Mumbai: Amid the rupee falling against the US dollar, RBI Governor Shaktikanta Das on Friday said “you buy an umbrella to use it when it rains!’, indicating that the central bank is using foreign exchange reserves to deal with currency volatility.Das also said that by eschewing sudden and volatile shifts, the central bank has ensured that expectations remain anchored and the forex market functions in a stable and liquid manner. He also noted that the central bank will continue to engage with the forex market and ensure that the rupee finds its level in line with its fundamentals. The governor said in recognition of a genuine shortfall of supply of forex in the market relative to demand because of import and debt servicing requirements and portfolio outflows, the RBI has been supplying US dollars to the market to ensure that there is adequate forex liquidity.“After all, this is the very purpose for which we had accumulated reserves when the capital inflows were strong. And, may I add, you buy an umbrella to use it when it rains!,” Das said.The country’s foreign exchange reserves had declined by a massive USD 8.062 billion to USD 580.252 billion in the week ended July 8. On Thursday, the rupee touched an all-time intra-day low of 80.06 against the US dollar but managed to recover the lost ground and closed at 79.05 against the greenback.“I would like to reiterate that we have no particular level of the rupee in mind, but we would like to ensure its orderly evolution and we have zero tolerance for volatile and bumpy movements,” Das said while speaking at the banking conclave organised by Bank of Baroda.According to him, the rupee is holding well compared to currencies of advanced and emerging market economies due to the country’s resilient macroeconomic fundamentals. The recovery is gradually strengthening, the current account deficit is modest and inflation is stabilising, he said and added that the financial sector is well-capitalised and sound.Due to the RBI actions, including measures to encourage inflows, the movements of the rupee have been relatively smooth and orderly, the governor pointed out.Earlier this month, the RBI had announced a slew of measures including liberalising norms for foreign investments in government bonds and increase in overseas borrowing limits for companies, to boost foreign exchange inflows and curb the fall in the rupee.Further, Das said a predominant part of the outstanding External Commercial Borrowings (ECBs) is effectively hedged. As per the RBI’s internal research estimates, the optimal hedging ratio for India is at 63 per cent.Taking into account natural hedges and the exposure of public sector companies, the optimal hedge ratio condition is comfortably satisfied in the case of the stock of ECBs in the country’s external debt, he said.—PTI&nbsp;

Amid the rupee falling against the US dollar, RBI Governor Shaktikanta Das on Friday said “you buy an umbrella to use it when it rains!’, indicating that the central bank is using foreign exchange reserves to deal with currency volatility.

'You Buy An Umbrella To Use When It Rains': Rbi Governor On Using Forex Reserves

New Delhi: Around 10 crore shares of online food delivery platform Zomato, amounting to an 1.17 per cent of the company’s equity, changed hands on Wednesday at a total deal value of around Rs 947 crore.  Japanese company SoftBank’s SVF Growth Fund is the likely seller in this mega transaction, according to CNBC TV18.  The report had earlier said that SVF Growth Fund may sell 10 crore shares of the company or 1.17 per cent of the total equity via block deals at Rs 94 per share.
SVF Growth (Singapore) Pte. Ltd. had 3.35 per cent stake in Zomato, totalling around 28 crore shares.  Zomato shares reached near Rs 100 after the block deal, and were hovering around Rs 98.45 in morning.  The fresh block sale came after another foreign institutional investor, Tiger Global Management, offloaded its entire shareholding of 1.44 per cent in Zomato on Monday.  The deal earned Tiger Global a total of Rs 1,123.85 crore.  US-based investment major, via its VC fund Internet Fund III Pte Ltd, exited online food delivery platform Zomato.  The VC firm sold around 12.34 crore shares or 1.44 per cent stake in Zomato at an average price of Rs 91.01 per share.  Brokerage firm HSBC maintained its buy rating on Zomato and raised its price target to Rs 120 from Rs 102 earlier.  The note said that hyperlocal can become a much bigger business for Zomato in the long-term. Zomato's stock is likely to be volatile in the near term on account of market speculation around possible exits by some pre-IPO shareholders (VC/PE/Chinese investors) of the company as well as erstwhile shareholders of Blinkit who had received it under a share swap deal, JM Financial Institutional Securities had said in its recent report.
—IANS

Around 10 crore shares of online food delivery platform Zomato, amounting to an 1.17 per cent of the company’s equity, changed hands on Wednesday at a total deal value of around Rs 947 crore.

