Market turning unfavourable, investors need to be selective hereon, says Mahesh Nandurkar of Jefferies

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

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The equity market is beginning to turn unfavourable and investors need to be selective hereon, says Mahesh Nandurkar, India Strategist, Jefferies. Speaking to CNBC-TV18, he advised investors to have a bottom-up approach at current levels.

“The market has become more bottom-up oriented from here on. Difficult to argue for large gains at the broad index level, certain stocks and sectors will definitely do better. But from the broader risk-reward perspective, I would say that it’s beginning to turn unfavourable, in my view,” Nandurkar said.

“So, difficult to see how we will make substantial gains in the broader market from hereon, but we continue to prefer the cyclical than some of the selective sectors. So I think from hereon, the investors will need to become more selective and more bottom-up oriented,” he added.

He believes every successive Covid wave will have lesser economic and market impact.

“We may be seeing initial signs of Covid cases rising in India again, while the recovery post-second wave has been faster than last year,” he said.

Also read: Froth in small, mid-cap space has to be corrected; be very selective in IPO, says Arun Malhotra of CapGrow Capital Advisors

However, he is of the view that the return of normalised monetary policy will be the near-term risk and a strong economic recovery has to be followed by monetary policy normalization.

Nandurkar continues to remain positive on metal space and said that the decarbonisation theme will be a tailwind for the metal sector.

“The metal stocks still at reasonable levels on a price-to-book basis. Even if metal prices move down, we are still looking at 15-20 percent ROE,” he said.

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He believes the valuations of new-age business stocks are clearly hard to explain.

“I think the valuations are clearly very difficult to explain and I must admit that, but the thing is there is clearly a novelty value there. We have seen the kind of valuations and the market caps, these kinds of stocks have traded in the developed world, India is just entering that phase. So, while investors will keep complaining about the valuations,” he said.

Nandurkar advises to hold 2-3 percent of the portfolio in some of these new ages, new technology companies.

“I think practically, most of the investors still want to own those stocks and now you are getting more and more choices, so people will be doing some picking and choosing, but from the institutional portfolio perspective, it would still make sense to hold about at least 2-3 percent of the portfolio in some of these new ages, new technology companies, despite the valuations because that clearly is going to be the flavour of the day, at least over the next 12 to 18 months, maybe longer,” he said.

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Serum Institute buys 50% stake in pharma packaging firm Schott Kaisha

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

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Vaccine major Serum Institute of India has acquired 50 percent stake in pharma packaging firm Schott Kaisha to become a joint venture partner of Germany’s specialty glass company Schott AG. Serum Institute has acquired stake from former co-owners Kairus Dadachanji and Shapoor Mistry, Schott and Serum Institute of India said in a joint statement. The joint venture is for pharmaceutical packaging, they added.

Serum Institute of India (SII) has bought 50 percent stake in Schott Kaisha to become Schott’s joint venture partner and secure pharma packaging supply, the statement said. The partners, however, did not share the financial details of the stake acquisition by the vaccine maker.

The joint venture is the leading Indian manufacturer of pharma packaging products such as vials, syringes, ampoules and cartridges used to package life-saving medications, as per the statement. Even the best medication can’t reach the patient without the right packaging. Securing this supply chain is of strategic importance. Schott is the perfect partner for us to do this because of their expertise and global network,” Serum Institute of India CEO Adar Poonawalla said.

As a long-time customer, Serum Institute uses their vials, ampoules, and syringes to store our vaccines including Covishield. Working even closer together is in the best interest of global health, he added. On the development, Schott CEO Frank Heinricht said, “As India has steadily established its position as a global pharmaceutical hub, we are delighted to strengthen our footprint within the Indian pharma supply chain. We are looking forward to strong impulses from this partnership.”

It is an excellent example of shifting towards new cooperation models, with greater synergies between pharma manufacturing and packaging production, he added.

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WHO issues medical alert as fake Covishield vaccines found in India, Uganda

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

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The World Health Organisation (WHO) has issued a medical product alert on ‘falsified’ COVID-19 vaccine Covishield identified in India and Uganda. The Serum Institute of India, manufacturer of Covishield, has confirmed that some vials reported at the patient level were fake.

