Tag: Stocks

World stocks up cautiously ahead of high stakes Fed decision

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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World stocks rose to their highest level in almost two weeks on Wednesday, although cautious optimism that a banking crisis would be averted was tempered by uncertainty ahead of a high-stakes Federal Reserve meeting.

The U.S. central bank is expected to raise rates by 25 basis points (bps) in a decision that will land amid a brewing political storm over Fed oversight of collapsed Silicon Valley Bank and with the financial world hanging on the words of Fed chief Jerome Powell about how he navigates market turmoil.

Data showing British inflation unexpectedly rose to 10.4 percent in February meanwhile lifted expectations for a quarter point rate hike at Thursday’s Bank of England meeting, boosting sterling.

Also read: Large deal in M&M Finance, FIIs buy Jindal Saw – Stocks that kept dealers busy on Wednesday

U.S. stock futures nudged higher, reversing earlier falls, European stock markets were higher and Asia-Pacific shares outside Japan added 1.3 percent.

Japan’s Nikkei climbed 1.9 percent led by a rebound in beaten-down bank stocks.

This all left MSCI’s World Stock Index up a third of a percent, having touched its highest in almost two weeks.

Efforts by regulators and policymakers globally to counter banking sector turmoil have helped stem a rout in equity markets and now focus on was the Fed to give markets further reason for a recovery.

“It is very tricky for them,” said Francois Savary, chief investment officer at Prime Partners, referring to Fed policymakers.

“Either they do nothing and say they are still in the process of hiking rates because of inflation or they do 25 bps and say they don’t see the financial situation as putting the economy at risk but we will assess the impact.”

QT AND DOT PLOTS

An added complication is whether the Fed temporarily stops selling its holdings of Treasury debt, known as quantitative tightening, and what Fed members do with their dot plot forecasts for future rate hikes.

Having even priced in the risk of a rate cut last week, futures now imply an 86 percent chance of a quarter-point rise to 4.75 percent-5.0 percent. A couple of weeks ago the market had been wagering on a half-point hike.

Also read: Hero MotoCorp to revise price of vehicles by approximately 2%

Bond investors will be hoping Powell can instil some calm given the wild volatility of recent days. Two-year Treasury yields were last down about 6 basis points on the day at 4.11 percent, having made a remarkable round-trip from 5.085 percent to 3.635 percent in just nine sessions.

European bonds have gone along for the ride. German two-year yields overnight recording the biggest daily jump since 2008 as markets went back to pricing in more ECB hikes.

The euro meanwhile touched a fresh five-week high at $1.0800, benefiting from renewed rate-hike bets, while sterling rose 0.5 percent to $1.2274 after the British inflation data.

The dollar index was a touch softer, while the dollar firmed against the yen to 132.97.

HOT SPOTS

Markets, unnerved by banking sector turmoil, remained alert to signs of stress elsewhere.

The upheaval sparked by the collapse of Silicon Valley Bank is not yet over, and a significant number of banks will fail within two years, hedge fund Man Group CEO Luke Ellis said at a conference in London on Wednesday.

“I think we will have significantly more banks that don’t exist in 12-24 months,” Ellis said, adding that he thought smaller and regional banks in the United States and challenger banks in Britain could be at risk.

First Republic Bank was also in focus after efforts to secure a capital infusion continued without success on Tuesday.

“The banking crisis is creating tighter credit conditions, and if you tighten conditions you weaken economic activity which puts more pressure on the banking sector,” said Savary at Prime Partners. “I don’t consider the banking crisis is over.”

Elsewhere, oil prices eased with Brent crude down 39 cents to $74.93 a barrel, while U.S. crude fell 34 cents to $69.33.

Also read: KEC International bags orders worth Rs 1,560 crore from Power Grid Corporation

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Markets keeping it light today with all eyes on the FOMC meeting

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ITS GAME DAY !

Markets are keeping it light today given the fact that later in the day we have the FOMC decision. The Nifty and the Bank Nifty are trading flat to slightly higher.

Overnight the cues from the U.S. markets were positive while indices closed higher for the second straight session. The S&P500 has managed to end above it’s 200 day moving average which is an important signal. Bond yields jumped higher on the back of strong existing home sales data in the month of February. Asian markets & our markets responded well early in the session but have since come off the day’s highest point.

Sectors like PSU banks and autos are doing well. Broader markets are also in fine shape with Smallcap Index up over 0.8%. Insurance stocks are doing well on the back of a CLSA note which says that all negatives for the sector are in the price.

Fed March OIS is pricing >80% chance of a 25bps hike but how Chair Powell Fed balances stability vs inflation in the press conference looks key for market reaction.

