Sensex, Nifty Lose Over 1% Dragged By Energy, I.T., Metal Stocks; FPIs Turned Net Buyers

India's stock benchmarks declined, dragged by losses in energy, information technology and metal stocks. The decline comes amid selloff across global markets amid hawkish comments from central bankers, lockdown in China. The fall in energy and oil & gas stocks followed government's decision to hike windfall tax on diesel, crude and ATF exports.

The Sensex lost 770.48 points (1.29%) to 58,766.59. The Nifty 50 shed over 200 points (1.22%) to 17,542.80. The benchmarks have witnessed significant volatility in this truncated week, so far, rising 2.5% on Tuesday either side of over 1% decline on Monday and Thursday.Today 37 of the Nifty 50 stocks fell while 13 rose. Hindalco, Reliance Industries, ONGC, TCS, SBI Life were among the top losers.

The broader indices outperformed their larger peers, with MidCap rising 0.6% and SmallCap jumping 0.5%. Thirteen of the 19 sectoral indices compiled by BSE Ltd. declined with Energy measure losing 2%.

The market breadth was skewed in the favour of bulls. About 1,958 stocks rose, 1,468 fell and 152 remained unchanged.

Overseas investors bounced back as net sellers on Thursday post buying the highest worth of Indian Equities on Tuesday.

The longest buying stretch by FPIs, this year so far, lasted 13 days from July 28 to August 17.

As per data from the National Stock Exchange, foreign portfolio investors net sold equities worth Rs 2,290.31 crore today.

Domestic institutional investors, on the contrary, turned net buyers and bought equities worth Rs 951.13 crore today.

Institutions net bought Rs 14,956.61 crore worth of equities in the month of August and net sold equities worth Rs 34,822.26 till date in 2022.

• Yield on the 10-year bond rose 3bps to 7.22%.

Source: Bloomberg

• Indian currency rose 17 paise to 79.29, during the session. The Rupee erased gains and closed 10 paise lower at 79.56.

Source: Bloomberg

Shares of Deepak Fertilisers & Petrochemicals Corp fell 5%, equalling the magnitude of decline in 10 weeks since June 20.

• The company approved allotment of 56,44,877 shares of face value of Rs 10 each to International Finance Corporation, after the conversion of foreign currency bonds.

• IFC agreed to convert bonds worth $15 million in September 2020 at Rs 195 apiece.

Source: Exchange Filing, Bloomberg

Shares of Bharti Airtel jumped over 2.5% in intraday trade in a weak market.

• The digital communications solutions provider announced several new products in its cloud portfolio ahead of the 5G service launch. The cloud offerings will fall under Edge Cloud Portfolio.

• Airtel with use Qwilt's Open Edge Cloud solution for deploying new cloud offerings. Airtel Cloud's Edge content delivery network accelerates web and video content delivery, the company said in a statement. The service is likely to be useful in OTT, Ed-Tech, Gaming and Healthcare sectors.

• This launch comes after efforts the company to spearhead 5G throughout the country. Airtel recently tested captive private network at the Bosch facility in Bengaluru, thereby becoming the first company to do so. Airtel also promised to bring out targeted cloud solutions for specific industry needs such as banking, 5G Edge, developer and hybrid cloud requirements, in due course of time.

• Of the 33 analysts tracking the company, 30 maintain 'buy', two suggest 'hold' and one recommends 'sell'. The return potential of the stock is 18.2%.

Source: Bharti Airtel statement, Bloomberg

U.S. FDA issued a Form 483 with two observations after conducting inspection at the company's injectable facility at Karkhadi.

None of the observations are related to data integrity and are addressable, the company said in an exchange filing.

U.S. FDA conducted inspection at the plant between August 18 and August 30.

Source: Exchange filing

India's stock benchmarks declined, dragged by losses in oil and gas, metals, IT and energy stocks in the trading session so far. The Sensex and Nifty 50 both were down 0.9%.

The 30-stock gauge had lost over 550.83 points to hover around 58,990. The Nifty 50 traded around 17,600. Today 14 of Nifty 50 stocks rose while 36 fell.

The broader indices outperformed larger peers with MidCap gauge losing 0.4% and SmallCap measure declining 0.5%. Nine of the 19 sectoral indices compiled by BSE Ltd. advanced while I.T. index shed nearly 2%.