SoftBank likely sold 10 cr shares in Zomato for Rs 947 cr, stock up

Mumbai: Equity benchmarks Sensex and Nifty eked out marginal gains to settle in the positive zone after a highly volatile trade on Wednesday, helped by buying in index majors Infosys, ITC and Reliance Industries.
However, the rise in stocks was restricted amid unabated foreign fund outflows from the equity markets, traders said.  In a choppy session, the 30-share BSE Sensex climbed 92.47 points or 0.14 per cent to settle at 66,023.24. During the day, it fell to a low of 65,664.85 and touched a high of 66,063.43.  The Nifty edged higher by 28.45 points or 0.14 per cent to 19,811.85.  Among the Sensex firms, Infosys, NTPC, Power Grid, Titan, ITC, Tech Mahindra, Hindustan Unilever, Axis Bank, Tata Consultancy Services, Bajaj Finserv, Reliance Industries and UltraTech Cement were the biggest gainers.  In contrast, IndusInd Bank, Kotak Mahindra Bank, Mahindra &amp; Mahindra, JSW Steel, HDFC Bank and Maruti were the major laggards.  In Asian markets, Seoul and Tokyo settled in the green, while Shanghai and Hong Kong ended lower.  Europan markets were trading mostly with gains. The US markets ended in negative territory on Tuesday.  "Despite the US Fed adopting a cautious stance in its minutes and refraining from indicating a rate cut, the market recovered from the day’s correction and ended with mild gain. On the other hand, the broad market witnessed some profit-booking as investors' focus shifted to the primary market, marked by a set of IPOs scheduled for this week."  "However, the undercurrent is positive, with a cooling of inflation and an easing US bond yield supporting a short- to medium-term rally," said Vinod Nair, Head of Research at Geojit Financial Services.  Global oil benchmark Brent crude declined 0.46 per cent to $82.07 a barrel.  Foreign Institutional Investors (FIIs) offloaded equities worth Rs 455.59 crore on Tuesday, according to exchange data.  The BSE benchmark climbed 275.62 points or 0.42 per cent to settle at 65,930.77 on Tuesday. The Nifty went up by 89.40 points or 0.45 per cent to 19,783.40.
—PTI

Equity benchmarks Sensex and Nifty eked out marginal gains to settle in the positive zone after a highly volatile trade on Wednesday

Markets settle with modest gains in highly volatile trade

New Delhi: The Supreme Court on Friday asked the Securities and Exchange Board of India (SEBI) what the capital markets regulator intends to do for ensuring the protection of investors from extreme volatility in the stock market.  While hearing a batch of pleas concerning the Adani-Hindenburg row, a bench headed by Chief Justice D Y Chandrachud observed one of the principal reasons which led the apex court to intervene in these petitions was the extreme volatility of stock market.
"Now what does SEBI intend to do to protect this kind of volatility... which leads to a loss of investor value," the bench, also comprising justices J B Pardiwala and Manoj Misra, asked Solicitor General Tushar Mehta, who was representing the SEBI.  "Has SEBI looked at whether it is necessary to tighten the regulations. What is SEBI intending to do in terms of ensuring the protection of investors," the bench said. "We must," Mehta said.
The bench said SEBI has to take steps to ensure that instances of loss of investors' wealth, consequent on short selling or volatility in the stock market, were obviated in the future.  "What has SEBI done on investigating the volatility in the market," the court asked.  Mehta told the bench about the steps taken by the SEBI.  The bench reserved its order in the matter.  The bench also expressed its reservation in directing SEBI to investigate the matter based on some media reports which were relied by one of the petitioners.  At the outset, the solicitor general apprised the bench that investigation in 22 out of the 24 cases relating to allegations against the Adani group were over.  "For remaining two, we need information from foreign regulators etc. and some other information. We have been in consultation with them. Some information has come but that is where we are not in control of the time limit for obvious reasons...," he said.  During the hearing, the bench also asked whether the SEBI has found any element of wrong doing in so far as short selling was concerned.  Mehta said wherever the capital markets regulator has found short selling, they are taking action as per the SEBI Act.  He said so far as regulatory framework was concerned, suggestions from the apex court appointed expert committee was there.  "So far as the report of the expert committee is concerned, in principle, the suggestions are not objected to," he said.  Advocate Prashant Bhushan, appearing for one of the petitioners, also argued in the matter and questioned the credibility of the SEBI's probe.  The bench also heard submissions of advocates appearing for the other petitioners. On May 17, the apex court had granted SEBI time till August 14 to complete its probe into the allegations of stock price manipulation by the Adani group.  A Supreme Court-appointed expert committee had in an interim report in May stated that it saw "no evident pattern of manipulation" in billionaire Gautam Adani's companies and there was no regulatory failure.  It, however, cited several amendments the SEBI made between 2014 and 2019 that constrained the regulator's ability to investigate, and its probe into alleged violations in money flows from offshore entities has "drawn a blank".  The apex court had on May 17 directed that copies of the report submitted before it by the top court-appointed Justice (retd) A M Sapre expert committee be made available to the parties to enable them to assist it in further deliberations in the matter.
 Adani Group stocks had been bludgeoned on the bourses after Hindenburg Research made a litany of allegations, including those about fraudulent transactions and share-price manipulation, against the business conglomerate.  The Adani Group dismissed the charges as lies, saying it complies with all laws and disclosure requirements.
—PTI