Also read: Experts say halt in interest rate hikes not a solution to the banking crisis

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bears tighten grip, experts say expect Nifty to take resistance at 17050-17070 zones

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s VIX marginally moved up by 0.46 percent from 16.22 to 16.29 levels yesterday. Volatility is quoting near the highest levels of the last 28 trading sessions thus giving an overall grip to the bears in the market.

India VIX or a volatility index is a leading indicator of confidence in the market. The market fear barometer VIX closed above the 200 daily moving average level yesterday and now needs to sustain below 14.5 for Nifty to attain stability.

Sudeep Shah, Head of Technical and Derivate Research, SBI Securities said “Post opening, expect the index to take resistance at 17050-17070 zones and as long as the index trading below these levels, it is expected to test 16880-16900 zones, while the breach of supports at 16880 would lead to down move towards 16790 levels.”

Domestic indices opened in the red territory with Sensex down 120 points  and Nifty 50 down 34 points. Bank Nifty fell 103 points or 0.26%. The top gainers on Nifty 50 were BPCL, Titan, Power Grid, Nestle India and Divis Lab while the top losers were Hindalco, Tata Steel, JSW Steel, IndusInd Bank and ONGC.

Also read: Stock Market Live: Nifty 50 breaches 16,900, Sensex falls 350 points as Credit Suisse triggers global selloff

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Foreign inflows in Indian equities jump in November as stocks hit new highs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Foreign portfolio investors (FPIs) bought Indian stocks worth 362.38 billion rupees ($4.4 billion) in November, marking the second-best month of overseas inflows into equities this year, data from the National Securities Depository Ltd showed.

The surge in inflows comes at a time when Indian shares rose to record highs. The benchmark Nifty 50 and Sensex indexes added 4.1 percent and 3.87 percent, respectively, in November.

Last month’s foreign inflows into stocks trailed only those in August when FPIs purchased Rs 5,12,000 crore.

Analysts said that foreign interest in domestic equities would continue due to India’s favourable fiscal policies, growth outlook and moderation in inflation.

Also Read: Wall Street recovers as investors interpret US payrolls data

“India will be one of the first economies that will start cutting rates once inflation cools off over the next few quarters,” said Mayuresh Joshi, head of equity research at investment advisory firm William O’Neil & Co.

NOVEMBER SHOPPING

Financial services stocks were the top of the pick for FPIs at 142.05 billion rupees, followed by fast-moving consumer goods (Rs 3,900 crore), information technology (Rs 3,800 crore) and automobile and auto components (Rs 3,000 crore).

The Nifty Bank index added 4.66 percent, while the Nifty FMCG index rose 2.8 percent in November. The Nifty IT index surged 5.79 percent, extending gains into the second month.

Also Read: Wall Street takes a breath after Powell rally while dollar falls

“There are no other sectors other than information technology and banking where there is such high earnings visibility and clear conviction of growth uptick,” said Yogesh Nagaonkar, founder and CEO at Rowan Capital Advisors.

Nagaonkar added that foreign fund inflows could further rise on hopes of moderation in the Federal Reserve’s rate hike cycle.

William O’Neil’s Joshi said outperformance in the banking and financials sector was driven by steady outperformance in earnings.

He noted that the sustenance of interest in consumption-oriented segments like FMCG would depend upon the pace of rural demand recovery.

Also Read: Zomato shares gain after Temasek picks up 1.1% stake for Rs 608 crore

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bottomline: Market’s got little value headroom

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

With the Nifty (NSE-50 index of stocks) near 18,000 and the Sensex (BSE index of 30 stocks) near 60,000, stock valuations aren’t cheap. Even as the world grapples with uncertainties, Indian equities are riding the safe-haven wave to push higher. With growth being a rarity in a geopolitically disrupted world and some central banks, like the US Federal Reserve, determined to slow their economies down, India stands out as a beacon of growth.

While this is good news for domestic investors, who’ve been spared a pummeling of their portfolio values, it doesn’t make stocks cheap from a historical valuation perspective. As in the uncertain Covid period, when analysts chose to look beyond earnings at the book value of companies to get a grip on value, we’ve done the same today, even as analysts roll over their targets to their uncertain fiscal 2024 earnings estimates. And what we found was not comforting, mostly.

STOCKS AREN’T CHEAP

The BSE-Sensex price-to-book value (P/BV) today stands at 3.3x, that’s in line with the average multiple in the past 25 years. And while the Sensex did see a high of 5.5x in 2008 and a low of 2.2x in 2003, those are not the normal ranges you should be working with. Over the past 10 years, the Sensex P/BV multiple has ranged between 2.8x and 3.5x. And this offers an upside potential of just about 6 percent. So, there’s limited headroom on the upside from current levels on a sustainable basis.

