Dilly-dallying

Nifty50: 17,539 ▼ 3.3 (-0.02%)
Sensex: 58,803 ▲ 36 (+0.06%)

Hello, folks!

There are times when seeing red is a good thing. No, we’re not talking about the markets. Spain’s Tomatina festival is back after a gap of two years! On Wednesday, thousands of people sploshed about in 130 tonnes of over-ripe tomatoes. Well, that’s one way to celebrate the end of lockdowns!

• Amid mixed global cues, benchmark indices closed flat after a volatile session.
• In all, 35 of the Nifty50 stocks closed lower. 
• Chinese city of Chengdu, which is home to 21 million residents, has gone into lockdown amid a fresh outbreak of Covid cases.

Among the Nifty sectoral indices, Financial Services (+0.5%) and Media (+0.5%) saw minor gains, while Oil and Gas (-1.0%) and PSU Bank (-0.6%) were the top losers.

What’s trending

⭐ Adani Enterprises to be part of Nifty50

ADANIENT(NSE): 3,352 ▲ 118 (+3.6%)

Adani Group’s flagship company, Adani Enterprises, will soon be included in the benchmark Nifty50 index. The periodic review of the Nifty50 was recently concluded and will see Adani Enterprises replace Shree Cement effective from 30 September. This will be the second company from the Adani Group (after Adani Ports and SEZ) to be included in India’s most tracked stock index. Shares of Adani Enterprises have risen by over 95% so far in 2022.

⭐ Aurobindo Pharma arm plans capacity expansion

AUROPHARMA (NSE): 534 ▼ 4.8 (-0.9%)

Aurobindo Pharma’s wholly-owned subsidiary, CuraTeQ Biologics, plans to invest around ₹300 crore for capacity expansion of its biologics manufacturing facilitY. The facility is likely to be fully operational by FY26. The board also approved entering into contract manufacturing operations (CMO) for biologicals. The company said this would augment the company’s business prospects as the global biologics contract manufacturing demand is growing at 8-10%.

⭐ GMR Infra to divest stake in Philippines airport

GMRINFRA (NSE): 39 ▲ 0.9 (+2.3%)

GMR Airports International BV (GAIBV), a subsidiary of GMR Infrastructure, plans to sell part of its stake in GMR-Megawide Cebu Airport Corporation (GMCAC) to Aboitiz InfraCapital Inc (AIC). As per the agreement, GMCAC will issue fresh shares and transfer existing shares worth nearly ₹1,334 crore (9.5 billion Philippine pesos) from Megawide and GAIBV to AIC, which will result in the latter owning 33.3% stake in GMCAC.

⭐ PM commissions INS Vikrant

COCHINSHIP (NSE): 378 ▼ 1.6 (-0.4%)

Prime Minister Narendra Modi commissioned India's first indigenously designed and built aircraft carrier INS Vikrant. The carrier is built at a cost of ₹20,000 crore. Named after the iconic INS Vikrant, which was decommissioned in 1997, the warship is equipped with state-of-the-art features. With the commissioning of INS Vikrant, India has joined a select group of nations having the capability to indigenously design and build an aircraft carrier.

In Focus

Indian economy makes a comeback

Before the pandemic, India was among the fastest-growing economies globally and a leading destination for investment. However, the pandemic slammed the brakes on growth, leading to an economic slowdown. However, recent economic data suggests that the country’s economy seems to be clawing its way back to revival. 

One of the key indicators of economic health, the monthly goods and service tax (GST) collections rose by 28% YoY in August to ₹1.44 lakh crore. This is the sixth consecutive month when GST revenue exceeded ₹1.4 lakh crore, indicating revival in consumption along with improved compliance. 

Furthermore, credit growth or loans given out to industry touched an 8-year high in July 2022, signalling positive signs for the economy. Credit to industry has remained stagnant for the past two years at around ₹28-29 lakh crore per month. However, as per RBI’s latest data, credit to industry rose by 10.5% YoY to ₹31.8 lakh crore in July. Recovery in consumer demand and a rise in private capex has triggered credit growth revival.

In addition, a stable manufacturing PMI at 56.2 in August points to an underlying strength in the manufacturing segment. Even petrol and diesel sales for August 2022 rose by 16% and 23.5%, respectively, compared to last year as economic activity gathered pace.

Despite the above bright spots, a few concerns remain. The jump in the above indicators was aided by the low-base effect of last year, when the pandemic has stalled economic growth. Also, the global economic slowdown is likely to pull down exports in the year ahead. Additionally, India’s lower than expected Q1 GDP data has prompted several rating agencies to cut down the country's growth forecast.

Nonetheless, with the festive season approaching, most companies are getting ready for strong sales. If the FMCG and auto sales in August are anything to go by, we’re set for a bumper festive season ahead.

IPO corner

Tamilnad Mercantile Bank will launch its ₹832 crore IPO on Monday. The 100-year-old private sector bank has set a price band of ₹500-₹525 per share for its public issue. While the bank has a strong presence in Tamil Nadu, it also has 509 branches across the country and around 50 lakh customers.

Click here to pre-apply for the IPO on Upstox.

Good to know

What is divestment?

Divestment means selling a stake in a company, subsidiary or other investments. Businesses and governments generally resort to divestment as a way to cut losses from a non-performing asset, exit a particular industry, or raise money. In some cases, however, a company may be forced to sell its assets as a result of legal or regulatory action.

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