Nifty extends gains 21K mark; Global cues in focus
Markets ended with a minor cut last week as the Reserve Bank of India (RBI) kept its key interest rate unchanged for a sixth consecutive meeting, in line with expectations. RBI held the short-term interest rate steady for the sixth time at 6.5 pct. While it was in line with expectations, there were hopes for positive commentary from the central bank’s Monetary Policy Committee. RBI Governor Shaktikanta Das said the MPC has decided to maintain its “withdrawal of accommodation” stance, with a focus on bringing inflation down to 4 pct.
Globally, Federal Reserve Chair Jerome Powell further dashed interest rate cut expectations followed by better-than-expected US ISM Services PMI and jobs data. For the week, the Nifty fell 71.30 points or 0.33 pct to 21,782. Nifty IT was up by 1.01, Nifty Mid Cap 100 increased 0.85 pct and Nifty Smallcap 100 index ended on a flat note, while Bank Nifty was down by 0.73 pct to 45,634.55. On the institutional activity front, FIIs were net sellers to the tune of Rs 58.73 bn while DIIs were net buyers to the tune of Rs 53.26 bn.
Crude oil recorded weekly gains amidst ongoing tensions in the Middle East following Israel’s rejection of a ceasefire proposal from Hamas. These tensions sustained elevated oil prices, with both Brent and WTI poised to achieve over 6.5 pct gains for the week, bolstered by geopolitical unrest in the region. Brent ended the week at USD 82.2 a bbl. Gold prices couldn’t sustain at higher levels as a stronger U.S. dollar offset safe-haven demand driven by tensions in the Middle East. Gold ended the week at USD 2,038 an oz.
On the economic data front, India’s services activity rose at the sharpest rate of expansion in January 2024. The HSBC India Services PMI came in at 61.8 in January, up from 59 in December. It is the highest since July 2023 when the PMI was 62.3. The Organization for Economic Co-operation and Development (OECD) raised India’s growth outlook for 2024-25 (FY25) to 6.2 pct from the 6.1 pct estimated earlier in its November outlook. Fitch Ratings stated it expects the target of 5.1 pct of GDP to be missed by as much as 30 basis points.
Stocks/Sector in Spotlight
- BPCL was up by 20.82 pct. Its joint venture – Petronet LNG (PLL) concluded and executed a Long-term LNG Sale & Purchase Agreement (LNG SPA) with Qatar Energy for the purchase of around 7.5 MMTPA Liquified Natural Gas (LNG) on a long-term basis. Coal India was up by 12.17 pct was another top gainer on Nifty for the week. Coal India traded higher as it set a new performance high for the month of January 2024 of any year till now. The company notched several record highs in coal supplies and production in January. The company’s output in January was 78.4 MT the highest ever for the month, logging 9.1 pct YoY growth.
- UPL fell by 13.60 pct was the top loser of the week on Nifty. UPL traded under pressure after reporting consolidated net loss of Rs 16.07 bn for Q3FY24 as against net profit of Rs 13.60 bn for the same quarter in the previous year. Total income of the company decreased by 27.23 pct, On a standalone basis, the company reported 85.76 pct fall in its net profit. We however maintain our Hold stance. ITC down by 6.19 pct was another top loser of the week on Nifty. ITC witnessed selling pressure amid reports that the company’s largest shareholder, British American Tobacco (BAT), said it was working towards completing the regulatory process to pare its stake in the diversified conglomerate.
- For Q3FY24, Britannia’s sales grew by 1.42 pct YoY/ declined 3.9 pct QoQ to Rs. 42.56 bn. The EBITDA of the stands at Rs. 8.08 bn in Q3FY24 which increased by 1.25 pct YoY and declined by 6.05 pct QoQ. The EBITDA margins of the company came at 19.29 pct in Q3FY24 vs 19.48 pct margins in Q3FY23. The profit of the company declined by 40 pct YoY due to higher base (exceptional item) to Rs. 5.57 bn in this quarter of the FY24. The volume growth of the company is seen at 5 pct.
- Tata Consumers sales grew 9 pct YoY and 8 pct in CC terms to Rs. 38.04 bn in Q3FY24 against sales of Rs 34.75 bn in Q3FY23. During the quarter, EBITDA witnessed growth of 26 pct YoY to Rs. 5.76 bn. EBITDA margin improved to 15.1 pct YoY in Q3FY24 from 13.2 pct on account of pricing interventions in most of its international markets, softening of commodity costs, and strong operating cost controls. Profit of the company declined to Rs.3.16 bn by 15 pct YoY.
