Month: July 2021

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Asian stocks sink after Wall St pulls back from record

Asian stock markets declined Wednesday after Wall Street pulled back from a record as investors awaited a Federal Reserve report for signs of when US stimulus might be withdrawn. Investors also were uncertain how much farther China will go with a regulatory crackdown that set off a slide in its internet share prices. Shanghai, Tokyo and Sydney retreated while Hong Kong advanced.

Investors were digesting US earnings reports while worries increased after the Centers for Disease Control and Prevention recommended even vaccinated people return to wearing masks indoors in areas where the coronavirus’s more contagious delta variant is spreading. “Investors turned cautious,” said Edward Moya of Oanda in a report.

A meeting of the Federal Reserve board that began Tuesday is expected to bring an update on when the US central bank might start to reduce bond purchases that inject money into financial markets and keep interest rates low. The Shanghai Composite Index lost 0.6 per cent to 3,363.00, declining for a third day, while the Nikkei 225 in Tokyo fell 1.5 per cent to 27,561.50. The Hang Seng in Hong Kong shed 0.2 per cent to 25,027.16.

The Kospi in Seoul lost 0.4 per cent to 3,220.17, while Sydney’s S&P-ASX 200 gave up 0.8 per cent to 7,369.70. New Zealand and Southeast Asian markets declined. On Wall Street, the benchmark S&P 500 fell 0.5 per cent to 4,401.46, snapping a five-day streak of gains. The Dow Jones Industrial Average dropped 0.2 per cent to 35,058.52. The Nasdaq lost 1.2 per cent to 14,660.58.

Selling was most pronounced in technology and communication stocks, and in companies that rely on consumer spending. Traders shifted money into sectors seen as less risky, including utilities, health care and in companies that make household and personal goods. Shares in Chinese internet giants slid for a third day as investors waited for possible new action after Beijing stepped up anti-monopoly and data security enforcement against the industry. They were reported to be considering restrictions on for-profit education ventures.

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Zomato, Naukri.com shares may not make it to Nifty 50 this time, but strong case for future entry

New age internet shares such as Zomato and Info Edge (naukri.com) may not make it to the benchmark NSE Nifty 50 index in the impending review next month, despite having a high market capitalization. However, Info Edge is the best possible contender for a spot in Nifty 50 in future reshuffles, ICICI Direct said in a report. Zomato too has a bright chance of making it to Nifty 50 in the future. “New large-cap internet platform companies like Zomato with high free-float market cap due to zero promoter holdings could be serious contenders for entry into the benchmark indices going ahead,” the report said.

Info Edge stock: Falling short on free float
Info Edge’s average free-float market capitalisation is below that of Indian Oil — the smallest free-float market cap stock within the current Nifty 50 index. For a stock to qualify for inclusion, it should have an average free-float market capitalisation of at least 1.5 times the average free-float market capitalization of the smallest constituent in the index — where Info Edge falls short. “As per the index methodology, the investible weight factor (IWF) is determined as the amount available for trading and which is not held by entities having strategic interest in a company,” ICICI Direct said.

Entry into the benchmark Nifty 50 index is decided on the basis of a stock’s average market capitalization in the previous six months among other factors. Stocks that are currently a part of the Nifty 100 index and available for trading in NSE’s Futures & Options segment are picked for Nifty 50.

Info Edge best placed for future entry
Info Edge is still the best-placed stock to enter the index in the next reshuffle. “Info Edge will be the first pure-play internet platform company to be included in the NIFTY50 index as and when it qualifies,” ICICI Direct said. Putting things into perspective, the brokerage firm highlighted that even the US Dow Jones Industrial Average still doesn’t have any of the internet platform companies such as Amazon or Google as part of its constituents given the limitations of it being a price-weighted index.

Zomato, internet and new-age economy stocks gearing up to dominate
Now with the advent of the internet and the new-age economy, the three best-placed stocks to enter the index are Info Edge, Radhakishan Damani’s Avenue Supermarts (DMart), and Gautam Adani’s Adani Green Energy. “All the three stocks are notably from the new-age economy sectors of internet businesses, organised discount grocery retail with e-commerce incubation, and a green energy company, respectively,” the report said. DMart and Adani Green Energy currently fail to qualify for not being a part of the F&O list.