The Supreme Court on Friday asked the Securities and Exchange Board of India (SEBI) what the capital markets regulator intends to do for ensuring

What SEBI intends to do to protect investors from volatility in stock market, asks SC

New Delhi: Shares of Adani group firms continued to attract heavy demand in morning trade on Tuesday, with Adani Total Gas climbing nearly 20 per cent.
All the 10 listed group companies were trading with sharp gains during the morning trade, defying a muted trend in the equity market.
Shares of Adani Total Gas zoomed 19.61 per cent, Adani Energy Solutions surged 13 per cent, Adani Power soared 8.46 per cent, Adani Green Energy jumped 7.84 per cent, Adani Enterprises climbed 7 per cent, Adani Wilmar went up by 6.86 per cent and NDTV advanced 6.42 per cent on the BSE. Adani Ports gained 3.71 per cent, Ambuja Cements climbed 3.66 per cent and ACC went up by 2.86 per cent. Stock prices of Adani group companies soared on Friday also as the Supreme Court heard and reserved its verdict on a batch of petitions seeking examination of allegations of fraud against the conglomerate. On Friday, nine of the 10 listed group companies ended in the green, adding Rs 14,786 crore to their combined market capitalisation, stock exchange data showed. Equity markets were closed on Monday for Guru Nanak Jayanti. In the broader equity market, the benchmark indices faced heavy volatile trends and were quoting between highs and lows.
—PTI

Shares of Adani group firms continued to attract heavy demand in morning trade on Tuesday, with Adani Total Gas climbing nearly 20 per cent.

Adani group firms zoom in morning trade; Adani Total Gas jumps nearly 20 pc

Mumbai: Benchmarks Sensex and Nifty snapped their seven-day run in early trade on Thursday amid selling pressure from foreign institutional investors and tracking cues from Asian markets.
Analysts said, receding crude oil prices in international markets failed to boost sentiment as investors turned to book profit ahead of RBI's monetary policy decision.  The 30-share BSE Sensex fell 211.21 points, or 0.30 per cent, to 69,442.52. The broader index Nifty also declined 58.95 points, or 0.28 per cent to 20,878.75.  Among major Sensex constituents, Hindustan Unilever, Bharti Airtel, ICICI Bank and Bajaj Finance were the laggards and traded with a loss of up to 2.03 per cent.
Meanwhile, the company that defied the broader market trend were PowerGrid, that rose 1.25 per cent, followed by UltraTech Cement (1.07 per cent), Asian Paints (0.96 per cent) and NTPC (0.76 per cent). Other gainers included Maruti, Kotak Mahindra Bank and HCL Tech.  As many as 18 shares of the 30-stock Sensex were trading in red, while 24 Nifty firms saw loss in early trade.  On Wednesday, Sensex surged 357.59 points, or 0.52 per cent, to settle at a new record of 69,653.73. The broader index Nifty also climbed 82.60 points, or 0.40 per cent, to hit its fresh peak of 20,937.70.  Foreign institutional investors sold shares worth ₹79.88 crore on Wednesday, according to exchange data.  According to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, in spite of favourable factors such as steady decline in US bond yields, India's GDP growth rate, declining crude price and political stability, "there will be dips in the market triggered by profit booking at higher levels".  The Reserve Bank of India is expected to maintain the status quo on the interest rate in its bi-monthly monetary policy decision to be announced on Friday.  Meanwhile, in Asian markets, Nikkei 225 was trading lower by 1.79 per cent.  European markets finished broadly higher on Wednesday. France's CAC 40 closed 1.71 per cent higher and Germany's DAX ended 0.75 per cent higher. London's FTSE 100 gained 0.21 per cent.  The U.S. markets ended on a mixed note on Wednesday, with the S&amp;P 500 registering a loss of 0.39 per cent, while Brazilian stocks gained 0.08 per cent.  On Thursday, global oil benchmark Brent crude was trading 0.47 per cent higher to $74.65 a barrel.
—PTI

