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ICICIdirect Research Posted on 09:31am 13-Jan-2022

Power Grid Corporation of India has signed a joint development agreement with Africa50...

* Market Outlook

Indian markets are likely to open on a positive note on the back of strong global cues. IT majors TCS, Infosys and Wipro will be in focus as they announced earnings post market hours on Wednesday.


*  Markets Yesterday

• Domestic markets ended higher tracking gains across BFSI and FMCG stocks, which were partially offset by losses in IT stocks amid positive global cues.

• US markets ended marginally higher amid mixed news inflows.


* Key Developments

• Index of industrial production (IIP) grew 1.4% YoY in November 2021 against an increase of 3.2% in October 2021. Manufacturing sector grew 0.9% YoY. Mining & power output grew 5% and 2.1% YoY, respectively. Under use-based segments, primary goods increased 3.5% YoY, capital goods fell 3.7% YoY. IIP during April-November 2021 grew 17.4% YoY.

• CPI inflation for December rose to 5.6% vs. 4.9% in November 2021. Food inflation was higher with CFPI rising to 4.1% in December vs. 1.9% in November leading to higher headline inflation print. Unfavourable base was the primary reason for higher food inflation as CFPI was higher despite month on month decline of 1.2%. CFPI declined sharply to 3.4% in December 2020 from 9.5% in November 2020. Within food inflation, unfavourable base effect in vegetables and, to a lesser extent, in cereals (but higher weight at 10%) was the primary driver of higher food inflation. Core inflation remained at levels similar to last month at 6.1%.

• Mindtree is expected to report its numbers today. We expect the company to report 5% QoQ CC growth to be driven by deals in BFSI, ramp up in travel verticals. In rupee terms the growth is expected to be 6.2% QoQ. We expect company’s EBIT margins to expand 20 bps QoQ.

• In an exchange filing, Cipla informed that its subsidiary, Invagen had terminated stock purchase and merger agreement with Avenue Therapeutics (a company focused on the development and commercialisation of intravenous Tramadol) with effect from November 2021. Invagen will continue to hold shares in Avenue.

• Power Grid Corporation of India has signed a joint development agreement with Africa50, the pan-African infrastructure investment platform to continue to develop the Kenya Transmission Project on a public-private partnership basis. The project entails the development, financing, construction, and operation of the 400kV Lessos – Loosuk and 220kV Kisumu – Musaga transmission lines under a public-private partnership (PPP) framework.

• As per media sources, M&M has increased prices of its recently launched vehicle i.e. XUV 700 by ~| 46,000 - 80,000/unit starting January 2022. This model was first launched in October 2021 at an introductory price of | 12 lakh/unit (ex-Showroom Delhi) with prices now prevailing at ~| 13 lakh/unit. Separately, M&M’s subsidiary company in the 2-W space i.e. Classic legends will be introducing Yezdi brand of motorcycles today.

• As per The Economic Times, state-run lenders have asked their private sector counterparts to raise their stake in NARCL and India Debt Resolution Company Ltd (IDRCL). This comes as the government has asked banks to speedily address procedural delays in the functioning of the two entities created for the resolution of distressed assets. At present, SBI, Union Bank of India and Indian Bank hold 13.27% each in NARCL, while PNB holds 12.07% and Canara Bank owns 12% and as per plan eventually no bank will hold more than a 10% stake to ensure a diversified ownership for the ARC.

• According to Business Standard, the government-appointed actuary has pegged the embedded value (EV) of the Life Insurance Corporation of India at | 4-5 lakh crore, a key parameter that will be used to compute the market valuation of India’s largest insurer.

• As per Livemint, Kotak Mahindra Bank has hiked the interest rate on fixed deposits (FD) across various tenors by 5 to 15 bps while in another development the bank has passed a resolution to cap promoter voting rights at 26%.

• Federal Bank has received approval from its board of directors to raise up to | 700 crore by issuing bonds on a private placement basis. The board of directors of the bank at its meeting has approved the issuance of unsecured Basel-III tier-II subordinate bonds in the nature of debentures, amounting up to | 700 on a private placement basis, Federal Bank said in a regulatory filing.

• According to Business Line, Quiklyz, the vehicle leasing and subscription business vertical of Mahindra & Mahindra Financial Services, will offer the widest range of electric vehicles (EVs) for leasing and subscription to potential customers. Quiklyz currently has a large portfolio of EVs on its digital subscription platform. The portfolio spans across electric 4W from the leading OEMs offering electric vehicles including Mahindra, Tata Motors, Mercedes-Benz, MG Motors, Audi, and Jaguar as well as electric 3W load vehicles from Mahindra and Piaggio for e-commerce fleet operators.

• As per Business Line, demand for credit has picked up in last three months, with a State Bank of India (SBI) inhouse survey suggesting plans for capacity expansion across sectors. Referring to the credit growth visible across sectors, SBI in an economic research report noted that sectors where demand for credit started picking up in last three months includes NBFCs, Telecom, Petroleum, Chemical, Electronics, Gems & Jewellery and Infrastructure, including Power and Roads.

• As per Moneycontrol, Indraprastha Gas has hiked PNG price in Delhi by | 0.5/scm to | 35.6/scm from January 12.

• According to Livemint, Yes Bank is in the process of selecting a partner for an asset reconstruction company (ARC) to warehouse a large portion of its bad loans, is seeking as much as | 12,000 crore from potential investors.


*  Today's Highlight

Results: Mindtree, Tata Metaliks, GTPL Hathway.

Events: US PPI.