Market Update
Welcome to today's market update from BMSMoney. Let's dive into the key highlights of the day.
Sensex & Nifty Performance
In a highly volatile market, both Nifty and Sensex managed to close in the green today. The markets were buoyed by private banks and metal stocks, although gains were limited by a dip in pharma stocks. The Sensex closed at 77,478, while the Nifty ended at 23,567, reflecting a positive trend despite the market fluctuations.
Gainers and Losers of the Day
From the Sensex pack, JSW Steel, Tata Steel, ICICI Bank, Reliance Industries, and Kotak Mahindra Bank emerged as the top gainers, each rising over 1%. On the flip side, Sun Pharma, M&M, NTPC, SBI, and Wipro were the top losers. Sun Pharma's significant drop was particularly noteworthy, closing 2.2% lower after its Dadra facility received a warning letter from the U.S. drug regulator, making it the top Sensex loser.
Sector-Wise Performance
The Nifty Pharma index dropped by 0.5%, dragged down by Sun Pharma's decline. This was a direct consequence of the regulatory issues faced by the company. In contrast, the private bank index rose by 1.16%, bolstered by Macquarie's positive outlook, citing stable asset quality and attractive valuations. The Nifty Metal index gained 1.8% following China's reiteration of a supportive monetary stance, which boosted market sentiment. Additionally, the Nifty Realty index saw a 2% increase, led by significant gains in Prestige, Lodha, and Oberoi Realty.
Global Markets
Global shares hovered around record highs on Thursday, driven by investor confidence in the likelihood of a drop in U.S. interest rates this year. The MSCI All-World index remained steady at 805.19. However, U.S. markets were closed for a public holiday, leading to a quieter trading environment globally.
Crude Oil & Rupee
Brent oil futures were steady, hovering just below seven-week highs as the market awaited U.S. inventory data. August Brent crude futures stood at $85.39 per barrel, while U.S. WTI futures for July were at $81.32 per barrel. Meanwhile, the Indian rupee fell to a record low, ending the day at 83.6525, reflecting ongoing pressures on the currency.
Conclusion
Today's market movements highlight the mixed sentiment among investors, with gains in private banks and metal stocks countered by losses in the pharma sector. The global economic outlook and domestic factors, such as regulatory issues and currency fluctuations, continue to influence market trends. Stay tuned to BMS Money for more updates and insights into the financial world.
Prioritizing Safety: Growth Must Not Come at the Expense of Unacceptable Risks, Says RBI Governor Shaktikanta Das
The Reserve Bank of India (RBI) Governor, Shaktikanta Das, highlighted the impact of the central bank's timely interventions on moderating vulnerabilities in unsecured loans. Speaking at the Second Global Conference on Financial Resilience, organized by the College of Supervisors on June 20, Das emphasized that these actions have successfully slowed the growth of unsecured loans, preventing potential larger issues.
“Our timely action resulted in slowing down the growth of unsecured loans. If left unattended, vulnerabilities on unsecured loans could have become a bigger problem,” Das stated. He stressed the necessity for robust credit assessment processes and risk management frameworks, urging banks and non-banking financial companies (NBFCs) to enhance their oversight mechanisms to mitigate risks associated with unsecured lending.
“Pursuit of business growth is important, but it should never come at the expense of taking on unacceptable risks. Robust risk mitigants are essential for ensuring the long-term success and resilience of a regulated entity as well as the overall financial system,” he added.
The demand for unsecured loans, which are loans not backed by collateral, has surged, raising concerns about higher default rates and their impact on the financial system. To address this, the RBI increased the risk weight on consumer loans by commercial banks and NBFCs by 25 percentage points last year, from 100 percent to 125 percent.
Governor Das also underscored the importance of proactive supervision. He remarked that supervisors should anticipate crises and act promptly, leveraging the unique position and capabilities of the RBI to manage potential crises effectively. “It is our endeavor to smell a crisis. Supervision has become a very complex task. We need to realize it is a complex world, and our supervisory methods should be our best endeavor to remain in sync with time, and to see stress before it builds up,” Das explained.
