Top Business News: February 3, 2023

The rupee appreciated by 34 paise to close at 81.86 (provisional) against the US currency on Friday, supported by a rebound in domestic equities and easing crude oil prices.

At the interbank foreign exchange market, the local unit opened at 82.15 against the American currency and finally settled at 81.86 against the greenback, registering a gain of 34 paise over its previous close of 82.20.

The stock market turmoil created by rout in Adani group shares is a “storm in a tea cup” from a macroeconomic point of view, Finance Secretary TV Somanathan said on Friday, emphasing that India’s public financial system is robust. The senior most bureaucrat in the Finance Ministry also said that movements in the stock market per se are not the government’s concern and there are independent regulators to take necessary action.

Benchmark indices ended sharply higher on Friday, aided by a rise Auto, Banking, and Financials and optimism that the rate hike cycle may be near its end after global central banks hinted at inflation easing, while the ongoing rout in Adani group stock capped gains.

The Nifty 50 index rose 243.65 points or 1.38% to 17,854.05, while the S&P BSE Sensex climbed 909.64 points or 1.52% to 60,841.88,

Banking index rose over 2% ahead of earnings of State Bank of India and after clarification from life insurers SBI Life and HDFC Life, addressing investor concerns regarding the latest budget proposals.

Thirty-one of the Nifty 50 stocks rose with Titan , IndusInd Bank, Bajaj Finance, SBI Life and SBI among the top gainers.

The stock of ITC (₹380) is ruling at record levels after witnessing a sharp rally in the past few trading sessions. Since the stock has broken out afresh, we expect it to carry the momentum in the coming days leading to more appreciation. Hence, our suggestion is to hold the 380-strike call option.

Cognizant Technology Solutions, the US-based IT company with a large presence in India, reported a 10 per cent drop in net profit to $521 million for the fourth quarter ended December 31, 2022 as against $576 million in the same quarter previous year. Revenue was marginally up by 1.3 per cent to $4.8 billion ($4.7 billion).

During the fourth quarter, the company recorded a $59 million ‘impairment of capitalised costs’ related to a large volume-based contract with a Health Sciences customer, says a release.

“Within financial services, revenue declined 1 per cent reflecting a negative impact of 180 basis points related to the previously disclosed sale of our Samlink subsidiary. This was partially offset by growth among public sector clients in the UK and insurance clients,” Jan Siegmund, CFO, Cognizant, told analysts.

For the full year ended December 31, 2022, the company reported higher net profit of $2.3 billion ($2.1 billion) on increased revenue of $19 billion ($18 billion).

Brookfield Asset Management Company is in talks with Singapore’s sovereign wealth fund GIC to sell half its stake in the special purpose vehicle that is holding its office assets in Powai, Mumbai for $1.5 billion, two sources with knowledge of the deal said.

The 4.2 million square feet of office and retail space was acquired by the Canadian alternatives asset manager in October 2016 from the Hiranandani group for around $1 billion, in one of the largest deals then in the real estate sector. At that time, GIC had been among the funds in the race for the assets, which had seen interest from other global investors as well, including US-based Blackstone Inc.

Fitch Ratings said on Friday it will be monitoring Adani group companies’ access to financing, cost of financing, or any other developments that could affect their credit profiles and consequently their ratings.

It added that there was no immediate impact on the rating of the companies and securities issued by them following the allegations of malpractices by Hindenberg Research last week.

After showing mild volatility, the markets rose nearly 1 per cent in the afternoon session. The BSE Sensex gained 619.15 points to 60551.14, while the Nifty gained 147 points to 17.757.30 on the NSE. Bank Nifty rose over 1.25% to 41,186.10. However, FMCG, IT, Media, Metal and Pharma fell between 0.40% and 1.50% today.

The Indian services sector growth rate moderated in January as output and sales rose at softer rates, while subdued level of confidence among service providers towards future outlook appeared to have stymied job creation, a monthly survey said on Friday.

The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 58.5 in December to 57.2 in January.

Despite easing from December, the latest figure remained above its long-run average (53.5) and the upturn was associated with favourable demand conditions and ongoing increase in new work.

For the 18th straight month, the headline figure was above the neutral 50 threshold. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

The finance minister proposed several changes in the new IT regime. It is proposed that the income slabs be reduced from six to five and the basic tax exemption limit be increased to₹3 lakh. The rebate under section 87A will be increased to₹7 lakh from the current level of ₹5 lakh.

The Indian services sector growth rate moderated in January as output and sales rose at softer rates, while subdued level of confidence among service providers towards future outlook appeared to have stymied job creation, a monthly survey said on Friday.

The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 58.5 in December to 57.2 in January.

Despite easing from December, the latest figure remained above its long-run average (53.5) and the upturn was associated with favourable demand conditions and ongoing increase in new work. - PTI

Adani stocks continued their downward journey on extreme selling pressure today also. The stocks were down for over a week without any let up.

While Adani stocks were trading in the red on the domestic bourses with over $100 billion of the company’s value wiped out, its bonds trading overseas fell to distressed levels.

