Glitch

Nifty50: 18,496 ▼ 112 (-0.6%)
Sensex: 62,181 ▼ 389 (-0.6%)

Namaste, friends!

Thankfully, the weekend’s here. With a series of mouth watering football clashes lined up starting with today’s Brazil vs Croatia clash. We know what we will be doing Saturday-Sunday. Indian footie fans are ready for the penultimate showdowns too with life-size cutouts of players and mega screens to watch matches. So, who are you cheering for?

• The markets closed in the red, weighed down by sell-off in the IT stocks.
• In the Nifty50 universe, 33 stocks declined. 
• Investor focus is now on the Fed rate decision next week.

Among the Nifty sectoral indices, FMCG (+0.8%) and Pharma (+0.3%) were the top gainers, while IT (-3.1%) and PSU Bank (-1.7%) were the top losers.

What’s trending

⭐ Auto in the driver’s seat

MARUTI (NSE): 8,610 ▼ 72 (-0.8%), TATAMOTORS (NSE): 413 ▼ 4 (-0.9%)

Cash registers are ringing at car dealerships across the country. At 23.8 lakh units (all categories) sold nationwide, the auto sector clocked its best month ever in November 2022. Data from the Federation of Automobile Dealers Associations (FADA) shows sales grew 26% year-on-year (YoY). Sales were up 1.5% compared to November 2019 (pre-Covid year). 

As per FADA, the near term sales outlook remains healthy owing to demand uptick in the rural segment amid the ongoing harvest season. Also, automakers are offering discounts on slow moving and lower variants products to clear their year-end stock.

⭐ HGS announces new acquisition

HGS (NSE): 1,351 ▲ 7.4 (+0.5%)

Business process management firm Hinduja Global Solutions (HGS) will acquire 100% stake in TekLink International, an analytic service provider for ₹483 crore. HGS also intends to acquire uKnowva from Convergence IT Services. uKnowva provides an HR solutions platform. As per the management, both companies are a good strategic fit and will help strengthen their existing digital portfolio. 

⭐ JSW Steel reports rise in output

JSWSTEEL (NSE): 740 ▼ 4.1 (-0.5%)

JSW Steel has reported double-digit production growth in November 2022. Standalone crude steel production grew by 16% YoY to 16.9 lakh tonnes. The company also reported a 19% increase in output of flat rolled product to 11.8 lakh tonnes. JSW Group has recently announced plans to invest ₹1 lakh crore in Odisha to set up a greenfield steel plant and a silicon metal plant.

⭐ V-Guard acquires Sunflame

VGUARD (NSE): 258 ▲ 8.7 (+3.4%)

Shares of V-Guard Industries, which makes electrical and home appliances rose by nearly 8% intraday after it acquired 100% stake in Sunflame Enterprises for ₹660 crore in cash. The acquisition of Sunflame Enterprises, a leading player in the kitchen appliances space will help V-Guard to scale up its kitchen appliance business. The transaction would be funded through a mix of internal accruals and deb

In Focus

HCL Tech shows yellow card, IT index crashes

Shares of IT service provider HCL Technologies declined by over 7% intraday after its management lowered the FY23 revenue growth forecast. The company's shares tumbled for the sixth straight trading session. The announcement sent ripples through other IT stocks. The Nifty IT index crashed 3%. Here is a complete download. 

What happened?

The management of HCL Tech indicated that FY23 revenue growth could be at the lower end of 13.5-14.5% (company’s earlier growth projection). The company blamed deteriorating macro conditions for this. 

It said that the global economic slowdown has led to higher-than-expected furloughs (layoffs) in the ongoing quarter. Companies that outsource IT services are also preferring to work with one rather than many vendors. This is also impacting business. 

Why did the IT Index fall?

As per market experts, the Indian IT sector is going through a rough phase due to worsening economic outlook in their biggest market, the US. Aggressive rate hikes undertaken by the US Federal Reserve will most likely slowdown the US economy in the second half of 2023. Indian IT companies derive nearly 45-60% of their revenue from the US market. Therefore, any cut back in IT spending by US companies could impact books of Indian tech majors. 

However, a higher-than-expected rupee depreciation against US dollar and lower wage hikes could provide some cushion to the overall earnings of IT companies.

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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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