On the topic of emerging technologies, Das noted that artificial intelligence (AI) and machine learning (ML) could enhance predictive analysis, enabling banks and NBFCs to identify potential risks and trends more accurately. He clarified that the RBI has no intention of making constant regulatory changes unless necessary and pointed out the improved condition of India's financial system compared to the Covid-19 pandemic period.
“India’s domestic financial system is now in a much stronger position, characterized by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and NBFCs,” Das said. However, he cautioned against complacency, urging continuous vigilance and proactive measures to sustain this progress. “There is, however, no room for complacency. We must keep constant vigil and continue to take proactive measures to sustain this progress," he concluded.
Ola Electric Receives SEBI Nod for ₹5,500 Crore IPO
The Securities and Exchange Board of India (SEBI) has granted approval for Ola Electric's Initial Public Offering (IPO), making it the first EV startup in India to take this step. Ola Electric, India's leading electric two-wheeler manufacturer, aims to raise up to ₹5,500 crore through this IPO. This event is poised to be one of the most significant new-age IPOs in 2024.
Ola Electric, based in Bengaluru, submitted its Draft Red Herring Prospectus (DRHP) to SEBI on December 22. The DRHP is a preliminary document filed by a company planning to go public, detailing the business's operations, financials, and the IPO's specifics. It provides potential investors with comprehensive information about the company's strengths, risks, and plans. The DRHP doesn't include details about the IPO price or the number of shares to be issued, hence the term 'red herring'.
The proposed ₹5,500 crore IPO includes both a fresh issue of shares and an Offer for Sale (OFS) of up to 9.52 crore shares. The company seeks a valuation of approximately $6 billion (around ₹49,800 crore). According to the DRHP, promoter Bhavish Aggarwal will offload 4.7 crore shares, which constitutes 50% of the total OFS. Additionally, Ola Electric has the option to raise ₹1,000 crore through a pre-IPO placement, which would reduce the size of the fresh issue accordingly.
Other entities that will divest their stakes include Indus Trust, Kaha Wave Ventures, Alpine Opportunity Fund, DIG Investment Internet Fund, MacRitchie Investments, Matrix Partners India Investments, SVF II Ostrich, and Tekne Private Ventures XV.
An IPO, or Initial Public Offering, is the process by which a private company offers its shares to the public for the first time. This transition from a private to a public company can help the business raise capital to fund expansion, pay down debt, or for other corporate purposes. The size of an IPO often reflects the company's growth potential and market value, attracting investors looking to participate in the company's future success.
For Ola Electric, a portion of the proceeds from the IPO will be used to repay loans owed by its subsidiaries to Axis Bank and Bank of Baroda. The electric vehicle giant, backed by prominent investors like SoftBank and Temasek, also plans to use the funds to expand its electric vehicle portfolio, build a gigafactory, and enhance its sales operations.
This IPO represents a significant milestone not only for Ola Electric but also for the broader Indian EV market, signaling a growing investor interest in sustainable and innovative transportation solutions.
Philippines Accuses China of Using Bladed Weapons in South China Sea Escalation, Calling It Piracy
The Philippines has accused China's Coast Guard of launching a "brutal assault" with bladed weapons during a South China Sea clash, marking a significant escalation in an ongoing dispute that could involve the United States in a global conflict.
Footage released by the Philippine military showed Chinese coast guard officers wielding an axe and other sharp tools at Filipino soldiers, damaging their rubber boat. Manila condemned this as "a brazen act of aggression."
The confrontation occurred near the Second Thomas Shoal in the contested Spratly Islands during a Philippine mission to resupply its soldiers stationed on a beached World War II-era warship, asserting Manila's territorial claims over the atoll. Both nations have blamed each other for the incident.
This event is part of a series of tense encounters in the resource-rich South China Sea. The latest footage signifies a critical point in these tensions, with China employing openly aggressive tactics. Analysts believe this move is intended to test the response of the Philippines and its key defense ally, the United States.
The South China Sea is a highly contested region with multiple governments, including Manila, holding competing claims. China asserts "indisputable sovereignty" over most of the area, including the Spratly Islands, where it has built military installations on disputed islands.