  Primary reason for this is a slight drop in demand due to Covid & oil companies are in pause mode to see the trends in global oil market.  In the meantime there has been a sharp movement of oil and Crude WTI is trading at $64.98 per barrel  

Briefing 15.02.2019

• Sensex had a 6th day of straight losses.  Domestic concerns over industry growth and lower inflation are the main factors for a prolonged week phase in markets
• WPI inflation fell to a record low of 2.76% in January 2019 due to sharp fall in product and food prices.  This gives headroom for RBI  to further reduce interest rates
• Pilot shortage hits Indigo forcing it to cancel flights.  Aggressive expansion plans weighed in without taking into consideration pilots working hours have hit the airline hard
• Oil is on a song.  In 2019 it has increased by 19%.  Cut in output by OPEC countries, sanctions on Venezuela are the main reasons for this increase.  Saudi estimates a break even on its economy only when oil reaches $ 80 to $ 85 per barrel.   Currently Brent Crude trades at $ 65.57 per barrel.  Expect more increases in oil front.
• Jet airways has approved a plan by its lenders to resolve a Rs.8,500 crores debt.  Plan includes conversion of debt to equity, debt restructuring, sale and lease back of aircraft.  Jet will seek shareholder approval on 21st February for conversion of debt into 114 million shares.
• Naresh Goyal may not be the biggest shareholder in Jet after the new approved restructuring plan as a consortium of banks led by SBI will become the major shareholder.  Naresh Goyal will have around 20% (currently 51%) , Etihad 24%.   
• The biggest passenger carrier A380 manufactured by Airbus will become history soon.  Airbus will stop manufacture of A380 from 2021.  Though this aircraft cuts on fuel costs and pollution it calls for significant investment by carriers on airport space, hanger space, wider runways to name a few, which means all seats should be sold to make it economical which is not viable in all situations.  Competition from Boeing's fuel efficient Dreamliner also had a major impact on A380.
• Theresa May again losses vote on Brexit in Parliament.  Voted out on 303-258 on the main motion for reaffirmation of support for May's plan on Brexit
• Germany posted a 0% growth in 4th quarter of 2018, narrowly avoiding a recession.  It was preceded by a 0.2% growth in Q3 of 2018.

Briefing 09.02.2019

• On 8.2.19 Sensex ended 425 points lower mainly due to concerns of performance of other global stock markets, week economic growth projection especially in Europe and still no much movement in resolution of US-China trade dispute
• Net direct tax collection between April 2018 to January 2019 was Rs.7,88,930 crores.  Target for the fiscal year 2018-19 is Rs.12 lakh crores.  In 2017-18 net direct tax collection was Rs.10.02 lakh crores
• In response to 0.25% reduction in interest rates by RBI, SBI reduced home loan rates by 0.05%
• Indian forex reserves again crossed US$ 400 billion mark and is at US $ 400.2 billion in January 2019.  This is mainly due to softening of global oil prices
• Tata motors which reported a loss of Rs.26,961 crores in December quarter saw its stock prices drop 17% in one single day on 8.2.19.  Loss in market capitalization on a single day is Rs.9.124 crores
• Public Sector Banks NPA's is at Rs.8,64,433 crores in December 2018.  This is Rs.31,000 crores less compared to March 2018.   NPA's are eating away profitability of banks and is very high, need to be brought down significantly
• Lenders sell shares of Anil Ambani group on fears of company's performance leading to 55% erosion of market capitalisation in 4 days
  

Briefing 08.02.2018

• RBI reduces benchmark lending rate by 0.25%.  Currently repo rate is at 6.5%
• Falling inflation provided head room for reduction in lending rate - Projected inflation 2.4% during January-March and 3.2%-3.4% per cent during April-September.
• RBI projects GDP growth at 7.4% in 2019-20
• GST collection exceed Rs.100,000 crore in January 2019
• Tata motors report Rs.26,961 crore Q3 loss on one time loss from asset impairment at JLR
• Change in CEO at Cognizant
• Jet airways get a second tranche of funding by selling tickets in advance to Jet Privilege Programme (JPP).  JPP is majority owned by Ethihad Airways
• Bank of England projects lower growth rate of 1.2% for UK economy from 1.7% primarily due to Brexit concerns and global slow down
• Twitter shares lost 10% as revenue targets fall short of expectations.