Subdued start

Nifty50: 17,241 ▼ 73 (-0.4%)
Sensex: 57,991 ▼ 200 (-0.3%)

Hello, folks!

Sometimes markets can take us on an exciting ride. Just like this kid who was thrilled on his first tram ride. While there was no such luck today, here’s wishing for better days ahead.

• After a gap-down opening, markets recovered a bit but couldn’t recoup early losses.
• In all, 35 of the Nifty50 stocks closed in the red. 
• Investors await the retail inflation data for September, which will be announced later this week.

Among the Nifty sectoral indices, IT (+1.0%) was the sole gainer, while FMCG (-1.1%) and Media (-1.0%) were the top losers.

What’s trending

⭐ TCS posts strong results

TCS (NSE): 3,124 ▲ 59 (+1.9%)

IT major TCS has reported robust numbers for Q2 FY23. Its revenue rose by 18% year-on-year (YoY) to ₹55,309 crore, while its net income rose by 8.4% YoY to ₹10,431 crore. Attrition rate stood at 21.5% for the last twelve months. The company also announced an interim dividend of ₹8 per share.

⭐ FMCG cos cut soap prices

HINDUNILVR(NSE): 2,603 ▲ 4.0 (+0.1%), GODREJCP (NSE): 834 ▲ 4.9 (0.5%)

FMCG companies like Hindustan Unilever and Godrej Consumer Products have cut prices of their respective soap brands by up to 15% due to fall in prices of palm oil and other raw materials in the global market. As per market experts, the price reduction could help drive volume growth amid sluggish demand.

⭐ JSW Steel’s Q2 output rises

JSWSTEEL (NSE): 665 ▼ 0.8 (-0.1%)

Steel manufacturer JSW Steel reported a 12% YoY rise in its combined crude steel production to 5.6 million tonnes during the September quarter. However, the production was down by 3% compared to the previous quarter due to extended maintenance shutdowns, subdued market conditions in the US and lower capacity utilisation due to supply and logistics constraints.

⭐ Deep Industries bags new order

DEEPINDS (NSE): 312 ▲ 2.1 (+0.6%)

Shares of energy company Deep Industries rose by nearly 4% intraday and hit a new 52-week high. The company has received a new order from Oil India for the charter hiring of two workover rigs for a three-year period. The order value is estimated at ₹71.6 crore, which is equivalent to 26% of the company’s FY22 revenue.

In Focus

Rupee slides: But who gains and who loses?

The Indian rupee has depreciated by over 10% against the US dollar in 2022. Rising interest rates in the US and the global economic slowdown have sent the US dollar to an all-time high as compared to other currencies. Let’s look at how the falling rupee has impacted key sectors.

⭐Losers 

In general, sectors that are heavily dependent on imports are hit by the rupee depreciation. A falling rupee makes imported items including crude oil and metals costly, which ultimately leads to high raw material and production costs.

Oil and Gas is the most affected sector as India imports over 85% of oil it consumes. Purchase costs rise for crude importers, leading to margin pressure as companies are unable to pass on the entire rise in costs to consumers.

FMCG is another sector that bears the brunt of rupee fall. Key raw materials like palm oil and others are imported by FMCG companies. Hence, to offset the high input cost, companies try to increase product prices, which results in a fall in demand and leads to lower sales volumes.

⭐Gainers 

Typically, companies that are operating in export-oriented businesses or those that receive revenue in dollars are most likely to benefit from a depreciating rupee. Industries such as IT, Pharma, and Textiles gain when the rupee declines.

IT firms are one the biggest gainers as they generate most of their revenue in dollars. The Americas, including the US, contribute nearly 60% of the total revenue of IT firms. As per market experts, every 1 rupee fall against the dollar adds up to 0.3% to the operating margins of IT companies.

Pharma companies that are focused on formulation exports also stand to benefit from a declining rupee. Every 1 rupee depreciation versus dollar adds up to 0.15% to the EBITDA margins of pharma companies.   

To conclude, the rupee has its positive and negative impact on several sectors. But when will the rupee stop falling? Well, we’d have to toss a coin to answer that question.

IPO Corner

The IPO of Tracxn Technologies received a strong response from retail investors on Day 1. The public issue of the data service provider was subscribed around 0.23 times. Retail investors flocked towards the IPO, with the retail segment being subscribed around 1.2 times.

Click here to apply for the IPO on Upstox. 

Good to know

What is the operating margin?

The operating margin is a financial metric that reveals how much money a company is making after paying its variable costs like wages and raw materials but before paying out interest and tax. This reveals how efficiently a company’s operations are managed. It is calculated by dividing operating income or earnings by net sales. A high operating margin shows that the company is good at turning its sales into profit.

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