Neither here nor there

Nifty50: 18,232 ▲ 35 (+0.1%)
Sensex: 61,294 ▲ 126 (+0.2%)

Namaste, friends!

Who doesn’t like to start their day with a positive message? It simply has the power to put a smile on anyone’s face. A woman in southern China has taken this responsibility pretty seriously. She quit her job to draw positive messages in the sand for people!  Yes, you heard us right.

The woman, a former sales executive, now does this full-time. She leaves messages of love on sandy beaches for other people. Cool, isn’t it? 

Meanwhile, the markets seem to be indecisive over the message it wants to send out. The indices stayed range bound—early morning gains were wiped out and then reclaimed by the end of the trading period. Here’s a quick lowdown. 

• After a positive start, markets stayed range bound today.
• In all, 26 of the Nifty50 stocks closed in the green.
• Investors await release of the minutes of the last Fed meet on Wednesday.

Among the Nifty sectoral indices, IT (+0.7%) and Pharma (+0.7%) were the top gainers, while Media (-0.7%) and Metal (-0.5%) were the top losers.

What’s trending

⭐ Oil cos fall as the Taxman comes knocking

ONGC (NSE): 149 ▼ 0.8 (-0.5%), OIL (NSE): 211 ▼ 3.4 (-1.6%)

The two week long party for energy companies ended early today after the Finance Ministry increased  windfall tax on domestically produced crude oil, aviation turbine fuel, and high-speed diesel. The windfall tax on crude production was hiked 23% to ₹2100 per tonne from the existing ₹1,700 per tonne, causing stocks to slide. 

Windfall tax on diesel has been raised to ₹7.5/litre from ₹5/litre. Companies producing aviation turbine fuel will pay ₹4.5/litre - about 200% more as windfall tax. Windfall tax is a tax levied on gains made by domestic crude producers and refiners due to high global crude and product price. The tax revision follows a 7% rise in crude oil prices in the last two weeks.

⭐ Loan demand boosts M&M Finance 

M&MFIN (NSE): 234 ▼ 6.8 (-2.8%)

Strong loan demand boosted M&M Finance to a 52-week high in intraday trade. The company has disbursed about ₹4,650 crore in loans in December 2022 alone. That is a growth of  67% year-on-year in the rate hike season. Overall loan disbursement in the third quarter grew 80% to ₹14,450 crore. The collection efficiency (CE)-a key metric that tracks loan repayment- stood at 98% for December 2022.

⭐ Green strategy sees Granules India gain

GRANULES (NSE): 326 ▲ 6.5 (+2.0%)

Pharma company, Granules India and energy firm, Greenko ZeroC will collaborate to build a 100- acres green field facility in Andhra Pradesh. Granules India will use the facility to manufacture APIs, fermentation-based products and Intermediates. Greenko ZeroC will be providing carbon free energy. The estimated cost of the project is ₹ 2,000 crore, over five years. 

⭐ Gold at 2-year high 

Gold prices in India touched a two-year high of ₹55,613/10 gram today. In the global markets, gold prices traded at a six-month high. The reason - a weak US dollar and high inflation. Any fall in the US dollar makes dollar-priced bullion more attractive for overseas buyers. This is because gold is considered a hedge against inflation and economic uncertainties. Back home, high demand from the festive and wedding seasons also aided the rise in gold prices.

In Focus

Rice stocks boil over

Look who’s celebrating before harvest season. Shares of rice millers cum exporters such as KRBL, LT Foods, Chaman Lal Setia Exports have gained 10-13% in the last two weeks. The primary reason - increasing rice prices. Why is this happening and how are the companies benefiting? Let’s find out.

1. Short supply, rising prices in global markets

In the last month, rice prices have gone up nearly 15%. Industry experts attribute this to rice millers building stocks hoping to get better prices in the international market. Wondering why? Well, Pakistan, one of the top exporters of rice, was hit by floods that wiped out its crop. This has caused lesser supply in global markets. 

Consequently, prices could increase in international markets, making exports more lucrative. Despite export restrictions, India’s rice exports have already increased by 37% in value terms to $2280 million in the first six months of FY23. 

 2. Reduced Kharif harvest expected

The expected drop in kharif rice production is another key factor for the increase in non-basmati rice prices. During the 2022-23 kharif season, rice production is estimated to drop by 6% to 104.9 million tonnes, as per the agriculture ministry’s first estimate. 

3. Winding up of public food scheme 

The withdrawal of the government-run food security scheme (announced during the pandemic) could further boost demand in domestic markets. The central government scheme was providing  an additional 5kg of foodgrains free to 80 crore people. It ended on 31 December, 2022.

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Good to know

What is credit growth?

The term credit growth refers to a rise in demand for loans. It’s an important indicator of economic activity. Bank loans are of three types - loans to individuals like us, to companies when they start new projects and to service sector and other financial institutions like NBFCs.

Despite rising interest rates, loan demand has been strong in India.  RBI data shows bank loans to industry grew 13.1% on year in November 2022 as against a 3.4% on-year rise in November last year, due to strong demand. Meanwhile, loans to the service sector rose 21.3% on-year as on Nov 18, 2022, as per RBI. 

What the number means - Corporate loan demand (an indicator of business expanding) is yet to pick up. 

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