Marching ahead

Nifty50: 17,525 ▲ 127 (+0.7%)
Sensex: 58,853 ▲ 465 (+0.8%)

Hola, folks!

When things go wrong in life, a friend can boost our confidence and help us to face challenges. Friendship is crucial in one's life. This is the reason why we celebrate Friendship Day. But, a true friendship should be like bulls and bears. Fighting all the time to stay on the top but always together, even if there is a difference in opinion.

• After an initial hiccup, the markets witnessed sustained buying and marched higher. 
• In all, 34 of the Nifty50 stocks closed in the green.
• The investor sentiment was upbeat as major Asian and European indices were up on Monday. 

Among the Nifty sectoral indices, Metal (+1.2%) and Auto (+0.9%) were the top gainers, whereas PSU Bank (-0.4%) and IT (-0.02%) were the top losers.

What’s trending

⭐ Tata Motors to acquire Ford’s Gujarat plant

TATAMOTORS (NSE): 468 ▲ 2.7 (+0.5%)

Tata Motors’ electric vehicle (EV) subsidiary and Ford India have signed an agreement for the acquisition of Ford’s manufacturing plant located at Sanand, Gujarat. The plant will be sold for ₹725 crore. The deal could be considered timely as it will add a capacity of 3 lakh units to Tata Motors’ overall manufacturing capacity, which is already near saturation.

⭐ BPCL reports big loss

BPCL (NSE): 326 ▼ 10 (-3.0%)

Shares of state-run Bharat Petroleum Corporation fell nearly 5% intraday. The selling pressure was on the back of a ₹6,147 crore loss reported by the refiner for the June quarter. The freeze on retail prices of petrol and diesel impacted its ability to recover a 90% rise in raw material costs. Its revenues rose by 54% year-on-year. The performance was further impacted by a ₹966 crore foreign exchange loss.

⭐ India’s Q1 GDP set to jump 

As per economists, India’s economy is likely to grow between 12.5 and 15% in Q1FY23. The growth is aided by a strong revival in consumption and recovery in the services sector. The growth rate looks high partly on account of the low base of last year. Meanwhile, economists also said that private investment is yet to fully pick up and rising interest rates led by monetary policy tightening might pose a challenge.

⭐ IPO rush: 28 firms get SEBI’s nod

Between April and July 2022, the market regulator SEBI has given its nod to 28 companies to raise funds totaling ₹45,000 crore through initial public offerings. Companies like FabIndia, Bharat FIH, TVS Supply Chain Solutions and Macleods Pharmaceuticals are among those who have received approval from the SEBI. Meanwhile, electronic manufacturing services company Syrma SGS will launch its IPO on 12 August 2022. The IPO will be open for subscription on Upstox. 

⭐ Berkshire Hathaway reports loss

Warren Buffet’s Berkshire Hathaway reported a loss of $43.8 billion in the June quarter as share prices of top US stocks slumped. The loss is on the back of a $53 billion fall in value of investments. Its management said significant disruptions of supply chains and higher costs have persisted as new Covid variants emerged and geopolitical uncertainties escalated. However, it must be noted that much of these portfolio losses are unrealized in nature.  

In Focus

Festive sales to drive demand revival

Discretionary products such as electronic goods, apparel, and passenger vehicles are expected to be in high demand in the upcoming festive season from August to December. Industry leaders, reportedly, expect a 15-25% higher demand compared to the same period in 2019(pre-pandemic). The rise in demand is expected to be supported by the pent-up demand and improved consumer sentiments.  

Discretionary spending refers to the money spent on non-essential goods and services e.g. recreation, entertainment, etc. It is considered one of the key parameters to gauge the country’s economic health. This is because during crisis-like situations such as pandemics or economic downturns, discretionary spending shrinks as individuals aim to save more for tough days.

AC-maker Voltas expects upbeat consumer sentiment and is reportedly targeting a 25%-plus growth in the festive season in comparison to 2019. 

Similarly, the management of Aditya Birla Fashion, said initial bookings in the wholesale business are strong and the festive season is expected to provide further boost. The apparel retailer posted its highest ever April-June sales last quarter, with 39% revenue growth over the pre-Covid levels. Cosmetics and fashion retailer Nykaa is also hopeful of strong demand. 

It is important to note that the festive season is a crucial period for businesses as it accounts for 35 to 45% of annual sales for most consumer goods companies.

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Good to know

What is Return on Equity (RoE)?

Return on equity (RoE) is a measure of a company’s financial performance. It is calculated by dividing the net income of the company by its shareholders’ equity. The figure indicates how effectively the company is managing shareholders’ funds. The ideal level of RoE varies across sectors. Before investing, one should compare the RoE of a given company to the average for the company's sector or its peers.  

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