Thursday tussle

Nifty50: 15,938 ▼ 28 (-0.1%)
Sensex: 53,416 ▼ 98 (-0.1%)

Howdy, folks!

Have you got your booster shot yet? If not, the government has decided to give free Covid boosters starting from Friday for the 18-59 age group. At least that may give you some time away from markets that declined for the fourth day in a row.

• After a volatile session, the benchmark indices closed in the red for the fourth straight day.
• In all, 29 of the Nifty50 stocks closed lower. 
• The rupee closed at a fresh low of 79.90 against the dollar, as compared to previous close of 79.81.

Among the Nifty sectoral indices, Oil and Gas (+1.3%) and Pharma (+0.7%) saw the most gains, while PSU Bank (-2.2%) and IT (-1.5%) were the top losers.

What’s trending

⭐ Infosys acquires Danish tech co 🤝

INFY (NSE): 1,433 ▼ 11 (-0.7%)

Infosys has signed an agreement to acquire Denmark-based BASE life science for $111 million. BASE is a leading technology and consulting firm in the life sciences industry in Europe. The acquisition is expected to close in Q2FY23. It will help Infosys augment its life sciences expertise and expand its footprint further in the Nordic region and across Europe. Notably, the life sciences vertical contributes 6.6% to Infosys’ total revenues.

⭐ Jio, Airtel and Adani to battle for 5G spectrum 📶

BHARTIARTL (NSE): 642 ▼ 0.6 (-0.09%), IDEA (NSE): 8.6 ▼ 0.1 (-1.7%)

Reliance Jio and Bharti Airtel are expected to bid for 5G spectrum worth up to 60,000 crore and 50,000 crore, respectively. The sale of the airwaves begins on 26 July. Adani Group is expected to bid for spectrum worth up to 15,000 crore, while Vodafone Idea is likely to bid for spectrum worth up to 6,000 crore. There is expected to be an intense fight for the airwaves, which could push up spectrum prices of some bands by 10%.

⭐ Hindustan Zinc announces dividend 💰

HINDZINC (NSE): 284 ▲ 12 (+4.6%)

Shares of Hindustan Zinc surged on Thursday after the company announced an interim dividend of ₹21 per share, which is 7.4% of the closing price of ₹284. The Vedanta-promoted company said the dividend payout amounts to ₹8,873 crore, and the record date for the dividend is 21 July. To be eligible, investors need to buy shares at least two trading days before the record date.

⭐ Tata Metaliks reports sharp fall in profits ⛏️

TATAMETALI (NSE): 725 ▲ 22 (+3.2%)

Shares of Tata Metaliks plummeted after the company announced a sharp fall in its Q1 net profit. The pig iron and ductile iron (DI) pipes maker reported a 99% year-on-year fall in net profit to ₹1.2 crore. This was due to a fall in market prices of pig iron and a significant rise in prices of raw materials like coal and coke. Although revenues rose 10% to ₹669 crore due to higher realisations, volumes of pig iron and DI pipes declined 23% and 8%, respectively.

⭐ Wholesale inflation dips in June 🏭

India's wholesale price index (WPI) fell to 15.18% in June, from 15.88% in May, which was the highest in at least three decades. The overall decline in WPI was due to a decline in manufacturing inflation to 9.19% from 10.11%. Manufacturing constitutes 64.23% of the overall WPI basket. However, wholesale food inflation rose to 12.41% in June, up from 10.89% in May.

In Focus

IT firms disappoint, investors sign out

IT companies have begun to announce their results for the first quarter of FY23. And just like the last quarter, investors have shown their dissatisfaction. IT shares are trading lower, and some have hit fresh 52-week lows. Let's decrypt what's causing investors to hit 'Esc'.

So far three IT firms have announced their results, TCS, HCL Tech and Mindtree. While revenues have risen on a quarter-on-quarter (QoQ) basis, all firms have seen a decline in net profit. This could be a sign of a slowdown in business activity due to rising employee wages and a recession-like situation.

TCS reported a 4.4% drop in net profit to ₹9,519 crore, while HCL Tech’s net profit declined by 8.8% to ₹3,281 crore. Similarly, Mindtree saw  its profit after tax (PAT) fall 0.3% to ₹471 crore.

To make matters worse, the attrition rate has also continued to rise. For TCS, the attrition rate rose to 19.7% for the 12 months ending on 30 June, from 17.4% on 31 March 2022. Meanwhile, HCL Tech’s attrition increased to 23.8% from 21.9%. In the case of Mindtree, the attrition rate jumped from 23.8% to 24.5%. To curb this, companies are taking steps such as raising annual salaries and bonuses, which is having a direct impact on profitability. 

The Nifty IT index has declined over 6% this week, which shows that investors seem to be moving away from the sector. There are fears that a global slowdown could push companies to cut down on IT spending. This is expected to have an adverse impact on the future revenues of IT firms.  

While IT firms seem to be under a dark cloud, investors will look for a silver lining in the results of Infosys and Wipro, which are expected later this month.

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Good to know

What is a record date?

The record date is basically a cut-off date to be eligible to receive benefits of corporate actions like bonus or dividend. All investors who hold shares of a company in their demat accounts on this date are eligible to benefit from the corporate action. Another date investors need to remember is the ex-date, which falls one business day before the record date. The investor needs to buy the shares at least one day before the ex-date, to be eligible for the corporate action's benefits. This is because Indian stock exchanges follow the T+2 method of trade settlement, wherein shares are credited into the investor’s demat account two business days after the order is executed.

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