HCL Tech hits 52-week high, Strides Pharma gains & more

NIFTY50: 19,727 ▲ 116 (+0.5%)
SENSEX: 66,265 ▲ 385 (+0.5%)

• Benchmark indices continued to rise, with the SENSEX crossing the 66,000 mark
• In all, 34 of the NIFTY50 stocks closed in the green
• Eurozone GDP expanded a meagre 0.1% during the June quarter

Among the NIFTY sectoral indices, Realty (+1.4%) and PSU Bank (+1.1%) were the top gainers, while FMCG (-0.4%) and Pharma (-0.3%) were the top losers.

What’s trending

⭐ HCL Tech hits 52-week high 

Shares of the IT services provider rose 1.5%, touching a new 52-week high of ₹1,257, after the company signed a multi-year managed public cloud services agreement with Siemens AG. HCL Tech will focus on automating the public cloud environment while adhering to Siemens’ high security standards.

⭐ Hitachi Energy rises on order win 

Hitachi Energy shares gained more than 3% today. This comes after the company secured a new order from Ayana Renewable Power to provide a grid connection solution for their upcoming 300 MW solar project in Rajasthan.

⭐ Strides Pharma gains after board approval 

Shares of the pharma company jumped more than 3% today after its board approved the acquisition of 100% shareholding in its step-down subsidiary Strides Pharma Services Private Limited (SPSPL) as part of internal restructuring. After this acquisition, SPSPL will become a direct subsidiary of Strides Pharma, thereby simplifying its corporate structure.

⭐ Power Mech Projects secures new order 

The engineering and construction company’s shares closed 1.7% higher after it secured two orders cumulatively valued at ₹625 crore. One of these orders comes from Hindustan Zinc to operate and maintain its captive power plant in Rajasthan, while the other order is from Vedanta Limited to test and commission its boiler, turbine and generator at its project site in Chhattisgarh.

In Focus

Oil marketers on a slippery slope

Shares of state-owned oil-marketing companies (OMCs) have been on a downward trajectory of late. Hindustan Petroleum, Bharat Petroleum and Indian Oil have seen their share prices decline by 3% to 10% in August. What are the reasons behind this? Let’s explore. 

Crude prices are on the rise

Brent crude oil prices have surged by over 19% in the last three months. This week, they touched a 10-month high of $90 per barrel. This rise is partly due to extended production cuts by key oil-producing countries like Saudi Arabia and Russia.

This is likely to impact the gross marketing margins (or the profitability per barrel) of OMCs. As a result, oil-marketing companies are heading for a challenging second quarter as international crude prices are on the rise while retail fuel prices continue to remain stable. 

Russian crude discounts are narrowing

Another key factor that is impacting OMC margins is the narrowing discount on Russian crude oil prices. Discount offered on Russian Urals (a type of crude oil) has declined to $15 per barrel  from $25 per barrel in May 2023. To make matters worse, after shipping and insurance charges, this discount further narrows to $5 per barrel for Indian refiners. 

This has impacted crude imports from Russia as its market share in India’s total crude import has come down to 34% in August from 40% seen in April-July period.

Government intervention limits price hikes 

But why can’t OMCs simply hike petrol and diesel prices, as crude oil prices increase? Well, the answer is government intervention. In the pre-election year, the government won’t allow OMCs to hike retail prices significantly. Last week, government reduced domestic LPG by ₹200 per cylinder amid a surge in retail inflation. Thus, OMCs’ margins are shrinking further.  

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