U-turn

Nifty50: 15,415 ▼ 225 (-1.4%)
Sensex: 51,822 ▼ 709 (-1.3%)

Wassup people!

Some parts of the country are witnessing a downpour, and you're sure to be celebrating the good weather. The IMD has predicted heavy rainfall in parts of Maharashtra, Goa and Karnataka. However, markets would have put a dampener on your spirits. After Tuesday’s defeat, bears made a strong comeback today.

Meanwhile, investors have been beating down metal stocks out of shape. What's fueling this selloff? More on that later.

• Despite a strong overnight session in the US, Indian markets closed lower, ending a two-day winning sprint.
• In all, 45 of the Nifty50 stocks closed in the red.
• Meanwhile, the rupee futures touched a fresh low after closing at 78.3652 against the dollar, compared to 78.15 on Tuesday.

All of the Nifty sectoral indices closed in the red with Metal (-4.8%) and Media (-3.5%) witnessing most loss. Interestingly, media index was among the top gainers on Tuesday.

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What’s trending

⭐ Car makers plan new SUVs 🚙

MARUTI (NSE): 7,780 ▼ 0.6 (-0.01%)

Car makers are planning sports utility vehicle (SUV) launches in the run up to the festive season, as they become increasingly popular. Overall, 12 new utility vehicles are slated for launch this year, which is more than eight launches in FY21, and seven in FY22. Maruti will get the ball rolling, with the launch of the new Brezza on 30 June.

⭐ Kalpataru Power bags new orders

KALPATPOWR (NSE): 358 ▼ 1.9 (-0.5%), JMCPROJECT (NSE): 76.8 ▲ 3.1 (+4.2%)

Kalpataru Power Transmission has bagged orders worth ₹1,416 crore in the overseas market for electric transmission and distribution. Meanwhile, its listed subsidiary JMC Projects has secured a new orders of ₹874 crore for the construction of Kanpur metro stations and a data centre. The combined order win of ₹2,290 crore is nearly 15% of its FY22 consolidated revenue.

⭐ Jain Irrigation zooms on merger news 👍

JISLJALEQS (NSE): 41.2 ▲ 3.7 (+9.8%)

Shares of agri-products and plastic pipe maker Jain Irrigation surged 20% intraday on Wednesday. The company announced the merger of its subsidiary’s international irrigation business with Rivulus, part of Singapore-based investment fund Temasek. The integrated entity will have a revenue of $750 million. The cash from the merger is expected to lower consolidated debt of Jain Irrigation by around 45%. 

⭐ Crude oil price cool down 🛢️

Crude oil prices declined by over 5% earlier today. The traders' sentiments towards crude oil were subdued amid anticipation of aggressive steps by the US government to bring down soaring fuel costs. Also, major US-based oil companies are set to meet Joe Biden on Thursday. High energy prices were one of the major contributors to the US inflation, which jumped to 8.6% last month. 

⭐ UK inflation soars 😰
The UK inflation rate is at a 40-year high. The rate touched 9.1% year-on-year owing to increasing food and energy prices. To combat inflation, the Bank of England had raised interest rates by 0.25% last week.

In Focus

A metal meltdown

Metal stocks are having a meltdown. Shares of leading metal & mining companies such as Tata Steel, Vedanta and Hindalco are down 25-36% since the start of 2022. Meanwhile, the Nifty Metal index is down by about 18%. But what's got them bent out of shape? Let's break it down.

Inflation in developed economies like the United States is touching highs not witnessed in decades. This has weakened consumer sentiments and the demand outlook. The US Fed is also signalling aggressive rate hikes to bring down inflation. Due to this, investors are concerned about a slowdown in economic activity, resulting in a significant selloff in metal stocks. 

Furthermore, the demand scenario from China, which is one of the world's biggest importers of steel, remains muted. This is mainly because of the uncertainty around the country's strict lockdown measures.

If we look at the India market, the government's recent decision to levy a 15% export duty on steel products caught companies off guard. This could make their exports uncompetitive at the global level. According to CRISIL, Indian steel exports are expected to fall by 40% in FY23.

Additionally, monsoon is a seasonally weak period for demand. But, once the monsoon is over, the construction activity may pick up. Rural demand may also rise. Could metal stocks make a comeback then, and perhaps 'steel' the show? It’s anybody's guess at this point.

IPO Corner

India Exposition Mart, a venue planner, has received an approval from the market regulator SEBI to launch a ₹600 crore IPO. The public issue consists of an offer of sale as well as a fresh issue. The company plans to raise ₹450 crore through the fresh issue, which will be used for funding capital expenditure, expansion of infrastructure and repaying debt. 

Good to know

What is an underlying asset?

An underlying asset refers to a real financial asset upon which the price of a derivative is based. There are various types of underlying assets, which include stocks, indices, commodities, among others. Any change in the price of the underlying asset can impact the price of the derivative, such as futures and options.

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