Nifty50: 17,859 ▼ 132 (-0.7%)
Sensex: 59,900 ▼ 452 (-0.7%)
Hello,
Who would want to be in Elon Musk's shoes right now?
From being the world’s richest person for several months last year to becoming the first person to lose $200 billion, it's been a wild ride for the Tesla owner.
As if that wasn't enough, controversies continue to hit his recently acquired social media platform Twitter. The latest is the report of a possible hacking, in which 200 million user email addresses reportedly got leaked.
Much like Musk, Markets seem to be extending their lean patch. Read on to know why.
- The markets closed in the red for third consecutive day.
- In the Nifty50 universe, 39 stocks declined.
- Strong US jobs data fuelled concerns that the Fed may keep hiking rates.
Of the Nifty indices, IT (-2.0%) and Media (-1.4%) were the top losers, whereas FMCG (+0.03%) was the sole gainer, rising marginally.
| Top gainers | Today's change |
| Britannia | 4,365 ▲ 51 (+1.2%) |
| RIL | 2,537 ▲ 22 (+0.9%) |
| M&M | 1,263 ▲ 10 (+0.8%) |
| Top losers | Today's change |
| JSW Steel | 728 ▼ 22 (-3.0%) |
| TCS | 3,213 ▼ 97 (-2.9%) |
| IndusInd Bank | 1,182 ▼ 33 (-2.7%) |
What’s trending
⭐ Debt-ridden Vi phones-a-friend
IDEA (NSE): 7.85 ▼ 0.05 (-0.6%)
Reeling under a debt burden of ₹2 lakh crore, Vi has dialled big lenders seeking an emergency loan of ₹7,000 crore. As per reports, the telco is desperate to at least partly clear the debt it owes to Indus tower in order to avoid towers disconnection. Meanwhile, sceptical banks have reportedly asked for details on the Government's potential shareholding in the company and the company’s own equity infusion plan. Meanwhile, government is yet to make its stand clear on the issue of capital infusion.
⭐ Heavy metal blues
TATASTEEL (NSE) :115 ▼ 0.9 (-0.8%) ; JSWSTEEL (NSE) : 728 ▼ 22 (-3%)
Expensive coal is blacking out the profit margins of domestic base metal players, says a rating agency. And, per the agency, there is no immediate relief in sight. Translated - Expect earnings of metal stocks to be under pressure in the second half of FY23. It has also expects operating profitability down to 18% in the current fiscal. Base metals are common metals used in industry or manufacturing, such as steel, copper and zinc.
⭐ Samsung's quarterly profit at 8-year-low
South Korea headquartered, Samsung Electronics' quarterly profit has dropped 69%, sinking to an 8-year low. The main trigger for this slide is the weakening global economy. The demand for electronic devices and memory chips have dampened due to the rise in interest rates and cost of living. This has impacted memory chip prices negatively. Why is this important? Samsung is the world's largest memory chips, smartphones and TV manufacturer. The dismal numbers could well serve as a teaser before the upcoming tech quarterlies.
In Focus
The battle for gold loans
Gold prices started 2023 on a strong wicket, hitting a two-year high in India. The increase was powered by fears of a global slowdown and geopolitical uncertainty. Experts believe gold could continue to glitter through 2023 as recession fears mount. Gold loan financers like Muthoot Finance and Manappuram Finance could stand to gain from the rise in prices of the yellow metal. Let’s understand why.
These non-banking finance companies (NBFC) give loans to borrowers against gold. The loans typically add up to 75% of the value of the pledged gold. So if a borrower has gold worth ₹10,000, they can borrow money up to ₹7,500. As the market price of gold goes up, the loan ticket size also increases. Bigger the loan, the more the interest earned by the NBFC.
In addition, the gold, which is kept as collateral, cushions the NBFCs in case of loan default.
Then why are shares of these companies taking a beating?
The gold loan business has seen intense competition of late. Backed by low cost funds like deposits, major banks like SBI, HDFC Bank and Axis Bank have begun eating into gold financers’ market share. The NBFCs’ market share has dropped to 20% in FY22 from 22% in FY20, according to a report. Against this backdrop, shares of Muthoot Finance and Manappuram Finance have dropped about 29%in 2022.
But the management of Manappuram remains undeterred. In the September earnings call, it acknowledged the competition, but also said that there is still a lot of untapped potential. India’s organised gold loan market stood at 7% in FY22, reflecting that this segment is severely underpenetrated.
The management also said that the demand situation is consistently improving. It added that the demand could be robust post the monsoon season, which could reflect in the company’s December quarter numbers.
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Good to know
What is operating profit?
Operating profit is a company's income derived from its core business operations. It is the profit before subtracting interests, expenses and taxes. Plus, income from ancillary activities such as a profit from sale of investment or interests on loans given are also excluded. The operating profit is a better indicator to track when a company reports a sudden, unexplained spike in profit (which could come from sale of land etc.).
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