Speed bump

Nifty50: 17,758 ▼ 198 (-1.1%)
Sensex: 59,646 ▼ 651 (-1.0%)

Hello folks!

You may be familiar with the idiom, ‘you snooze, you lose’. Two airline pilots took the phrase quite literally. They fell asleep at 37,000 feet and missed their landing!

Anyway, on to the markets, which snapped their eight-day winning streak.

• Benchmark indices fell sharply, halting the longest winning streak in two years.
• In all, 44 of the Nifty50 stocks closed in the red.
• India's gold imports rose 6.4% to $12.9 billion during April-July owing to healthy demand.

Among the Nifty sectoral indices, IT (+0.06%) was the sole gainer, while PSU Bank (-2.6%) and Realty (-1.9%) were the top losers.

What’s trending

⭐ SEBI approves Adani’s open offer for Ambuja, ACC 

Market regulator SEBI approved Adani Group's $3.8-billion open offer for Ambuja Cements and ACC. The Adani Group has made offers of ₹385 per share for Ambuja Cements and ₹2,300 a share for ACC. The total investment is worth ₹31,139 crore. As per data, Adani’s open offer price for Ambuja is at 6% discount compared to Thursday’s closing price while that for ACC is at a 1% discount.

⭐ PVR-Inox merger runs into hurdle

PVR (NSE): 1,807 ▼ 111 (-5.7%), INOXLEISUR (NSE): 492 ▼ 33 (-6.2%)

A non-profit group has approached the Competition Commission of India (CCI), filing a complaint against the proposed merger of multiplex giants PVR and Inox Leisure. The group alleges that the merger will have anti-competitive effects on the film exhibition industry. In June, SEBI had approved the merger through a share swap deal, which would create India’s largest multiplex chain.

⭐ Centre revises windfall tax on oil products

ONGC (NSE): 134 ▼ 1.1 (-0.8%), OIL (NSE): 188 ▼ 3.0 (-1.5%)

The government on Thursday cut the windfall tax on domestically crude oil to ₹13,000 per tonne from ₹17,750 per tonne. Meanwhile, the export duty on diesel was hiked to ₹7 per litre from ₹5 per litre. The government also levied a tax of ₹2 on aviation turbine fuel (ATF) exports. The changes will come into effect from Friday.

⭐ NHPC signs MOU with Nepal

NHPC (NSE): 34.8 ▲ 0.1 (+0.4%)

Government-owned hydroelectric company NHPC has signed an agreement with the government of Nepal for the development of two hydropower projects. Both projects will be situated in the far western region of Nepal and have a combined potential of 1,200 megawatts. Although the value of the projects was not revealed, there is another 900 megawatt hydropower project being constructed in east Nepal at a cost $1.04 billion.

In Focus

Auto sector race ahead

The auto industry in India has been in top gear this fiscal. Since April 2022, the Nifty Auto index has zoomed over 20%, outperforming the benchmark Nifty50, which rose by a modest 2.4%. 

But what is driving the rally in the auto sector? Let’s look under the hood.

The industry is witnessing high demand and strong volume visibility, especially in the passenger vehicle (PV) segment. According to a report, PV sales rose by over 64% in the first quarter of FY23 to 7.9 lakh units. In response, automakers have launched several new vehicles, indicating a strong demand outlook. 

Further, steel prices have corrected over 25% from their peak this year. Steel is a key raw material used in auto manufacturing, and a fall in prices reduces the input costs and improves profitability for auto companies.

Investors are also sensing value-unlocking opportunities through the monetisation of the electric vehicle (EV) subsidiaries. In addition, recent decline in crude oil prices to below $100 have also supported the industry. Crude oil prices and autos are inversely related. A fall in crude prices reduces the running cost of automobiles, resulting in an increased demand.

Due to these factors, both foreign and domestic investors are making a beeline for the Indian auto sector. In July 2022, foreign portfolio investor allocation to the sector touched a multi-year high of 5.5%. Even domestic investors raised their bets on the auto sector, raising their allocation to 7.7%, a four-year high. 

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Good to know

What is a share swap?

Share swap is a transaction that typically takes place during an acquisition or a merger. In such transactions, shares are used instead of cash to make payments. The acquiring company gives some of its shares to the shareholders of the company being acquired. To make the deal fair, each company’s shares are accurately valued and the final swap ratio is set. 

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