Bulls prevail

Nifty50: 18,202 ▲ 85 (+0.4%)
Sensex: 61,185 ▲ 234 (+0.3%)

Greetings, folks!

When you start investing regularly early in your life, the returns are usually astonishing after a few decades. Just like this timelapse video made by this Dutch director, who took pictures of his daughter everyday for 20 years—and the result is just mesmerising.

• After a choppy trading session, benchmark indices closed higher amid positive global cues.
• In all, 34 of the Nifty50 stocks closed in the green.
• China’s exports and imports fell in October as Covid restrictions and the global slowdown impacted demand.

Among the Nifty sectoral indices, PSU Bank (+4.4%) and Metal (+1.5%) saw maximum gains, while Pharma (-1.4%) was the sole loser.

What’s trending

⭐ Britannia gains on robust results

BRITANNIA (NSE): 4,125 ▲ 320 (+8.4%)

Shares of Britannia Industries rose by over 10% intraday, hitting a new 52-week high after the company announced strong quarterly results. It reported a 22% year-on-year (YoY) rise in its consolidated revenue at ₹4,338 crore, while its net profit grew by over 28% YoY to ₹490 crore during the September quarter. The company said it has been gaining market share in the last 38 quarters. Currently, its market share stands at a 15-year high.

⭐ Divi’s Labs’ profit plunges

DIVISLAB (NSE): 3,419 ▼ 327 (-8.7%)

Divi’s Lab’s shares were trading deep in the red today. This comes after the company reported a 18.5% YoY fall in its net profit at ₹494 crore. Meanwhile, revenue also fell 3.6% YoY to ₹1,935 crore. The drugmaker's consolidated EBITDA was also down 24% YoY at ₹621 crore.

⭐ Voltas to expand capacity

VOLTAS (NSE): 834 ▼ 10 (-1.2%)

Voltas will invest over ₹1,000 crore to expand its manufacturing capacity, including setting up a new plant near Chennai and another proposed ₹500-crore compressor plant in partnership with a Chinese firm. With these proposed investments, the home appliance maker aims to ensure its leadership in the AC and commercial refrigeration segment.

⭐ India Cements posts a loss

INDIACEM (NSE): 247 ▲ 2.0 (+0.8%)

India Cements reported a net loss of ₹113 crore in Q2, as compared to a net profit of ₹29.75 crore in the same period last year. Meanwhile, revenue from operations rose by 7.4% YoY to ₹1,327 crore.

In Focus

Capex cycle revives as economy recovers  

During the September quarter there was a surge in corporate loan demand, led by the recovery in the capex cycle. In the past few quarters, demand for corporate loans was mainly for the working capital requirements. However, companies are slowly increasing capex investment. But why? Let's find out. 

Capex (or capital expenditure) is the money invested by a company to acquire or upgrade its assets like setting up a new plant. Capex within the corporate sector is witnessing a turnaround, aided by the revival in consumer demand, which is encouraging domestic companies to add new capacities. Further, companies have managed to reduce their debt in the past few years, and the improved profitability is allowing them to expand their capacity. 

According to the latest RBI data, bank credit to the industry rose by 1.7% YoY to 12.6% in September 2022, indicating a rise in demand. Meanwhile, a separate survey by the RBI shows that capacity utilisation in the manufacturing sector improved to a three-year high of 74.3% during the June quarter.

Besides this, India’s largest lender, State Bank of India (SBI) is witnessing a rise in credit demand led by sectors like infrastructure, renewable power, oil marketing, and services. SBI said it has a pipeline of corporate loans worth nearly ₹2.4 lakh crore and has also revised its credit growth outlook to 14-16%, driven by the capex cycle.

All in all, a revival in the capex cycle is a positive sign for the Indian economy as well as equity markets.

IPO Corner

On Day 3, the IPO of snacks and sweets maker Bikaji Foods received a strong response with an overall subscription of 26.67 times, with the retail portion being subscribed by 4.77 times. Meanwhile, the IPO of hospital-chain operator Global Health was subscribed 9.58 times on the last day.

Good to know

What is purchasing power parity?

Purchasing power parity is used to compare two currencies in terms of their purchasing power. It measures how much a unit of one currency can buy in that country as compared to that in another country. Thus, the conversion rate between two currencies in PPP terms is usually different from the forex rate. For instance, 1 US dollar is equivalent to about 23 Indian rupees in PPP terms, which is far lower than the forex rate of about 82 rupees. This shows that the purchasing power of the Indian rupee is higher than what the exchange rate suggests. 

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