Low spirits

Nifty50: 15,799 ▼ 51 (-0.3%)
Sensex: 53,026 ▼ 150 (-0.2%)

Wassup people

We've heard of robots replacing humans. But have you heard about dogs replacing us? A tennis club in the UK tried to train dogs to replace ball boys and girls at Wimbledon. The experiment failed, because although the dogs were good at picking up the balls, they refused to give them back!

In the markets, bears refused to lose ground, as they managed to overpower the bulls, to close the benchmark indices in the red.

• After a gap-down opening, markets closed in the red, mirroring weak global cues.
• In all, 34 of the Nifty50 stocks closed negatively.
• The rupee plunged further against the US dollar to close at a record low of 79.16.

Among the Nifty sectoral indices, Oil and Gas (+1.0%) and Metal (+0.2%) were the top gainers, while IT (-1.2%) and FMCG (-1.2%) were the weakest.

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What’s trending

⭐ Tata Motors, Tejas Networks tie up for semiconductors 🤝

TATAMOTORS (NSE): 416 ▼ 1.1 (-0.2%), TEJASNET (NSE): 458 ▲ 17.3 (+3.9%)

Tata Group companies Tejas Networks and Tata Motors have tied up with Japanese chipmaker Renesas Electronics to manufacture semiconductor solutions for India and other emerging markets. Tata Motors will collaborate on developing next-generation automotive electronics. Meanwhile, Tejas Networks will work with Renesas to implement next-generation wireless network solutions.

⭐ Adani Green signs new deal🤝

ADANIGREEN (NSE): 1,899 ▼ 10 (-0.5%)

Shares of Adani Green jumped by over 1.5% today after the company signed an agreement with Maharashtra government to set up a pumped storage project (PSP). The hydropower project will generate 11,000 MW electricity over the next five years and will require investment of  ₹60,000 cr.

⭐ Tata Steel to ramp up production 🏭

TATASTEEL (NSE): 879 ▲ 0.1 (+0.01%)

Tata Steel is looking to boost the operation of Neelachal Ispat Nigam (NINL) to 1.1 million tonne per annum within the next year. Tata Steel’s subsidiary Tata Steel Long Products won the bid to acquire a 93% stake in NINL at a value of just over ₹12,100 crore in January 2022. The management said the acquisition of NINL will be completed by the end of Q1 FY23.

⭐ Allied Blenders serves up an IPO 🍸

India's third-largest Indian made foreign liquor (IMFL) firm and maker of Officer’s Choice Whisky has filed draft papers with SEBI for a ₹2,000 crore IPO. The maiden offering will include a ₹1,000 crore fresh issue and a ₹1,000 crore offer for sale by promoter and existing shareholders. The proceeds will be used to repay debt. As of December 2021, the company had outstanding borrowings of ₹927 crore.

⭐ Tesla lays off employees 😱

As per a media report, Elon Musk-owned Tesla has let go of 200 employees from its Autopilot team. The company is also closing its office in California. Most of the employees were hourly workers. Report also said that Musk had plans to cut 10% of the salaried headcount last week. However, Musk said he would be adding more hourly employees over time.

In Focus

Happy hour yet for liquor stocks?

Liquor stocks have been hungover since the beginning of the year. Stocks like United Spirits, Radico Khaitan and Globus Spirits are down as much as 32% since 1 January. But will shares of liquor companies begin to buzz anytime soon? Let's take a look. 

Just like any other sector, the Ukraine-Russia war has been a major challenge for liquor companies. The two countries contribute a third to the world's wheat and barley produce, which are important raw materials for liquor firms. Further, prices of rice and barley have gone up 15% and 59%, respectively, this year. Meanwhile, the price of glass and packaging have risen 15-40%. 

However, things have begun to look up for the sector. Footfalls at restaurants and pubs have increased. As a result, out-of-home consumption of liquor is picking up. This segment constitutes 20-25% of total demand.

Additionally, state governments have stepped up efforts to provide relief to liquor companies. States like Kerala, Rajasthan and Assam have allowed the industry to raise liquor prices of Indian-made foreign liquor (IMFL). This will give liquor companies some room to pass on the higher input prices. Some state governments have gone a step further and also rolled back tax increases and while others have reduced custom duties.

Of late, raw material prices have stabilised, but they are likely to remain 'high' for some time. So while near-term challenges may remain, is the sector still worth a ‘shot’? That’s a question to ponder over a drink.

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Good to know

What is a share buyback?

A share buyback is a corporate action where a company offers to buyback its shares from the existing shareholders. The buyback is usually initiated at a higher price than the market price. There are two ways a company may buy back its shares—through a tender offer or through the open market. There could be various reasons to launch a buyback. It could be to reward existing shareholders through other means than dividends. Alternatively, a company may buy back shares to look more financially healthy, in order to attract more investors. Another objective of a buyback is to stop the fall in value of a stock, by reducing the supply of the stock. This pushes up the share price through a better price to earnings (P/E) multiple.

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