The WHO’s global surveillance and monitoring system for substandard and fake medical products reported it in July and August this year. This comes despite the government’s efforts to provide genuine vaccines against coronavirus in a transparent manner.

“Falsified COVID-19 vaccines pose a serious risk to global public health and place an additional burden on vulnerable populations and health systems. It is important to detect and remove these falsified products from circulation to prevent harm to patients,” the WHO said.

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The WHO said some vials were identified as fake that they deliberately or fraudulently misrepresent their identity, composition, or source. In India, Covishield 2ml was identified while the SII does not manufacture the vaccine in 2ml (four doses). In Uganda, Covishield with Batch 4121Z040 and the expiry date (10.08.2021) was found, which SII confirmed to WHO was fake.

“Genuine Covishield vaccine is indicated for active immunisation of individuals 18 years or older for the prevention of coronavirus disease caused by the SARS-CoV-2 virus. The use of genuine COVID-19 vaccines should be in accordance with official guidance from national regulatory authorities,” the WHO said.

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The WHO has asked countries for increased vigilance within the supply chains and also in hospitals, clinics, vaccination centres. It added that all medical products must be obtained from authorised/licensed suppliers.

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HDFC Bank confirms RBI lifting restrictions on sourcing new credit cards

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

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HDFC Bank released a board-approved statement Wednesday confirming the Reserve Bank of India has lifted the restriction placed on the sourcing of new credit cards. The statement states the bank’s intent to abide by the regulator’s directions on taking steps to remedy the tech issues faced by the banks.

“We would like to inform all that the Reserve Bank of India has lifted the restrictions placed on sourcing of new credit cards. We thank the regulator for this. The board has taken note of the same and the bank is committed to full compliance with the regulatory directions,” the bank said Wednesday.

CNBC-TV18’s Ritu Singh was the first to report on Tuesday that RBI has partially lifted the ban of HDFC Bank, allowing it to start sourcing new credit cards.

HDFC Bank was required to submit this letter of commitment towards continued compliance and to achieve full compliance with the remaining observations of the central bank’s IT examination report.

The central bank had put the bank under an embargo almost eight months ago in December 2020 due to a series of technical glitches in its software. Even now, the RBI has continued a ban on its new offering under the bank’s Digital 2.0 strategy.

“The restrictions on all the new launches of the Digital Business generating activities planned under Digital 2.0 will continue till further review by the regulator,” the bank said in the statement.

The shares of HDFC Bank have surged over 3 percent in the morning trade on Wednesday. The shares surged to rs 1,564.75 on BSE in early deals. The stock was the top boost for headline indices Sensex and Nifty50.

Also Read | ICICI Bank gains at HDFC Bank’s expense in credit cards amid RBI ban

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Explained: What do we know about booster shots for COVID-19?

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

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US health officials may soon recommend COVID-19 booster shots for fully vaccinated Americans. A look at what we know about boosters and how they could help fight the coronavirus.

Why might we need boosters?

It’s common for protection from vaccines to decrease over time. A tetanus booster, for example, is recommended every 10 years.

Researchers and health officials have been monitoring the real-world performance of the COVID-19 vaccines to see how long protection lasts among vaccinated people. The vaccines authorized in the US continue to offer very strong protection against severe disease and death.

But laboratory blood tests have suggested that antibodies one of the immune system’s layers of protection can wane over time. That doesn’t mean protection disappears, but it could mean protection is not as strong or that it could take longer for the body to fight back against an infection.

The delta variant has complicated the question of when to give boosters because it is so much more contagious and much of the data gathered about vaccine performance is from before the delta variant was widely circulating. Delta is taking off at the same time that vaccine immunity might also be waning for the first people vaccinated.

Israel is offering a booster to people over 50 who were vaccinated more than five months ago. France and Germany plan to offer boosters to some people in the fall. The European Medicines Agency said it too is reviewing data to see if booster shots are needed.

When would they be given?

It depends on when you got your initial shots. One possibility is that health officials will recommend people get a booster roughly eight months after getting their second shot of the Pfizer or Moderna vaccine.