The market breadth is skewed in the favour of bulls. About 1,937 stocks rose, 1,361 fell and 180 remained unchanged.

Shares of MM Forgings Ltd. rose over 8.5%, most in three months, during the session.

• Trading volume on the stock is nearly quadruple the 30-day average. The advance comes after the company agreed to make strategic investment in Abhinava Rizel Pvt Ltd. by subscribing shares equivalent to 88% of share capital. MM Forgings, the manufacturer of steel forgings in raw, various grades of carbon, alloy, micro alloy and stainless steel, entered into share subscription and shareholders' agreement with Abhinava Rizel. MM Forgings has not disclosed the cash paid for the deal. The acquisition is to be completed on or before September 30.

• Abhinava Rizel is a start-up, engaged in R&D, manufacturing of parts/components including but not limited to electric power train/drivetrain systems, electric motors, motor controllers, gearboxes.

• Of the five analysts tracking the company, three maintain 'buy', one suggests 'hold' and one recommends 'sell'. The return potential of the stock is 19.4%.

Source: Exchange filing, Bloomberg

Shares of Zee Entertainment Enterprises Ltd. fell nearly 5%, most in 10 weeks. Trading volume is more than twice the 30-day average.

• The decline comes Reuters reported on Wednesday that Competition Commission of India issued a notice on proper merger of Zee Entertainment with Sony Group's India unit. CCI flagged that the merged entity could potentially have 'unparalleled bargaining power', according to the report, attributed to an official notice seen by Reuters.

• CCI notice also stated that 'further investigation is merited', with regard to the merger. The anti-trust watchdog's finding could lead to delay in regulatory approvals for the deal.

• Sony and Zee signed definitive agreements for the merger of Zee Entertainment into Sony Pictures Networks India. If the merger is sealed, the merged entity will have a value of $10 billion, Punit Goenka, MD of Zee, said in an interview last year.

• The proposed merger has already received approval from the stock exchanges BSE and NSE.

• Earlier on Tuesday post market hours, Zee Entertainment announced that it entered into a strategic licensing agreement with Disney Star. Disney Star will license the TV broadcasting rights of ICC Men's and Under 19 global events for four years, exclusively to Zee. Disney Star will exclusively retain all ICC digital rights. The deal makes Zee the exclusive TV rights holder for ICC Men's T20 World Cups (2024,2026), ICC Men's Champions Trophy (2025), ICC Men's Cricket World Cup (2027) among others.

Of the 23 analysts tracking the company, 20 maintain 'buy', one suggests 'hold' and two recommend 'sell'.

Source: Exchange filings, Bloomberg

August gross GST collections stood at Rs 1.43 lakh crore. This is 28% higher than the GST revenues in August last year.

August 2022 Figures

• Gross gst revenue :₹ 1,43,612 crore

• CGST : ₹ 24,710 crore

• SGST : ₹ 30,951 crore

• IGST : ₹ 77,782 crore (including ₹ 42,067 crore collected on import of goods)

• Cess : ₹ 10,168 crore (including ₹ 1,018 crore collected on import of goods).

Source: PIB

• The Indian currency depreciated 21 paise (0.26%) against the greenback, during the session.

• Rupee erased losses and rose 17 paise to 79.29.

Source: Bloomberg

Shares of SpiceJet tumbled nearly 15%, the worst fall in nearly 11 months. Trading volume is nearly thrice the 30-day average.

• The steep decline comes after the budget carrier posted losses in quarters-ended March and June, dragged by high ATF costs and weak Rupee.

• The airline posted a loss of Rs 789 crore in the first quarter of fiscal ending March 2023 against a Rs 458-crore loss in the fourth quarter of FY22. Excluding forex loss of Rs 369 crore, the Q1 loss amounts to Rs 420 crore.

• The company had delayed the announcement of its financial results for both quarters due to disruptions caused by a ransomware attack in May.

• Of the 10 analysts tracking the company, two maintain 'buy', four suggest 'hold' and four recommend 'sell'. The return potential of the stock is -35.8%. The stock has underperformed the benchmarks, falling 36% in 2022 so far compared to 4.4% gain for Sensex.