- Trent continues its robust topline growth. Sales of the company grew 50.4 pct YoY to Rs. 34.66 bn in Q3FY24. Across formats, the company continued to register consistent growth. EBITDA registered growth of 96 pct YoY at Rs. 6.2 bn in Q3FY24. The EBITDA margin expanded by 410 bps YoY and came at 18.13 pct in Q3FY24 against 14.03 pct in Q3FY23.
- Navin Fluorine posted sales of Rs. 5,020 mn in Q3FY24 which declined by 11 pct YoY. The EBITDA of the company also slipped by 51 pct during Q3FY24 and currently stood at Rs. 760 mn as compared to the EBITDA of Rs. 1,560 mn in the same quarter of the previous year. The company posted an EBITDA margin of 15.1 pct Vs EBITDA margin of 27.6 pct. Margins of the company contracted by 1250 bps. During the Q3FY24 company posted profit of Rs. 780 mn vs profit of Rs. 1,070 mn on Q3FY23 which de-grew 27 pct YoY.
- PI Industries reported sales of Rs 18,975 mn, up 17.6 pct/ down10.36 pct YoY/QoQ in Q3FY24. Q3FY24 EBITDA came in at Rs 5,536 mn, up by 33.4 pct against EBITDA of Rs. 4,151 mn in Q3FY23 YoY with EBITDA margin improved by ~350 bps on account of favorable product mix and operating leverage. The company’s Profit stood at Rs 4,486 4,805 mn, up 27.5 pct/ down by 6.63 pct YoY/QoQ. The board of directors of the company has declared an interim dividend of Rs. 6 per equity share.
- Bharti Airtel’s Q3FY24 sales grew 5.9 pct YoY to Rs 379 bn YoY. Sales growth was partially impacted by the devaluation of African currencies during the period. EBITDA witnessed an uptick of 7.8 pct YoY to Rs 200.44 bn in Q3FY24. EBITDA margin improved from 52.0 pct in Q3FY23 to 52.9 pct in QFY24. EBITDA margins across businesses in India remained healthy, improving from 52.7 pct in Q3FY23 to 53.9 pct in Q3FY24. Profit of the company stands at Rs. 24.42 bn in Q3FY24, up by 53 pct YoY. ARPU of the company rose to Rs. 208 in this quarter.
- Tata Power sales grew 3.50 pct YoY to Rs. 148 bn and de-grew 3.89 pct QoQ in Q3FY24 due to Higher TPPSL projects execution, higher PLF in Mundra, and higher power prices. The EBITDA of the company increased by 15.33 pct bn YoY and stood at Rs. 32.50 bn with the EBITDA margin of 21.9 pct. The margins of the company increased by 225 bps YoY. During Q3FY24 the company posted a profit of Rs. 10.7 bn up by 2.28 pct YoY and increased by 5.9 pct QoQ.
International Updates
- U.S Labor Department released a report saying initial jobless claims slipped to 218,000, a decrease of 9,000 from the previous week’s upwardly revised level of 227,000.
- U.S. Commerce Department released a report that said wholesale inventories climbed by 0.4% in December after falling by a revised 0.4% in November.
- Germany’s CPI registered an annual increase of 2.9% in January, slower than the 3.7% rise in December.
- Germany’s industrial production dropped 1.6% month-on-month in December, bigger than the revised 0.2% fall in November.
- China consumer prices declined 0.8% on a yearly basis in January, which was steeper than December’s 0.3% decrease.
- The current conditions index of the Economy Watchers’ Survey, which measures the present situation of the economy, dropped to 50.2 in January from 51.8 in December in Japan.
Outlook for the Week
Traders will watch major macro-economic data starting with Consumer Price Index (CPI) data for the month of January to be out on February 12. On the same day, India Industrial Production (IIP) is also going to be released. The Wholesale Price Index (WPI) data for the month of January will be released on February 14.
There are many companies likely to report their quarterly numbers during the week including Bharat Forge, Coal India, NHPC, Steel Authority of India, BHEL, Deepak Nitrite, DLF, Eicher Motors, Hindalco Industries, IRCTC, Info Edge (India), NBCC, ZEEL, Glenmark Pharmaceuticals, Mahindra and Mahindra, Crisil etc.
On the global front, investors would be eyeing few economic data from US, starting with Consumer Inflation Expectations on February 12, Inflation Rate, Redbook on February 13, Export & Import data, Initial Jobless Claims, NY Empire State Manufacturing, Philadelphia Fed Manufacturing, Industrial Production, Manufacturing Production, NAHB Housing Market Index on February 15, Building Permits Prel, Producer Price Inflation, Michigan Consumer Sentiment and Baker Hughes Oil Rig Count on February 16. Technically, with Sensex holding firmly above 70,665, the potential for a further rally towards 75,600 remains on the cards. On macro terms, the Sensex to Gold ratio has seen major breakout on weekly basis which may lead to further concentrated buying in Sensex 30 in the coming week.
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