ICICI Direct said that Nifty 50 exclusion and inclusion trends reflect the emerging pockets of demand in the economy over the long term. Between 2003-2011, the rising investment rate drove demand in the economy and bulk of the stock additions to the index were from the investment and related credit cycle of the economy. Further, between 2012-20 bulk of the additions were from the consumption side of the economy.

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AEML raises USD 300 million by issuing sustainability bonds

Adani Electricity Mumbai Ltd (AEML) on Friday said it has raised USD 300 million (around Rs 2,232 crore) by issuing 10-year sustainability-linked bonds to global investors. It has announced a USD 2 billion global medium-term notes programme and is the first company in India’s energy sector to undertake fundraising through this route, a company statement said.

”AEML priced its first takedown of USD 300 million through 10-year notes under the 144A / REG S format,” the statement said adding it got the tightest coupon ever by a BBB- rated utilities issuer in Asia excluding Japan. The proceeds will be utilised for refinance of existing debt and regulatory asset development for enabling ‘asset hardening’, the statement added.

It said the takedown was oversubscribed 9.2 times, and also gave a geographical split of the investors which included Asia (49 per cent), Europe Middle East and Africa (27 per cent) and North America (24 per cent).

After the transaction, AEML’s capital management plan enters the next phase with 100 per cent of the term debt being placed in the international capital markets and the overall maturity increases to nine years. The company, bought by the Adani Group from Anil Ambani-led Reliance Energy, services 12 million consumers in the financial capital.

”AEML has set for itself some of the nation’s most challenging renewable penetration targets in the short term, thereby showcasing our commitment towards net zero emissions. “We have also committed to the short-term target of reductions of Green House Gas (GHG) Emission intensity by 60 per cent from FY19 levels to stay in line with COP26 targets,” its managing director and chief executive Kandarp Patel said.

The assurance of the sustainability framework for the issue was completed through external agencies, which included Moody’s Investors Service Vigeo Eiris providing a second party opinion on AEML’s Sustainability Framework and British Standards Institute assuring the baselines for the targets.

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Rakesh Jhunjhunwala buys 1 crore shares of Indiabulls Housing Finance in Apr-Jun 2021; stock surges 5%

Rakesh Jhunjhunwala acquired 1 crore shares or a 2.17 per cent stake in Indiabulls Housing Finance firm in the April-June quarter of FY22. Jhunjhunwala did not hold any stake in this housing finance firm in the March 2021 quarter. This comes after the ace investor raised stakes in companies such as Federal Bank, SAIL, Edelweiss Financial Services in the quarter of the current fiscal. Mutual funds also raised stake to 2.95 per cent or 1.36 crore shares from 2.81 per cent or 1.29 crore shares at the end of June quarter. Similarly, Foreign Portfolio Investors (FPIs) raised in Indiabulls Housing Finance to 33.63 or 15.53 crore shares from 33.61 per cent or 15.51 crore shares.

During the first quarter of the current fiscal, Blackrock Funds bought an additional stake in Indiabulls Housing Finance, taking the total stake to 3.54 per cent or over 25 lakh shares. In the previous quarter, the stake stood at 2.55 per cent. Blackrock Global Funds Emerging Markets Fund held 1.10 per cent stake, Blackrock Emerging Frontiers Master Fund 1.15 per cent and Blackrock Strategic Funds – Blackrock Emerging Markets 1.29 per cent in Indiabulls Housing Finance, as of June 2021. The promoter stake stod at 21.69 per cent, as against 21.70 per cent in the March 2021 quarter.

On BSE, Indiabulls Housing Finance shares surged nearly 5 per cent to Rs 278.80 apiece in intraday deals. The stock had hit a 52-week high of Rs 313.50 in the mid of the previous month. During the first quarter of the current fiscal, Rakesh Jhunjhunwala, the big bull of domestic stock markets, has trimmed his stake in Tata Motors, Titan Company and Autoline Industries.

Last month, Indiabulls Housing Finance said its board of directors has approved a proposal to raise over Rs 7,000 crore through various financial instruments. This includes about Rs 2,043 crore by issuing equity shares or other instruments, the company said in a statement. The plan will also include issuance of unsecured or secured, listed or unlisted, redeemable non-convertible debentures with or without warrants or any other similar security denominated in Indian rupees in one or more tranches for Rs 5,000 crore (equivalent currency) on private placement basis or otherwise.

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