Sensex Trades Flat Ahead of RBI Policy Decision; Telecom & FMCG Stocks Under Pressure

Thu, 10 Feb 10:30 am

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Asian share markets are mixed today following solid gains on Wall Street as investor sentiment improved ahead of a key inflation reading.

The Nikkei is up 0.3% while the Hang Seng fell 0.5%. The Shanghai Composite is down 0.1%.

In US stock markets, Wall Street indices closed sharply higher on Wednesday as megacap growth stocks powered up thanks to a pause in rising interest rates, and upbeat earnings reports.

The Dow Jones surged 0.9% while the tech heavy Nasdaq rallied a massive 2.1%.

Back home, Indian share markets are trading on a flat note. Benchmark indices opened on a positive note and extended gains to a third straight session ahead of RBI's MPC meeting outcome.

The RBI policy decision could be a key driver in the near term as it may impact liquidity and interest rates. According to reports, a 25 basis points hike in reverse repo rate is on the cards.

Market participants are tracking shares of Hindalco Industries, M&M, Zomato, Hero MotoCorp, and Page Industries as these companies will announce their December quarter results today.

Currently, the BSE Sensex is trading down by 104 points. Meanwhile, the NSE Nifty is trading lower by 28 points.

Power Grid and Tata Steel are among the top gainers today. Maruti Suzuki, on the other hand, is among the top losers today.

The BSE Mid Cap index is down 0.2% while the BSE Small Cap index is trading lower by 0.3%.

Sectoral indices are trading mixed with stocks in the telecom sector and FMCG sector witnessing selling pressure.

Metal stocks and power stocks, on the other hand, are trading in green.

Shares of Gujarat Narmada and Nalco hit their 52-week highs today.

The rupee is trading at 74.85 against the US$.

Gold prices are trading down by 0.1% at Rs 48,655 per 10 grams.

Meanwhile, silver prices are trading down by 0.1% at Rs 62,624 per kg.

Gold is trading in a tight range as investors awaited US inflation data that could offer fresh clues about the pace of the Federal Reserve's monetary policy tightening.

Crude oil prices are mixed today after rallying on an unexpected drop in US crude inventories in the previous session, as investors await the outcome of US-Iran nuclear talks that could add crude supplies quickly to global markets.

Speaking of stock markets, Brijesh Bhatia explains why fear has returned to Dalal Street, in his latest video for Fast Profits Daily.

The sentiment has shifted from greed to fear and this has implications for traders and investors.

In the video below, Brijesh discusses this change in sentiment and shares his view on it.

In news from the metal sector, Steel Authority of India (SAIL) is among the top buzzing stocks today.

India's largest steelmaker SAIL on Wednesday reported a 3.8% year-on-year (YoY) increase in its consolidated net profit at Rs 15.3 bn for the quarter ended December 2021.

In the same quarter a year ago, SAIL had posted a net profit of Rs 14.7 bn.

Revenue for the quarter rose 27.3% YoY to Rs 252.5 bn from Rs 198.4 bn a year ago.

In a statement, the company said it delivered one of its best physical performances during the quarter as well as nine months ended December 2021.

The company added it achieved the best ever Q3 and nine-month production of hot metal, crude steel and saleable steel.

• However, the same is not reflected in the financial performance of Q3 FY'22 due to various factors beyond the control of the company which primarily include an unprecedented increase in the prices of imported and indigenous coking coal.

The company also mentioned that performance in coming quarters will improve with the overall positive outlook in the economy and the announcements in the Union Budget for increasing the infrastructure spending.

Note that SAIL's focus remains to lower its borrowings, which is reflected in the reduction of about 15% compared to September 2021 quarter. Its borrowings stood at Rs 191.3 bn as of December 2021.

SAIL share price is currently trading up by 2.8%.

Speaking of SAIL, note that the stock has come under pressure of late after experts pointed out concerns of falling prices of the alloy and high raw material costs.

Brokerage firms now expect surging coking coal costs to cause SAIL's EBITDA to decline by more than half in the second half of the current fiscal.

SAIL was among the top performing PSU of 2021, rallying over 200% last year.

The strong performance was on the back of SAIL's best-ever performance in both production and sales during the financial year 2021, and as the company deleveraged its balance sheet.

It remains to be seen whether commodity stocks like SAIL relive the dream run they had in 2021.

Moving on to news from the IPO space, as per an article in The Economic Times, Oyo Hotels & Homes is planning to substantially reduce the size of its initial public offering (IPO) in view of adverse secondary market conditions and a crash in stock prices of new-age tech startups.

Sources close to the matter said the IPO issue size is expected to be much lower than US$1 billion. In its draft IPO papers with the markets regulator, Oyo had sought to raise US$1.2 bn.

The startup is also exploring the option of refiling the draft red herring prospectus (DRHP) with the regulator if required.

As per norms, Oyo may need to refile its DRHP if it reduces the primary offer, or fresh issuance of shares, by more than 20% and the offer for sale (OFS) by more than 50%.

However, no such decision of refiling the DRHP has been made as the company is still in the process of receiving final observations and necessary corporate approvals.

Oyo was aiming for a valuation in the range of around US$9-12 bn but may settle for around US$7 bn. It was last valued at US$9.6 bn when it raised strategic investment from Microsoft in September last year.

Note that Oyo is not the only company changing its IPO plan. Mobikwik had deferred its IPO after securing the nod last year in October 2021, following the crash in new age tech startups.

Among the large startups that have filed their DRHPs, Oyo, Delhivery and PharmEasy were expected to launch their IPOs in 2022.

We will keep you updated on the latest developments from this space. Stay tuned.

To know which IPOs are in the pipeline, check out the current and upcoming IPOs.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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