Source: Bloomberg, Exchange filing

Shares of Steel Strips Wheels surged 4.5% in intraday trade, on course to gain 8% in two sessions.

• Trading volume is seven times the 30-day average.

• The manufacturer of single piece steel wheel rims for scooters, passenger cars, utility vehicles and tractors achieved 100% YoY monthly sales growth in alloy wheels in August.

• Net turnover rose 14.55% YoY in August to Rs 352.93 crore compared to Rs 308.09 crore in August 2021. Gross turnover rose 17.06% YoY to Rs 436.67 crore.

Source: Bloomberg, Exchange filing

• Manufacturing PMI eases to 56.2 in August from 56.4 in July.

Source: S&P Global

• Moody’s cuts India’s economic growth forecast for calendar year 2022 to 7.7% in it’s August update from it’s May forecast of 8.8% and March forecast of 9.1%.

• Moody’s Investors Service forecasts India’s GDP to grow by 7.7% in 2022 and to decelerate further to 5.2% in 2023.

• India’s real GDP growth will slow from 8.3% in 2021 to 7.7% in 2022 and decelerate further to 5.2% in 2023.

• The expectation assumes that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis.

• A quicker letup in global commodity prices would provide significant upside to growth. In addition, economic growth would be stronger in 2023 if the private-sector capex cycle were to gain steam.

Source: Global Macro Outlook, August update, Moody’s Investors Service

Shares of Biocon fell 4%, steepest intraday decline in five weeks, to Rs 297.55 apiece. Trading volume is more than twice the 30-day average.

• The fall comes after the U.S. FDA issued Form 483 with 11 observations each for the two sites in Bengaluru and six observations for the one site in Malaysia. These observations highlight the need to improve strategies for microbial control, quality oversight and augment the use of software applications and computerised tools, the drugmaker said.

• The U.S. drug regulator had conducted three on-site inspections of Biocon Biologics' seven manufacturing facilities in Bengaluru, India and Johor in Malaysia. The inspections, which commenced with the Bengaluru site on Aug. 11 and concluded with the Malaysia site on Aug 30, were triggered on account of three pre-approval inspections for biosimilar Bevacizumab, rh-Insulin and Insulin Aspart and a capacity expansion inspection for biosimilar Trastuzumab, Biocon said in an exchange filing.

• Biocon said it will submit corrective and preventive action plans to the drug regulator in the stipulated time frame. The company added that the outcome of these inspections was unlikely to hinder the current supply of its products.

• Of the 21 analysts tracking the company, 13 maintain 'buy', four suggest 'hold' and four recommend 'sell'. The return potential of the stock is 23.4%.

Source: Exchange filing, Bloomberg

Shares of Ashok Leyland jumped nearly 5%, most in over four weeks to a four-year high of Rs 161.6 apiece.

The rise comes after Ashok Leyland announced that it bagged orders for 1,400 school buses from major fleets in the UAE. The deal has been bagged by Ashok Leyland's UAE distribution partners, Swaidan Trading - Al Naboodah Group. The value of the order has not been disclosed. Bulk of the supply will be made to Emirates Transport and STS Group, according to the company statement. Ashok Leyland will also supply 55-seater Falcon bus and 32-seater Oyster bus from its $50 million facility in Ras Al Khaimah, UAE. Ashok Leyland has manufactured 25,500 buses from the facility since its launch in 2008. The buses produced from UAE are exported to African countries as well.

Trading volume is nearly five times the 30-day average. Of the 47 analysts tracking the company, 39 maintain 'buy', seven suggest 'hold' and one recommends 'sell'. The return potential of the stock is 7.7%.

Source: Exchange filing, Bloomberg

Shares of fuel exporters and oil explorers, such as Reliance Industries, Mangalore Refinery, Chennai Petroleum, ONGC fell as union government almost doubled windfall tax on exports of diesel. The levies for ATF has been hiked by over four times. The new tax rates will be effective from today, according to a gazette notification on Wednesday.

• Windfall tax on diesel exports was increased to Rs 13.5 per litre from Rs 7 per litre earlier. The levy on ATF shipments was hiked to Rs 7 from Rs 2 earlier. Tax on crude oil produced in domestic fields was also increased to Rs 13,300 per tonne from Rs 13,000 per tonne.

• The recent hike is part of the fortnightly revision in windfall taxes. India introduced the levy in June this year.

