Moody Monday

Nifty50: 16,569 ▼ 14 (-0.09%)
Sensex: 55,675 ▼ 93 (-0.17%)

Hello, folks!

Mondays are not easy without that cup of strong coffee, and Google understands. In its daily Google Doodle on Monday, it chose to celebrate the 171st birthday of the godfather of espresso machines, Angelo Moriondo. How timely!

Meanwhile, markets began on the same Monday note, but made a decent recovery to end flat. 

• Markets opened the week nearly flat in a range-bound session. 
• Among the Nifty50 stocks, 29 closed in the red.
• Investors seem to be cautious ahead of the interest rate decisions by central banks in Europe and India.

Among the Nifty sectoral indices, Metal (+1.1%) and Oil and Gas (+0.5%) saw most gains, while Media (-1.2%) and Realty (-0.8%) were the top losers.

Did you know?

You can now place Good-Till-Triggered (GTT) orders on the new Upstox app. To know more about GTT orders, click here.

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What’s trending

⭐ Adani inks pact with Essar 🤝

ADANITRANS (NSE): 2,023 ▲ 67.95 (+3.4%)

Shares of Adani Transmission surged 4% intraday after it announced plans for taking over Essar Power’s inter-state transmission project. The project spans 673 circuit kilometres and the value of the transaction is ₹1,913 crore. 

⭐ Infra boost for banks 🏠

IDBI (NSE): 37 ▲ 0.6 (+1.6%); SBIN (NSE): 463 ▼ 0.9 (-0.1%); BANKBARODA (NSE) 102 ▼ 0.1 (-0.1%)

The banking sector is witnessing early indicators of capex growth supported by large infrastructure projects. The management of leading PSU banks believes that commercial loans might soon surpass retail loans. The RBI had also noted the revival of private capital expenditure in its last monetary policy statement. 

⭐ Consumer durables’ poor show in Q4 📺

VOLTAS (NSE): 1,010 ▼ 7.4 (-0.7%); BLUESTARCO (NSE): 982 ▼19.7 (-1.9%); WHIRLPOOL (NSE): 1,593 ▼ 42 (-2.5%)

Makers of consumer durables (products like washing machines, refrigerators and air conditioners) ended Q4 of FY22 on a weak note, with sales shrinking 6%. Profits were also impacted due to a rise in input costs and companies' inability to pass this increase due to competition and slow demand recovery after the pandemic. 

⭐ Ethanol energises economy and environment⛽

RENUKA (NSE): 53 ▲ 2.7 (+5.3%); EIDPARRY (NSE): 535 ▲ 12.9 (+2.4%); BALRAMCHIN (NSE): 410 ▲ 9.4 (+2.3%)

India has achieved the target of 10% ethanol blending in petrol, five months ahead of schedule, according to a statement by PM Modi. The move has resulted in the reduction of 27 lakh tonnes of carbon emissions. Further, India has managed to save foreign exchange worth over ₹41,000 crore in 8 years and the farmers have earned more than ₹40,000 crore. This has also benefited sugar companies, which have been increasing their ethanol-production capacity.

⭐ RBI to hike rates? 💵

The RBI Monetary Policy Committee (MPC) meets this week against the backdrop of soaring inflation. According to a media poll, the MPC is expected to hike rates by 0.5% to 4.9% this week. The RBI had hiked rates by 0.4% in an off-cycle meeting in May.

In Focus

Power stocks light up ⚡

Investors put some energy into power generation and transmission companies on Monday, after the government allowed electricity distribution companies (discoms) to settle their dues in EMIs. Stocks including NTPC, Tata Power and Adani Power rose up to 5%. Why the buzz?

Now if we take it from the start, there are various players in the power value chain. The first is an energy producer like Coal India, which sells coal to power generation companies (or gencos like Tata Power and Adani Power) that use the fuel to produce electricity. Then there are the power transmission and distribution companies that bring the power to our homes, offices and factories.

However, these discoms have been accumulating losses every year because of inadequate tariff hikes and rising dues from government departments. There are other reasons like cross subsidies which refers to selling power to different users (like farmers and subsidised sectors) at different prices. In FY21 alone, state-owned discoms reported losses of ₹90,000 crore! Meanwhile, demand for electricity is also rising. Power demand touched an all-time high of over 201 gigawatts (GW) on 26 April, as heatwave conditions continue.

With the new decision to allow EMI payment, distribution companies will get more time to pay back their dues to the energy generation companies. As of 6 June, discoms owe around ₹1.06 lakh crore to gencos. This instead allows gencos to repay their dues to fuel producers like Coal India.

According to the government notification, discoms with outstanding dues of more than ₹10,000 crore will be offered to settle their dues in 48 monthly instalments. 

Not only will this help gencos and energy producers get back dues routinely, but it will also help you get undisrupted power at your home.

IPO corner

India’s largest domestic liquor company Allied Blenders & Distillers is expected to file papers with the market regulatory SEBI for a ₹2,000 crore IPO. According to reports, the net proceeds from the IPO will be used to reduce debt and expand the business.  

Good to know

What is bottom fishing?

Bottom fishing is a method of investing in stocks that have seen sharp price correction and are considered to be undervalued. It is a risky strategy, because research is required to determine whether a stock has dropped due to a justifiable reason, or trades at an irrationally low valuation. Ideally, the purpose of bottom fishing should not be to buy a stock at its lowest, but to buy it at a point where it has the highest probability of appreciation. An example of bottom fishing would be to buy beaten down hospitality and airline stocks during the pandemic.

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