Fed jitters

Nifty50: 17,992 ▼ 50 (-0.2%)
Sensex: 60,353 ▼ 304 (-0.5%)

Hello,

(Disclaimer: This news can make you question your life choices.)

They are multi-millionaires, enjoy crazy social media following and live a life of luxury and bliss yet are oblivious to everything happening around them. 

Any guesses who could they be?

We are talking about the world's wealthiest pets. Their lives primarily revolve around eating-sleeping and playing, on a loop, yet their fortunes run into millions. 

As per reports, Gunther VI, a german shepherd, tops the 'Ultimate Pet Rich List' with a mind-numbing net worth of $500 million. His wealth comes from his grandfather’s inheritance that jumped manifold due to smart investments (Talk about the power of the right money moves!)

The second and third spots on this list belong to social media star cat – Nala & Taylor Swift's beloved kitty Oliver. Their combined net worth is more than a whopping  $197 million! 

Now as you ponder over their purrfect life, read on to know what transpired in the markets today.

• The markets made a weak opening but made a partial recovery in the second half of the day. 
• 33 stocks from the Nifty50 universe closed in the positive. 
• The US Fed’s signal to control inflation led to volatility, in general.

Of the Nifty indices, FMCG (+1.5%) and Oil & Gas (+1.4%) were the top gainers whereas Financial services (-1.1%) and Bank (-0.8%) were the top losers.

What’s trending

⭐ Here’s why Bajaj Finance shares tanked! 

BAJFINANCE (NSE): 6,096 ▼ 475 (-7.2%)

Shares of the leading NBFC slumped, with high volumes, over concerns of moderating loan growth. In the December quarter, typically a festive season, its AUM (assets under management) grew 27% year-on-year. This number was 31% in the September quarter. The moderating growth scenario also triggered the re-rating of the stock, creating a cascading effect on the stock price. Meanwhile, it showed a steady growth of 19% in its customer base to 6.6 crore.

⭐ Godrej consumers hopes to beat headwinds

GODREJCP (NSE): 918 ▲ 29 (+3.3%)

In its recent update, the hair and home care products maker hinted towards a meaningful improvement in its profit for the December quarter. The bump in the profit was led by a recovery in margins and double-digit growth in sales. This was achieved despite sluggish growth in the rural markets. The company also witnessed a double-digit sales growth in its international markets viz. Africa, the U.S and Middle East. 

⭐ Retail vehicle sales zoom

M&M (NSE): 1,253 ▲ 16 (+1.3%); MARUTI (NSE): 8,470 ▲ 47 (+0.5%)

The car and tractor retail sales touched new highs throughout 2022. And in December 2022 too, the sales continued to be in the fast lane. Sales of 3-wheelers, passenger vehicles, tractors and commercial vehicles grew by 42%, 8%, 5% and 11% YoY, respectively. The only dull spot was two-wheelers where the volumes dipped 5%. The rise in inflation and interest rates impacted two-wheeler sales in the rural markets. As per the auto retail body FADA, recent price hikes across all categories and inflation pressure could weigh on auto sales in January.

In Focus

Banks look to ride on rate hikes

Bank stocks were on a roll in 2022 with the Nifty Bank index rising 21%. And there are reasons that indicate that the party may continue for these lenders even in 2023. In a bid to tackle inflation, the Indian central bank has hiked the repo rate by 225 basis points (2.25%) in 2022.

This isn’t beneficial for borrowers like you and me, as we have to pay higher interest on our loans. But these rate hikes are music to the ears of banks. Let’s understand why. 

When you avail a loan, the interest you pay is linked to external benchmark rates like the repo rate. So, a rise in the repo rate translates into higher interest income for banks. Some of the large private banks, like ICICI Bank (49%) and Axis Bank (43%), have a significant amount of loans linked to external benchmark rates. Similarly, 55% of HDFC Bank’s loans are tied to floating rates. For SBI, the external benchmark linked loans stood at 34% in the September quarter.

Besides this, the rising rates have failed to dampen the buoyant consumer sentiment. Initial Q3 numbers of banks indicate that loan growth remains robust. For instance, HDFC Bank and the Federal Bank posted 21% and 19% growth in retail loans. 

However, the interest rate on deposits could eventually catch up. This is basically the interest you earn on the money kept in the bank. But until this happens, the party for banks could continue.

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Good to know

What is a Repo rate?

The rate at which the central bank of a country lends money to banks is called the repo rate. It is used by the central banks to manage the money supply in the economy and thereby control inflation. When inflation rises, the Reserve Bank of India (RBI) may increase the repo rate. When the repo rate is increased, banks have to pay higher interest to the RBI for borrowing money. And hence they pass on the interest rate hike to borrowers. This rise in the cost of borrowing for the borrowers is expected to lower demand and consumption, which in turn could help in bringing down inflation.

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