Also Read: Nervous November up ahead for new-age companies

A look at the BSE-500 P/BV ratio trend reveals a similar picture. The index today trades at a multiple of 3.2x compared to an 18-year average of 3x. And this is up sharply from 2.6x in 2020. So, the midcaps aren’t necessarily cheap either. Both the above indications, advise caution for investors, especially when it comes to making fresh investments when the indices are nearing their recent highs.

THERE’S VALUE IN POCKETS

Banks and financials have been the big bets of most savvy investors in the recent past and their conviction has been vindicated by the excellent performance of most frontline lenders in the recent quarterly earnings reports. But banks, after their recent run-up, aren’t that cheap. The BSE-Bankex P/BV ratio is today at 2.3x versus an 18-year average of 2.2x. Auto stocks after the recent rally have caught up with historical valuations, after a period of significant underpricing. The BSE-Auto index today commands a P/BV of 4.1 compared to an 18-year average of 4x, far above the 2.6x it plummeted to in 2020. Even realty stocks are trading at near 3x, compared to their 15-year average of 2.1x. In this case though, given the long cycle nature of the business, it also helps to compare the previous boom period of 2010 to 2013, during which the multiples ranged between 4-5x. Seen in this context, some might argue there’s still headroom for gains.

Another sector that’s been in the limelight is IT services. With frequent buybacks, P/BV becomes a less relevant measure of valuation. But if you look at dividend yield, it suggests that valuations are almost near historical levels now. The current dividend yield of 1.9 percent is just a tad higher than the 8-year average of 1.8 percent—up sharply from 1.4 percent last year.

Now let’s look at a few pockets where there’s still value, based on historical trends. Public Sector Enterprises is clearly one such pocket. The current P/BV of 1.1x is well under the 18-year average of 1.8x. The BSE Capital Goods index also trades at 3.9x compared to its 18-year average of 4.7x. A little lesser under valuation is seen in energy with the multiple of the BSE Energy index at 1.75 versus an 8-year average of 1.9x.

Also Read: Navratras to Bhai Dooj 2022: Hero MotoCorp sales zoom 20% this festive season

TREAD CAUTIOUSLY

Given how valuations are today, it would be prudent for investors to wait before putting money to work in the market. And if they really must invest now, short-term opportunities may be available in select stocks in pockets like PSUs, capital goods and energy.

Happy investing!

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning to invest in stocks? Here are five things to keep in mind

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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It is important to do your homework before investing your hard-earned money in a stock. If you plan on investing in the long run, you should look for good value.

But before you buy a stock, you should do thorough research, analyse the fundamentals and make sure it fits in your portfolio.

As an investor, you shouldn’t just buy a stock but become a company shareholder as well.

Here are five things to remember before buying stocks and investing your hard-earned cash.

Long investment horizon

One must have a long-term horizon while investing. The foremost is that only those funds that one does not require for at least the next five years should be deployed in equities. In the near term, the returns would depend on the vagaries of short-term events. Eventually, in the long term, valuations catch up with a company’s growth. Hence one’s long-term goals must be aligned accordingly.

ALSO READ: Explained: What are Smallcases, the new investing game in town

Right temperament

Stocks are volatile. An investor must inculcate the discipline and patience to bear stock volatility. As stocks go down in value after being bought, some investors cannot bear the downside pain. Similarly, a gain is not incurred on the upside unless the stock is sold. Developing the right temperament ensures one is not taken out of the trade at the wrong time. An investor must also treat volatility as his friend and take advantage of wild swings in stock prices.

ALSO READ: Investing lessons on hedging portfolio against rising inflationary pressures

Know thy company

Before one invests, the investor must ensure he/she understands the business behind the stock. Its economics, the company’s competitive position, growth factors etc. Investing without a detailed understanding of the company’s fundamentals borders on the investment, becoming a highly speculative bet. If one is inept at doing such a detailed study, one must have a trusted SEBI registered advisor to help with such a task. However, without a proper and detailed understating of the economics of a business, the investor is merely shooting in the dark.

ALSO READ: 5 things you should not do when investing in cryptocurrencies

Valuations

This aspect is paramount while investing. A cheap or at least a reasonable valuation is a must while picking a stock. But how does an investor know if the stock is cheap enough? For that, one must be able to value a business. Through this valuation, one needs to determine the price at which the business is worth. This value is also referred to as the intrinsic value.

An investor must buy a stock at a significant discount to that value. The reason for adding this discount, also called the margin of safety, is to protect the investment from any errors of judgement and changes in business fundamentals post-investment. Adding a layer of discount/safety ensures a reasonable level of protection.