Benchmarks Sensex and Nifty snapped their seven-day run in early trade on Thursday amid selling pressure from foreign institutional investors

Sensex, Nifty snap seven-day rally; Sensex falls over 200 points

Mumbai: It was an extremely volatile week in which one saw intraday gains being wiped out as well as opening losses being more than recovered. At the end of it all, markets gained on two of the five trading sessions and lost on three. BSESENSEX was down 490.14 points or 0.68 per cent to close at 71,595.49 points; NIFTY lost 71.30 points or 0.33 per cent to close at 21,782.50 points. The broader markets saw BSE100, BSE200 and BSE500 gain 0.22 per cent, 0.34 per cent and 0.22 per cent respectively. BSEMIDCAP was up 1.65 per cent but BSESMALLCAP was down 0.44 per cent. Intraday volatility and intraweek volatility has increased substantially in the midcap and Smallcap space and the net index changes at the end of the week do not give a fair picture of the volatility. The Indian Rupee lost 12 paise or 0.14 per cent to close at Rs 83.04 to the US Dollar. Dow Jones gained on three of the five trading sessions and lost on two sessions. At the end of the week, Dow was up a mere 17.27 points or 0.04 per cent to close at 38,671.69 points. At the end of the three-day bi-monthly meeting of the monetary policy committee meeting, RBI kept repo rates unchanged at 6.5 per cent. These rates have not been changed since February 2023. Markets have become very volatile and are giving some signs of a reasonably large correction happening in the coming period. For the records, the high on the BSESENSEX was made on 16th January at 73,427.59 points and on NIFTY at 22,124.15 points on the same day. In a flash of a pan movement, NIFTY crossed this high by a whisker at 22,126.80 points on February 2. What to make of this is debatable as BSESENSEX made a substantially lower high as compared to January 16 of 73,089.40 points. Looking at the fact that with just the last week left for results of the October-December 2023 quarter to be declared, the general summary indicates that the growth in revenue being talked about seems missing. There have been some outstanding results, but the pace of growth in revenues and profits is clearly missing. For the new trend to emerge we will now have to wait for yet another quarter at the bare minimum. This would also coincide with the general elections which would be held in April-May 2024. In primary market news we had four issues which closed for subscription during the week. The first was Apeejay Surrendra Park Hotels Limited which had tapped the markets with its fresh issue of Rs 600 crore and an offer for sale of Rs 320 crore. The price band was Rs 147-155. The issue was subscribed 62.90 times overall with the QIB portion subscribed 79.23 times, HNI portion subscribed 55.25 times and Retail portion subscribed 31.96 times there were 18.95 lac applications. The second issue was from Rashi Peripherals Limited which had tapped the markets with its fresh issue of Rs 600 crore in a price band of Rs 295-311.The issue was subscribed 62.95 times overall with QIB portion subscribed 151.45 times, HNI portion subscribed 66.15 times and Retail portion subscribed 11 times. There were 15.07 lac applications. The third issue was from Jana Small Finance Bank Limited which had tapped the capital markets with its fresh issue of Rs 462 crs and an offer for sale of 26,08,629 equity shares. The price band of the issue was Rs 393-414. The issue was subscribed 18.43 times overall with QIB portion subscribed 38.75 times, HNI portion subscribed 25.05 times and Retail portion subscribed 5.46 times. There were 7.04 lac application forms in all. The fourth issue was from Capital Small Finance Bank Limited. The company intended raising Rs 450 crore in a fresh issue and an offer for sale of 15,61,329 shares in a price band of Rs 445-468. The issue was subscribed 4.17 times overall with QIB portion subscribed 6.86 times, HNI portion subscribed 4.23 times and Retail subscribed 2.60 times. There were 4.17 lac applications in all. The subscription comparison between Jana Small Finance Bank and Capital Small Finance Bank Limited was stark. Both the issues were of similar size, a fairly similar price band and coincidentally in the same business, small finance bank. The valuation and direct comparison resulted in one being well-received and doing well and the other just getting subscribed at a time when markets are overflowing with funds, big learning for merchant bankers and prospective promoters looking to tap the markets going forward. There is one issue in the coming week which has already opened on Friday, February 9, and closes on Tuesday, February 13. The issue from Entero Healthcare Solutions Limited is tapping the capital markets with its fresh issue of Rs 1,000 crore and an offer for sale of 47,69,475 shares in a price band of Rs 1,195 to 1,248. The company is into the business of distributing healthcare products in India. Entero Healthcare Solutions is the third largest in terms of revenues in this space. It distributes pharmaceuticals and also has a range of white label products in healthcare devices and related products which currently form a small part of its overall revenues. The company has been growing its presence in the country by acquiring small well-established distributors across geographies and then converting them into subsidiaries. The idea is to have a well-knit all India presence which uses technology to achieve last mile distribution of these products. The company achieved revenues of Rs 3,300 crore for the year ended March 2023 and reported a net loss of Rs 11.10 crore for the same period. Revenues for the half year ended September 23 have improved to Rs 1,895 crore and the company has turned profitable for the first time and earned a profit of Rs 11.64 crore. In terms of EPS, as the company has reported losses for the year ended March 31, 2023 and therefore the EPS is negative Rs 3.10. The same is positive for the first six months at Rs 2.95. The only comparable player in the listed space which has a similar business model in part is Medplus. The other comparable price matrix for companies is price to book. The NAV of the company post conversion of CCCP as at September 23 is Rs 185.84. This effectively means that the company is asking for a price to book of 6.71 times. The business is complex, needs time to stabilise and achieve a decent profitability. Readers could look at the share post listing. Coming to the markets in the week ahead, volatility would be the order of the day. On the upside levels of 73,427 on BSESENSEX and 22,126 on NIFTY would be Mount Everest. I believe these need a superhuman effort with massive index management and accompanied by very strong news flow to be taken out. Suffice to say that without consolidation, this is something which cannot happen. On the support side, levels of 21,500 and 70,750 would act as decent levels where markets would look to bounce. If these are broken, then levels of 21,200 and 69,850 would act as solid supports for the time being. Depending on how markets behave, future movement in key indices would be decided. A note of caution would be that there could be a reason for a sharp fall in the markets over a couple of days. This could happen in this week or the next. The trading strategy would continue to book profits on rallies and reduce exposure in the midcap and Smallcap space. Safety lies in the large cap space where buying should be done only on sharp dips. —IANS