On the BSE, Adani Power was down 5% to Rs 192.05, Adani Enterprises tumbles 18.35% to Rs 1,277.95; Adani Total Gas was down 5% to Rs 1,625.95; Adani Transmission declined 10% to Rs 1,401.55 and Adani Ports was down 4.30% to Rs 442.10.

The Indian benchmark indices – the Nifty 50 (17,590) and the Sensex (60,085) – began the session with gain. While both the indices softened, Sensex is still in the green whereas Nifty is trading flat as it stands.

The market breadth of the Nifty 50 is indicating a bearish bias as the advance/decline ratio stands at 20/30. Like the benchmark, the mid- and small-cap indices are in the red and most of the sectors have also lost.

Equity benchmarks climbed in initial trade on Friday amid a strong rally in the US markets and buying in banking counters.

At 11 am, the 30-share BSE benchmark Sensex rose by 262.47 points to 60,194.71. The broader NSE Nifty advanced 29.05 points to 17,639.45.

Top gainers, losers

From the Sensex pack, IndusInd Bank, Titan, Bajaj Finance, HDFC Bank, Bajaj Finserv, ICICI Bank, HDFC and State Bank of India were among the major winners.

Reliance Industries, Tech Mahindra, Tata Steel, HCL Technologies, Infosys and Nestle were among the laggards.

Strong global markets

Elsewhere in Asia, equity markets in Seoul and Tokyo were trading in the green, while Shanghai and Hong Kong quoted lower.

Markets in the US ended mostly in the positive territory on Thursday.

“The ferocious rally of 3 per cent in Nasdaq yesterday is an indication that the market expects a soft landing of the US economy. IT stocks look strong,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The stock of Rajesh Exports has been trading in the range of ₹830 and ₹880 for nearly three weeks. But on Thursday, it rallied above the range top, opening the door for further appreciation. Looking at the price action on the daily chart, it will most probably rally on Friday. So, traders can consider the stock of Rajesh Exports for intraday longs.

We suggest buying at the current level of ₹892 and placing stop-loss at ₹870. On the upside, the scrip looks set to hit ₹940 and so, this can be the target.

That said, Do not trade if the stock opens below ₹870 on Friday.

Equities held on to their gains in the first one hour of trading period. The Sensex was up 60,321.79+389.55 +0.65% and the Nifty gained 57.45 points to 17,667.85.

​Cognizant Technology Solutions, the US-based IT company with a large presence in India, reported a 10 per cent drop in net profit to $521 million for the fourth quarter ​ended December 31, 2022 as against $576 million in the same quarter previous year. Revenue was marginally up by 1.3 per cent to $4.8 billion ($4.7 billion).

During the fourth quarter, the company recorded a $59 million ‘impairment of capitalised costs’ related to a large volume-based contract with a Health Sciences customer, says a release.

Sensex rose nearly 300 points at opening session. The Sensex was trading at 60,209.17+276.93 +0.46% and the Nifty was quoted at 17,676.65 66.25 0.38%

The government is likely to sell a part of its residual stake in Hindustan Zinc Ltd by next month to help it achieve the revised sell-off target of ₹50,000 crore for the current fiscal, DIPAM Secretary Tuhin Kanta Pandey said on Thursday.

Buzzing stocks include SBI, Paytm, Bank of Baroda, IndusInd Bank, HDFC AMC, Tata Power, Divis Labs, Engineers India, India Cements, Intellect Design Arena, InterGlobe Aviation, and JK Tyre & Industries.

After the Union Budget for 2023-24 proved to be a dampener for the life insurance industry, sector players are now joining hands to approach the Finance Ministry likely to seek a rollback of or clarity on the tax announcement. The most crucial thing being sought is to increase the tax exemption limit to ₹10 lakh from ₹5 lakh announced in the Budget, and to make the cap applicable on single policies and not on the cumulative policies held by an individual.

A source told businessline that instead of individual companies, life insurers are expected to make a representation via the Life Insurance Council or one of the CFO industry groups and that IRDAI will be kept in the loop.

Budget proposal

The Budget on Wednesday proposed limiting tax exemption from proceeds of insurance policies with very high value. Effective April 2023, aggregate premium from policies other than ULIPs, of over ₹5 lakh, will be taxable under ‘Income from Other Sources’. Following the announcement, shares of listed life insurance companies fell 8-12 per cent.

Insurers have said that while the impact on their bottomline will be minimal due to the taxation being applicable only on high value policies, demand for such covers is likely to fall substantially in the absence of any tax benefit, as traditional products have largely been sold as stable, tax free return on investment.

Domestic markets, especially Nifty, which is struggling due to two Adani stocks being part of it, are likely to open positive on Friday. Strong global cues to aid market recovery, said analysts. Some of the beaten down stocks will recover on global sentiment, they expect.

SGX Nifty at 17,704 indicates a positive opening for Nifty, as Nifty futures on Wednesday closed at 17,685.25. “The big events such as Budget and FOMC policy outcome have passed and the market thus finally seems to be settling down post the recent high volatility,” said Ruchit Jain, Lead Research, 5paisa.com.