ALSO READ: Smart Money: 10 things to keep in mind while investing

Be nimble

While investing in stocks, one must remain nimble-footed and be ready to change one’s thoughts if the premise of initial investment changes. Suppose you bought the stock on a particular thesis. If the situation changes and the original thesis is no longer valid, one must act accordingly. This means selling the stock or reducing its weightage and vice versa, adding to a stock based on new information. The investor must not cling to the past and ensure that his/her ego does not come between rational judgement.

-The author Siddharth Oberoi is the founder of Prudent Equity

ALSO READ: Puneet Khurana of Stoic Advisors on value investing in turbulent times

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Morgan Stanley is gung-ho about this Gurugram-based logistics company. Here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Delhivery” isinid=”INE148O01028″ bseid=”543529″ nseid=”DELHIVERY” sector=”Courier Services” exchange=”nse”]

Gurugram-based Delhivery is one of the largest and fastest growing logistics companies in India with a competitive advantage, said Morgan Stanley as it initiated coverage on the newly-listed firm. The brokerage has an ‘equal-weight’ rating on Delhivery with a target price of Rs 540 per share — an upside of 7.9 percent from Thursday’s closing price. 

The company’s valuation is at a premium but justified given its superior growth profile, according to the brokerage. It expects Delhivery’s revenue to increase at a compound annual growth rate (CAGR) of 29 percent till March 2026.

“It is the price setter in the market and drives share gains by lowering prices ahead of others. Using positive economics from the express business, Delhivery has seeded other new segments that have the potential to become large without a material increase in cumulative operative cash burn,” according to Morgan Stanley.

The Delhivery stock gave up initial gains amid choppy trade on Friday, falling as much as 1.8 percent to Rs 491.4 apiece on BSE.

The brokerage believes Delhivery has a stronger balance sheet position than its peers, which reduces the risk of irrational competitive behaviour. 

However, not everyone on Dalal Street has a positive view on the stock.

IIFL Securities — which has a ‘sell’ call on Delhivery — is of the view that the risk reward is unfavourable in Delhivery.

The brokerage views the logistics player’s operating efficiency as a key monitorable given 85 percent of its costs are variable in nature.

ALSO READ: Here’s why Credit Suisse is bullish on Delhivery while IIFL Securities is bearish

The company continues to grow as fast as the market “if not faster”, Delhivery Chief Business Officer Sandeep Barasia told CNBC-TV18. Delhivery has been able to reduce its costs and taken its operating margin to 11 percent from 2.5 percent, he said.

Delhivery aims to turn net profitable by the end of the years ending March 2023 and March 2024. After releasing its financial results for the March quarter, the company had said it would take 6-8 quarter for it to turn free cash flow positive. 

Delhivery began its journey in the secondary market last month with a decent debut, and has managed to broadly stay above its issue price since. As of Thursday, the stock changed hands at a premium of 2.7 percent over the upper end of its issue price.

Catch latest market updates with CNBCTV18.com’s blog

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Escorts shares up after company names Shenu Agarwal as interim CEO of Agri Machinery Business

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Escorts Ltd rose as much as 2 percent on Tuesday amid an overall rebound in the market, after the company appointed Shenu Agarwal as the interim CEO of Agri Machinery Business.

Shares of Escorts ended 2.27percent higher at Rs 1,516,90 on the BSE.

The company on Tuesday informed the exchanges that Ajay Mandhar had resigned from his position of Chief Executive Officer – Agri Machinery Business.

“We would like to inform you that Mr. Ajay Mandhar vide his email dated June 20, 2022 has tendered his resignation from the post of Chief Executive Officer, Agri Machinery Business, citing personal reasons and requested, inter alia, for acceptance of his resignation which has been accepted,” said Escorts Kubota, formerly Escorts, in an exchange filing.

Shenu Agarwal, President, Agri Machinery and Construction Equipment Business, will be the interim CEO till a successor is finalised, said the company.

Also Read | Nifty may see 10% further correction as largecaps returns likely to disappoint, says Shankar Sharma

In May, a senior company official had told CNBC-TV18 that the firm had lined up a capital expenditure of up to Rs 400 crore for the ongoing fiscal for new product introduction and creation of production capacity for the same.

The company, which has started exporting electric tractors to markets like the US and Europe, expects it to contribute up to 15 percent of its overall overseas shipments in the next five to six years.

Following a sell-off that lasted for six sessions in a row, the market today ended in the green with the Sensex up 1.81 percent and the Nifty up 1.88 percent.

Catch up on all LIVE stock market updates here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow