TCS bags $1.1 billion deal from UK, Gold prices continue to fall & more

Nifty50: 18,771 ▼ 85 (-0.4%)
Sensex: 63,238 ▼ 284 (-0.4%)

Namaste, friends!

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• Markets witnessed a choppy session and closed lower after rising to all-time highs yesterday
• In all, 37 of the Nifty50 stocks closed in the red
• The Bank of England raised its policy rates for the 13th consecutive time by 0.5% to 5%

All the Nifty sectoral indices closed in the red, with PSU Bank (-1.6%) and Realty (-0.8%) being the top losers.

What’s trending

⭐ TCS bags $1.1 billion deal from UK

The IT services giant has won a deal worth $1.1 billion (£840 million) from the UK National Employment Savings Trust (NEST), which is the country’s largest workplace pension scheme. The initial tenure of the contract will be 10 years, during which TCS will digitally transform the administration services of UK NEST. Total estimated value of the contract, if extended to the entirety of its 18-year tenure, will be around $1.9 billion (£1.5 billion). 

⭐ HAL signs pact with GE Aerospace

Hindustan Aeronautics Limited has signed a memorandum of understanding with US-based GE Aerospace to produce fighter jet engines for the Indian Air Force. As per the agreement, HAL will co-produce the latter’s F414 engines in India to power the Tejas Light Combat Aircraft Mk2. The development comes amid Prime Minister Narendra Modi's state visit to the US. 

⭐ Fitch Ratings upgrades India’s GDP forecast  

Fitch Ratings has raised India’s GDP forecast to 6.3% from 6% for the current fiscal year. This comes after the domestic economy expanded by 6.1% in the first quarter of 2023. As per the agency, the Indian economy continues to show broad-based strength, owing to the government’s push to increase capital expenditure, moderate commodity prices and robust credit growth.

⭐ Gold prices continue to fall

International gold prices declined for the fourth consecutive day this week. This comes after Federal Reserve Chair Jerome Powell’s testimony before the US Congress, in which he hinted at further interest rate hikes. On the Comex, gold futures were trading at $1,943.50 per troy ounce, down 0.07%, after recovering from a low of $1,919 earlier in the day.

In Focus

Sugar stocks turn sweeter

Leading sugar producers were in the spotlight today. Shares of Shree Renuka Sugars, Balrampur Chini, and Dalmia Sugar rose between 2 to 6% in an otherwise subdued market. What led to this rise? Let's explore.  

Surge in international prices 

The recent rally in sugar stocks can be attributed to the surge in international sugar prices, which are trading at multi-week highs. Sugar prices have remained elevated after reports of delayed monsoon in key sugar producing countries like India and Brazil due to the El Nino effect.

As a result, international sugar prices rose above $0.26 per pound in June 2023, trading close to an 11-year high of $0.27 per pound in April 2023. Higher international sugar prices are positive for domestic producers as they get higher prices for their exports. Meanwhile, domestic sugar prices continue to remain stable despite the global surge due to government-imposed caps on prices. 

Low domestic production 

As per early estimates, India is expected to produce less sugar in the current sugar season at 32.8 million tonnes, a decline of 11% YoY. Meanwhile, the consumption is gradually rising and is estimated at 27.5 million tonnes. This is likely to keep domestic prices at the same levels, which is also beneficial for the industry.

Ethanol business remains bright spot 

Besides this, ethanol production for most sugar producers is becoming a lucrative business as the government plans to increase ethanol blending with automotive fuel to 20% by 2025, which is favourable for the sugar industry.

All in all, these multiple factors are providing thrust to sugar stocks. Having said that, the weather outlook will hold the key to the stock movement in the near future.

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