Downslide

Nifty50: 16,025 ▼ 99 (-0.6%)
Sensex: 53,749 ▼ 303 (-0.5%)

Hello, Hello!

It’s the middle of the week and things are still not looking good at the markets. And if you thought you were having a bad day, imagine the consternation of a Hong Kong man, who had to shell out ₹3 lakh as compensation for a Teletubby statue that his son accidentally knocked over and broke.

• After a gap-up opening, the markets kept sliding downwards, extending their losing streak to the third straight day.
• In all, 32 of the Nifty50 stocks closed in the red.

Among the Nifty sectoral indices, Financial Service (+0.6%) and Bank (+0.1%) saw minor gains, while IT (-3.3%) and Realty (-2.8%) were the top losers.

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What’s trending

⭐ Adani Ports’ profits sink 👎
Shares of Adani Ports fell nearly 5% intraday after the company reported a 21% year-on-year (YoY) decline in its Q4 net profit to ₹1,033 crore. The drop in profits was mainly due to a foreign exchange loss of ₹524 crore. However, total income rose 8.5% to ₹4,417 crore in the same period. The company said its total cargo volume grew 26% YoY to 312 million metric tonnes. 

⭐ Minda races ahead 🚗

Delhi-based auto components manufacturer Minda Industries zoomed 9% intraday despite reporting a 5% year-on-year fall in its Q4 net profit to ₹156 crore. Investor sentiment was positive on account of an 8% YoY rise in revenues to ₹2,415 crore and the management’s upbeat commentary. The company has also announced a 1:1 bonus share issue and has set June 10 as the record date.

⭐ From Amby to EVs? 🚘

Hindustan Motors (+9.7%), maker of the iconic Ambassador cars, is planning a comeback. The company is in talks with a European company for a joint venture that will be focused on the EV space. Initially, the JV will launch two-wheelers and subsequently bring out four-wheelers. 

⭐Wheat goes south 🍞

Rice has traditionally been the staple cereal of southern India. But since the pandemic, the demand for grounded wheat atta in the southern states has risen. The region now accounts for 18% of India’s demand for grounded atta, up from 15% in 2020. This is attributed to the free distribution of wheat flour during the pandemic as part of the Pradhan Mantri Garib Kalyan Yojana. 

⭐ At the cinema, regional beats Hindi 🎦

Did you give movies like Jersey and Jayeshbhai Jordaar a miss and instead watched K.G.F. Chapter 2 in the cinema hall? You might not be the only one. The share of Hindi cinema in box office revenues in North India has slumped from around 60% to an all-time low of 10% in the past few months. While the urban audience has shown a preference for streaming content, cinema goers in the smaller towns seem to have taken a liking to regional language movies. 

In Focus

Sugar stocks turn sour

Sugar stocks are yet again in the limelight, and this time the news is not so sweet. Shares of companies like Shree Renuka, Balrampur Chini and Dwarikesh Sugar slid as much as 9% on Wednesday, after the government imposed restrictions on the export of sugar from 1 June.

The government has capped the total sugar exports at 100 lakh tonnes for the ongoing sugar marketing year, which ends on 30 September. That might sound like a lot, but India has already exported 71 lakh tonnes of sugar at the end of April 2022. Another 8-10 lakh tonnes of sugar is expected to be exported in May. So Indian exporters would inevitably have to cut down exports over the next four months.

To give a little background on why it hurts to be a sugar stock today, sugar exporters have been making a killing in the export markets. According to a news report, sugar prices have risen by 6% domestically in the last one year, while export prices have risen by 20%. Hence, being restricted to the India market would be less lucrative.

Sugar stocks have been on a rampage of late. Shree Renuka, Dwarikesh and Triveni Engineering, for instance, have risen in the range of 88-165% in the last 12 months. And for good reason. According to a tweet by a government official, the value of India's sugar exports has risen by 291% since FY14. 

However, over the long term, sugar companies are going to derive growth from the government’s ethanol blending ambitions. India's government aims to increase the proportion of ethanol in petrol to 20% (10% currently) by April 2023 to cut the country's dependence on oil imports.

But before we conclude, here's a quick and essential note on why you've been reading so much about export restrictions. The government has been on a mission to drive out inflation. As a result, it has been banning, or setting up restrictions on export of essential commodities, so that supply domestically increases. Excess supply can bring down prices. 

FYI, other countries are also doing the same. Malaysia has halted export of chickens, while Indonesia had earlier banned export of some palm oil products. That’s some food for thought.

IPO corner

Despite the weakness in the markets, companies are taking the IPO plunge. The IPO of Aether Industries, which was launched on Tuesday, was subscribed around 49% on day 2. The retail category of the public was subscribed 67%.

Click here to apply for this IPO on Upstox.

Good to know

What are bonus shares?

As employees, we all like to get bonuses after a year of hard work, right? In a similar fashion, bonus shares are additional shares that the company gives to its existing shareholders. These shares are issued out of the company’s accumulated earnings and are given absolutely free. The number of bonus shares depends on the bonus issue ratio decided by the company. So, for example, if the company decides on a 1:1 ratio, shareholders get 1 bonus share for each share held. To learn more about bonus shares, watch this video.

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