November 2022 – Eqwires Best Intraday tips provider in India, top trading tips company, Best Stock Advisory service in India

Oil slips on the strong dollar after Fed rate hike, tight supply lends floor

Oil slipped on Thursday as a U.S. interest rate hike pushed up the dollar and fuelled fears of a global recession, although losses were capped by concerns over tight supply. Brent crude shed 37 cents, or 0.4%, to $95.79 a barrel at 0426 GMT, while U.S. West Texas Intermediate (WTI) crude futures dipped 60 cents, or 0.7%, to $89.40.

Both benchmarks settled up more than $1 on Wednesday, aided by another drop in U.S. oil inventories, even as the Fed boosted interest rates by 75 basis points and Chair Jerome Powell said it was premature to think about pausing rate increases. A strong dollar is dragging down oil, with some market participants also likely booking profits following recent gains, CMC Markets analyst Tina Teng said.

A strong dollar reduces demand for oil by making the fuel more expensive for buyers using other currencies. “With the Fed confirming a higher peak in rates, a darkened global economic outlook could continue to pressure the oil futures markets,” Teng added. Stephen Innes, the managing partner of SPI Asset Management, said that it was surprising oil had proved so resilient after the move by the Federal Reserve, but he noted there were a couple of fundamental factors putting a floor under prices.

The European Union’s embargo on Russian oil for its invasion of Ukraine is set to start on Dec. 5 and will be followed by a halt on oil product imports in February. Also likely to keep supply tight in coming months, producers from the Organization of the Petroleum Exporting Countries (OPEC) may struggle to hit previously set output quotas, ANZ analysts said in a note.

OPEC production fell in October for the first time since June. OPEC and its allies, including Russia, also decided to cut their targeted output by 2 million barrels per day (BPD) from November. The market is also expecting demand from China to pick up with hopes that Beijing will ease off on its zero-COVID policies. Chinese policymakers pledged on Wednesday that growth was still a priority and they would press on with reforms. Any indication of a reopening in China following COVID-19 restrictions could be a “monster pivot”, said Innes.

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Fusion Micro Finance IPO opens for public subscription, GMP rises; should you subscribe?

Fusion Micro Finance IPO opened for subscription on Wednesday (2 November), and will conclude on 4 November. The non-banking finance company (NBFC) has fixed the IPO price band at Rs 350-368 apiece. The Rs 1,104 crore IPO comprises the issuance of fresh equity shares worth Rs 600 crore and an offer for sale (OFS) worth Rs 504 crore of 13,695,466 equity shares by promoters and existing shareholders. Half of the issue size has been reserved for qualified institutional investors (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors (NIIs). The minimum bid is that of 40 equity shares and then in multiples thereof. The face value of each share would be Rs 10. Fusion Micro Finance IPO shares were commanding a grey market premium (GMP) of Rs 35-40 apiece.

Fusion Micro Finance IPO share allotment date is 10 November, and the shares will be credited into the Demat accounts of successful bidders on 14. November. Fusion Micro Finance shares will debut on both the leading exchanges BSE and NSE on 15 November. Ahead of IPO, the company raised a little over Rs 331 crore from anchor investors. It allotted 89,99,943 equity shares to anchor investors at Rs 368 apiece, aggregating the transaction size to Rs 331.2 crore, according to a circular uploaded on the BSE’s website. Fusion Micro Finance is a strong player in a sustainably and well-growing MFI sector with healthy growth and operational performance, said ICICIdirect in its IPO note.

Should you subscribe to Fusion Micro Finance IPO?

Reliance Securities: Subscribe
“In view of well diversified and extensive pan-India presence, proven execution capabilities with a strong rural focus, a knack for quick adoption of technology access to capital, effective asset liability management, and valuation comfort we recommend a ‘SUBSCRIBE’ to the issue.

Nirmal Bang: Subscribe
“Fusion has grown its AUM at a CAGR of 37% over FY20-22, one of the fastest amongst listed financials. Fusion’s metrics are similar to those of the largest listed MFI player viz CreditAccess, while Fusion’s valuations are at a steep discount of 45% in comparison. We recommend to ‘Subscribe’ to the issue.”

Hem Securities: Subscribe
“Fusion Micro Finance is well diversified and has an extensive Pan-India presence with a strong rural focus. The company has access to diversified sources of capital and effective asset-liability management with a robust underwriting process and risk management policies. Its stable and experienced management team supported by marquee investors indicates decent fundamentals with strong growth potential in the future. Also, the issue seems reasonably priced at the current level but looking after the industry, we recommend “Subscribe” on the issue for risk appetite investors.”

Swastika Investmart: Subscribe
“The company also has access to diversified and recognized sources of capital and has a good financial track record. Although this company’s margins are now in declining mode and it is facing risk due to the category of borrowers it serves, an increase in the level of NPAs could also be a concern for the company. Secondly, the company demands a price-book (P/B) multiple of 1.8 on a post-IPO basis, whereas its peers like credit access command a P/B of 3.3. Thus, considering all the factors, we recommend a Subscribe rating for this issue, but only for high-risk investors with a long-term view.”