Officials are continuing to collect information about the one-shot Johnson & Johnson vaccine, which was approved in the US in late February, to determine when to recommend boosters.

Who would get them?

The first people vaccinated in the United States would likely be first in line for boosters too. That means health care workers, nursing home residents and other older Americans, who were the first to be vaccinated once the shots were authorized last December

Booster? Third shot? What’s the difference?

Transplant recipients and other people with weakened immune systems may not have gotten enough protection from vaccines, to begin with. They can now receive a third dose at least 28 days after their second shot as part of their initial series of shots needed for them to be fully vaccinated. For those with normal immune systems, boosters are given much later after full vaccination not to establish protection, but to rev it up again.

What questions remain?

Still unknown is whether people should get the same type of shot they got when first vaccinated. And the nation’s top health advisers will be looking for evidence about the safety of boosters and how well they protect against infection and severe disease.

Global access to vaccines is also important to stem the pandemic and prevent the emergence of new variants. Booster shots could crimp already tight global vaccine supplies.

What about the unvaccinated?

Dr Melanie Swift, who has been leading the vaccination program at Mayo Clinic in Rochester, Minnesota, says getting more shots into people who haven’t yet been vaccinated at all is our best tool, not only to prevent hospitalization and mortality from the delta variant but to stop transmission.” Every infection, she says, gives the virus more chances to mutate into who knows what the next variant could be.

People who took the vaccine the first time are likely to line up and get their booster, Swift says. But it’s not going to achieve our goals overall if all their unvaccinated neighbours are not vaccinated.

Catch all the latest updates on Coronavirus here

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IT safe place to hide, don’t see big outperformance from sector: Geosphere Capital

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

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Arvind Sanger, managing partner of Geosphere Capital Management, on Wednesday, said that IT is a safe place to hide as it provides stability in a portfolio, but don’t expect big outperformance.

In an interview to CNBC-TV18, he said, “IT has become a safe place to hang out because you don’t have to worry about China’s slowdown, you don’t have to worry about COVID concerns, none of these things seems to matter because growth is somewhat more predictable. So, yes, they are safe places to hang out and in a portfolio, they provide a bit more stability and less volatility, but if you are playing it upcycle over the next 2-3 years, I do not believe that this will be where the big outperformance will come from here.”

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“I am certainly looking to buy some of the stocks that have pulled back in this rotation that has happened recently. So I am not necessarily chasing after the IT names and I am not necessarily buying some of the fallen pharma names because I don’t think that’s where the next cycle is going to come from, but in other areas, yes, we are seeing opportunities to put money to work,” Sanger said.

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On HDFC Bank, he said, “HDFC Bank is not the only bank; it has suffered, obviously, because of its own problems, but even other market leaders like Kotak Mahindra Bank have lagged. So in a sense, the market has shifted its focus, but I think some of that underperformance can come back. But I do not believe that this cycle, as we go forward, is going to be led by the leaders of the last cycle, whether it’s FMCG companies or a narrow set of banks like HDFC Bank and Kotak Mahindra Bank.”

For the entire interview, watch the video

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

ICICI Bank gains at HDFC Bank’s expense in credit cards amid RBI ban

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

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The credit card market is set for a fresh bout of competition between the top three players – HDFC Bank, SBI Card and ICICI Bank after the Reserve Bank of India (RBI) partially lifted the ban on HDFC Bank, allowing it to issue new credit cards. Eight months ago, the banking regulator had barred the country’s largest private sector lender to sell new credit cards after repeated instances of technological outages.

While the HDFC Bank’s existing credit card users were not impacted by the RBI ban, rivals ICICI Bank and SBI Cards seized the opportunity to cut the gap with the market leader in the segment.

As of November 2020, HDFC Bank’s share in the credit card segment was 25.6 percent. Following the ban, it lost a market share of 199 basis points between November 2020 and June 2021 although the share of HDFC Bank is still highest at 23.61 percent. The growth in new customer acquisition during the period was negative at 3.63 percent, shows data sourced from the RBI. As of June 2021, HDFC Bank still has over 1.48 crore credit card customers.