Source: Gazette notification, Bloomberg

• MOIL has cut the prices of ferro grades of manganese ore with a manganese content of minimum 44%, by 15%.

• The prices of all other ores with a manganese content below 44% have been decreased by 10%.

Source: Exchange filing

India's stock benchmarks opened lower, shedding over 1%, dragged by losses in energy, banking, information technology and metal stocks.

The S&P BSE Sensex lost over 700 points (1.24%) to 58,806.10. The NSE Nifty 50 declined 1.2% to 17,543.80. Today 10 of Nifty 50 stocks rose, while 40 fell.

The broader indices outperformed their larger peers, with MidCap index gaining 0.1% and SmallCap gauge rising 0.34%. Fourteen of the 19 sectoral indices compiled by BSE Ltd. declined with Information Technology, Oil & Gas measures falling over 1.5%.

The market breadth is skewed in the favour of bulls. About 1,624 stocks rose, 974 fell and 133 remained unchanged.

• Yield on the 10-year bond rose 2bps to 7.21%. at the open.

Source: Bloomberg

• Indian currency depreciated 9 paise to 79.55, at the open.

Source: Bloomberg

• Retail loans grew 18.8% year-on-year to Rs 35.94 lakh crore, supported by growth in housing, consumer durable, vehicle and credit card loans.

• Industrial credit rose 10.5% year-on-year to Rs 31.82 lakh crore, supported by growth in telecom, airport, roads, power and other infrastructure loans.

• Credit to NBFCs rose 27.4% year-on-year and stood at Rs 11.63 lakh crore, up 7.9% year-to-date.

Source: RBI

• RRPR Holding has informed Adani Group unit VCPL that allotment of NDTV shares to the VCPL will need approvals or clarifications from the Income Tax Authorities.

• RRPR Holding also said that as individuals, Radhika and Prannoy Roy may individually require independent approval to deal with any assets, including indirect shareholding in NDTV.

• The founder firm has invited VCPL to join its application to the Income Tax Authorities for clarification on the matter.

Source: Exchange filing

• Government hikes windfall tax on diesel to Rs 13.5 per litre from Rs 7.

• It also raised taxes to Rs 9 per litre on ATF exports from Rs 2 per litre.

• Tax on domestically produced crude oil raised from Rs 13,000 per ton from Rs 13,300.

Source: Gazette notification

• U.S. Dollar Index at 109

• U.S. 10-year bond yield at 3.38% on Wednesday

• Brent crude down 2.8% to $96.49 per barrel

• Nymex crude at $89.13 per barrel

• SGX Nifty up 0.06% to 17,520 as of 6:02 a.m

• Bitcoin down 0.4% to $20,119.4

• Zee Entertainment: The company entered strategic licensing agreement with Disney Star for TV broadcasting rights for ICC Men’s and Under 19 global events for a period of four years. Merger between Sony and Zee Entertainment will likely hurt competition, CCI found in an initial, Reuters reported citing an offical notice. CCI's findings could potentially delay regulatoary approval for the deal.

• Tata Motors: The company has bought 49% stake of Marcopolo S.A. in Tata Marcopolo Motors for Rs 99.96 crore. Consequently, TMML will become a wholly owned subsidiary of the company.

• Tata Steel: The company has invested Rs 54 crore in its wholly owned subsidiary Tata Steel Mining.

• Infosys: The company divested its minority stake in San Francisco based Trifacta Inc for $12 million.

• Glenmark: The company along with Hikma Pharmaceuticals launched nasal spray Ryaltris for relief for both nasal and ocular symptoms of seasonal allergic rhinitis

• Inox Wind: The company approved fund raising of Rs 800 crore via issue of non-convertible preference shares to promoters on preferential basis. The funds will be used for repayment of debt. It aims to achieve net debt zero status “in the near future.”

• Credit Access Grameeen: The company has entered an arrangement to avail $90 million through first of its kind Loan Syndication Arrangement led by HSBC Bank. The other lenders in the syndication arrangement include Bank of India, Union Bank of India and UCO Bank.

• Aditya Birla Fashion and Retail: The company received approval from Competition Commission of India for acquisition of 7.49% stake by Caladium Investment Pte for Rs 2,195 crore.