Bears in control

Nifty50: 17,856 ▼ 36 (-0.2%)
Sensex: 60,682 ▼ 123 (-0.2%)

Hello dear friend!

In the past three days, the world has seen not one but 3 remarkable sports feats.

In the ongoing first test against the Aussies, the Indian team did not let the unwanted controversies (read: pitch and ball-tampering row) distract them. The entire unit, especially RRR- Rohit, Ravichandran Ashwin & Ravindra Jadeja, ensured that India will stay glued to their T.V sets this weekend!

Basketball great LeBron James scaled a new high (see what we did there ;)) as he became the NBA's all-time scoring leader. His tally touched 38,388 points during the LA Lakers game against Oklahoma City. James has now gone past fellow legend Kareem Abdul-Jabbar.

Football superstar Cristiano Ronaldo hit the mark of 500 club goals with a hat trick while playing for his new side Al Nassr. ICYDK, the five-time Ballon d'Or winner holds the all-time records for Champions League and international goals.

All fired up? Good. Because you need to be well prepared as we tell you about today’s choppy markets (those didn’t hit no goals).

• After a weak opening, the markets moved downward.
• Out of the Nifty50 space, 27 stocks declined.
• Weak global cues weighed down the markets.

Among the Nifty sectoral indices, Realty (+1.3%) and PSU Bank (+0.4%) were the top gainers, while Metal (-1.8%) and Oil & Gas (-0.5%) were the top losers.

What’s trending

⭐ M&M misses street signals

The automaker’s (-0.6%) net profit rose 14% YoY to ₹1,528 crore. However, this was lower than the street estimate of ₹1,723 crore. Meanwhile, its revenue also rose 41% YoY to ₹21,654 crore.

⭐ Hindalco slides 

The metal company’s (-2.4%) net profit declined 63% YoY to ₹1,362 crore. The management attributed this to elevated input costs and unfavourable macro conditions.

⭐ LIC Q3: Premiums ‘in’sure profits

The state-owned life insurance behemoth’s (+0.8%) net profit rose multifold to ₹6,334 crore in Q3FY23. This was supported by a rise in the premium income and a transfer of ₹5,669 crore to shareholders’ account to beef up the networth.   

⭐ RITES to focus on steady margins 

The management of the transport infra consultancy and engineering firm (+0.3%) has said that growth in the consultancy business has helped in maintaining steady margins. It added that the USP of the company is that it has received orders from across the sectors. 

⭐ FIIs: The name is Bond 

Foreign investors have bought Indian bonds or debt papers worth $840 million (₹6,938 crore) in 2023 so far. This comes at a time when the Indian central bank is raising the key rate (6.50%) to battle inflation.

In Focus

Aviation: Cleared for takeoff?

In December, social media feeds were filled with pictures of serpentine queues at major domestic airports. And if you were travelling by air, you would have received messages from airlines asking you to reach the airport three to four hours before your flight. 

Well, it might have been a hassle for you, but these sights were a welcome relief for pandemic-dented airlines. After a couple of turbulent years, airlines are now hoping for blue skies and tailwinds.’ Let’s see why. 

Strong demand

Those long queues at the airports? That translated into a strong take-off in airlines’ performance which was visible in the December quarter earnings. Fuelled by festive demand and recovery in international travel, Indigo’s passenger numbers rose 26% YoY to 2.2 crore. And this trend has continued in January 2023, with the air traffic inching closer to pre-pandemic levels (2% lower than January 2020), according to a ratings agency. What’s more, the upcoming school and college vacations could provide a further boost in coming quarters. 

Better utilisation

The rise in demand has translated into higher load factor (capacity utilisation, read more below). This is an important metric because a higher load factor means that an airline can spread its fixed costs among passengers. Indigo’s load factor improved to 85% in Q3FY23 from 79% in Q3FY22. Spicejet’s load factor was already at 85% in the September quarter. 

Higher fares 

The robust demand has given wriggle room for airlines to hike fares gradually. The increase in fares is in turn boosting profitability. The effect of this can be seen in higher yields, which is basically the average fare per passenger per kilometre. For instance, Indigo’s yield rose to ₹5.3 in Q3FY23 from ₹4.4 in Q3FY22. 

Lower fuel prices  

The icing on the cake is the lower air turbine fuel (ATF) prices. This accounts for around 40% of the total expenses for airlines. In the December quarter, Indigo’s aircraft fuel expenses were down 77% YoY. This was primarily led by lower crude oil prices. 

With multiple favourable factors, airlines are looking to soar higher. But rising competition could play spoilsport.

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What is load factor in aviation?

Load factor is a metric that tells investors the percentage of seats filled or booked. Higher the load factor, the better it is for airlines. This is because they can spread their fixed costs among passengers or bookings. As aviation business has low margin or profitability, a higher load factor is important for an airline.

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