The biggest gainer from HDFC Bank’s loss has been ICICI Bank, which moved from a 16 percent share in the credit cards in October 2020 to 17.57 percent as of June 2021, registering a growth of 13.63 percent. Overall, the bank has more than 1.10 crore credit card customers as of June 2021. ICICI Bank used the opportunity to aggressively push its new digital initiatives and gained significant market share in the cards business.

Another major player SBI Card has clocked a growth of 6.63 percent, raising its share from 18.79 percent in November 2020 to 19.17 percent in June 2021. In terms of numbers, SBI Card has over 1.20 crore credit card customers, higher than ICICI Bank’s 1.10 crore.

At 11.36 percent in June 2021, Axis Bank has lost about 9 basis points market share since November 2020.

Growth in the number of credit cards, from November 2020 to June 2021

Source: RBI, CNBCTV18

Market share and movement in percentage terms between Nov 20 and June 21

Source: RBI, CNBCTV18

Customer base and loss or gain between Nov 20 and June 21

Source: RBI, CNBCTV18

Meanwhile,  HDFC Bank share price jumped as much as 3.29 percent to Rs 1,564.75 apiece on BSE in early deals. ICICI Bank share price traded lower, down 0.46 percent, quoting at Rs 698.40 on BSE.

Also, catch all the live updates from the stock markets with CNBC-TV18.com’s blog

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

Facebook bans Taliban, content supporting it: Report

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

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Social media giant Facebook has said that it has banned the Taliban and all content supporting it from its platforms as it considers the group to be a terrorist organisation, according to a media report. The company says it has a dedicated team of Afghan experts to monitor and remove content linked to the insurgent group.

For years, the Taliban has used social media to spread its messages. “The Taliban is sanctioned as a terrorist organisation under US law and we have banned them from our services under our Dangerous Organisation policies. This means we remove accounts maintained by or on behalf of the Taliban and prohibit praise, support, and representation of them,” a Facebook spokesperson told the BBC.

“We also have a dedicated team of Afghanistan experts, who are native Dari and Pashto speakers and have knowledge of local context, helping to identify and alert us to emerging issues on the platform,” the spokesperson said.

The social media giant said it does not make decisions about the recognition of national governments but instead follows the “authority of the international community”.

Facebook highlighted that the policy applies to all of its platforms, including its flagship social media network, Instagram and WhatsApp. However, there are reports that the Taliban is using WhatsApp to communicate.

Facebook told the BBC that it would take action if it found accounts on the app to be linked to the group. The brutal war in Afghanistan reached a watershed moment on Sunday when the Taliban insurgents closed in on Kabul before entering the city and took over the presidential palace, forcing embattled President Ashraf Ghani to flee the country.

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Opening Bell: Indian benchmarks open higher amid mixed global cues; HDFC Bank top gainer

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

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The Indian equity benchmark indices opened higher on Wednesday as Asian and American stocks declined on the fears of coronavirus threatening global economic recovery.

HDFC Bank, Eicher Motors, UltraCement Co, Shree Cement, and Grasim were the top gainers on the Nifty50 index. HDFC Bank rose over two percent after the central bank lifted the ban on issuing credit cards.

Wipro, IndusInd Bank, Infosys, Tata Motors, and JSW Steel were major losers on the index, with Wipro declining nearly one percent.

Among NSE’s sectoral gauges, private banks, FMCG, auto and financial services indices gained the most, whereas Nifty Metals, Nifty PSU Bank and Nifty IT opened lower.

Globally, Asian shares held near year-to-date lows Wednesday as overnight declines on Wall Street reinforced worries about the economic impact of the Delta coronavirus variant sweeping through the region. Meanwhile, the Reserve Bank of New Zealand has held off a widely expected decision to raise interest rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.19 percent, having fallen for the past five sessions, and traded just above year-to-date lows touched in July.

Overnight, Wall Street fell after retail sales came in below expectations and valuations become increasingly stretched. All the major benchmark indices fell over half a percent. US Stock futures were little changed in Asian hours.

Over in the currency markets, the dollar hit a nine-month high against the euro and held near recent peaks against other major currencies. Oil continued declining for the fifth straight session in a row, with major benchmarks falling 0.1 percent.

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