It was an extremely volatile week in which one saw intraday gains being wiped out as well as opening losses being more than recovered

Markets Look Tired, Weakness To Continue; Best To Stick To Large Cap Route

Mumbai: The stock market witnessed a downturn at the close of trading on Friday, with selling pressure in index heavyweights dragging both the Nifty and Sensex into the red. Rumors circulating in the market regarding potential tax changes in the upcoming Union Budget of July 2024 added to the negative sentiment. The Sensex plummeted by 732.96 points, closing at 73,878.15, while the Nifty dropped by 172.35 points, ending the day at 22,475.85.
Among the Nifty companies, there were 13 advances and 37 declines. Notable gainers among the Nifty firms included Coal India, Bajaj Finance, Grasim, Tata Consumer Services, and ONGC. However, Bharti Airtel, Reliance, Nestle India, Maruti, and JSW Steel were among the top losers. According to market expert Ajay Bagga, there were rumors suggesting that tax treatment for all asset classes would be equalized in the upcoming budget, bringing long-term capital gains to the marginal tax rate.
Bagga emphasized that while the actual revenue impact of such a move is doubtful, the rumors had a significant negative impact on market sentiment. Bagga commented on the market situation, stating, "There was selling in index heavyweights that brought the Nifty and Sensex down. There were rumors in the market that tax treatment for all asset classes will be equalized in the Union Budget of July 2024. This would bring long-term capital gains to the marginal tax rate. The actual revenue impact of such a move is doubtful, but the sentimental damage done is much more."  He added, "With Rs 36,000 crores collected at source under STT, a clean, low-cost, and zero leakage tax is already in place for stock market investors. These rumors led to widespread selling today. As such, there is no basis to such a move on the part of the finance ministry, but in the days of social media and fake news, such rumors get amplified very fast. We stay positive on the markets and recommend buys at every dip. Tax treatment is outside the investor's control and not something that should determine asset allocation." The market's reaction reflects the nervousness among investors regarding potential policy changes and highlights the impact of rumors on market sentiment. Despite the dip, experts remain optimistic about the market's long-term prospects and advise investors to seize buying opportunities during downturns.
—ANI

Sensex falls 732.96 points and Nifty drops 172.35 due to rumored tax changes impacting investor sentiment ahead of the Union Budget 2024.

The Hawk

Tag : Volatility

'You Buy An Umbrella To Use When It Rains': Rbi Governor On Using Forex Reserves

Akbar Ali

Tag : Volatility

'You Buy An Umbrella To Use When It Rains': Rbi Governor On Using Forex Reserves

Akbar Ali

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