India's WPI Inflation, IDBI Bank Stake Sale, and Buzzing Stocks Today

Tue, 15 Mar Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices surged for the fifth consecutive session despite a weak Asian set-up and rising domestic wholesale inflation.

India's inflation based on the Wholesale Price Index (WPI) rose to 13.11% YoY in February from 12.96% in January, according to data released by the commerce ministry.

WPI inflation was 4.83% in February 2021. This is the 11th consecutive month in which WPI has been in double digits.

At the closing bell yesterday, the BSE Sensex stood higher by 936 points (up 1.7%).

Meanwhile, the NSE Nifty closed higher by 241 points (up 1.5%).

Infosys and HDFC Bank were among the top gainers.

IOC and ONGC, on the other hand, were among the top losers.

The BSE Mid Cap index ended on a flat note, while the BSE Small Cap index ended up by 0.3%.

Sectoral indices ended on a mixed note with stocks in the banking sector, IT sector and finance sector witnessing most of the buying interest.

Realty and oil & gas stocks, on the other hand, witnessed selling pressure.

Shares of GHCL and Credit Access Grameen hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 1.1% at Rs 52,309 per 10 grams at the time of closing stock market hours yesterday.

Speaking of stock markets, India's #1 trader Vijay Bhambwani explains why he is very bullish on silver, in his latest video for Fast Profits Daily.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Jubilant FoodWorks.

In a surprise move, Pratik Pota, CEO of Jubilant FoodWorks, resigned last week to pursue 'quasi-entrepreneurial opportunities'.

The development has led to a rerating of the stock by a few brokerages citing 'uncertain times' for the company as it hunts for a new CEO.

Yesterday, Jubilant FoodWorks' stock fell as much as 14% following the announcement.

The move has taken the street by surprise, especially since the Jubilant FoodWorks board had approved Pota's reappointment as CEO last June for another three years. Some market participants see the departure as an adverse development.

This certainly is a negative development, as he has been instrumental in turning the business.

The company has initiated the process of identifying his successor, it said in a filing to the stock exchanges.

Pota has been credited with significantly improving the performance of the company after he took over the reins in 2017. Pota, who succeeded Ajay Kaul, had joined Jubilant FoodWorks at a time when the company was going through a rough patch.

Post Pota era, now, a lot weighs on the appointment of the next CEO and how he leads the company to the next leg of growth.

IDBI Bank share price will also be in focus today.

The government plans to invite expression of interest (EoI) to sell its stake in LIC-controlled IDBI Bank by the next month-end, a senior official has said.

As part of the divestment, the government plans to sell its entire 45.48% stake eventually.

The government may look to sell around a 26% stake in the bank, along with management control to attract investors, the official said.

IDBI Bank became a subsidiary of LIC with effect from 21 January 2019, following the acquisition of an additional 828 m equity shares.

On 19 December 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24% following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP).

'We have been working on the proposal for a while now and most of the details have been finalised. We expect to invite the expression of interest from investors by end of next month or May,' the official said.

The Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May last year.

Necessary amendments to the IDBI Bank Act have already been made through the Finance Act 2021, and transaction advisors have been appointed.

IPO-bound Life Insurance Corporation (LIC) plans to retain some stake in IDBI Bank so that the insurer continues to reap the benefits of the bancassurance channel.

WPI Inflation Rises to 13.11% in February

Data released by the government on Monday showed that wholesale inflation in India rose to 13.11% in February.

It had moderated to 12.96% in January 2022 after rising to 13.56% in December 2021.

'The high rate of inflation in February 2022 is primarily due to rise in prices of mineral oils, basic metals, chemicals and chemical products, crude petroleum & gas, food articles and non-food articles etc. as compared to the corresponding month of the previous year,' the government release said.

Inflation in food articles basket in February came in at 8.19%, tad lower from the 10.33% growth witnessed in the month before. Inflation in vegetable prices moderated to 26.93% after having surged to 38.45% in January from 31.56% in December.

Wholesale prices of onion fell 26.37% while potato prices rose 14.78% after having fallen 14.45% in the month before. Prices of eggs, meat & fish rose 8.14% while wheat prices witnessed 11.03% rise.

Crude, petroleum & natural gas basket witnessed a surge of 46.14% while crude petroleum rose 55.17%.

Inflation in the fuel & power segment saw a rise of 31.50%, only marginally lower than the 32.27% rise seen in the preceding month. In this segment, LPG, petrol & HSD (high-speed diesel) prices grew 26.27%, 58.33% & 53.59% respectively.

The manufactured products segment rose 9.84% in February after rising 9.42% last month and 10.62% in December 2021.

Paytm Shares Crash 13% After RBI Restriction on Payments Bank

Shares of One 97 Communications, the parent company of Paytm, extended its freefall on Monday, as it dropped another 13% on the back of negative news flow.

The Reserve Bank of India (RBI) has barred Paytm Payments Bank from adding new customers due to likely gaps in its technology systems.

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system, the RBI said in a release.

Following the development, shares of Paytm dropped as much as 13% to Rs 672.1 per share yesterday.

According to a report, annual inspections by the RBI found that the company's servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank.

Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. China's Alibaba Group and its affiliate, Jack Ma's Ant Group Co., own shares of Paytm, according to exchange filings.

The fintech startup had launched India's largest IPO of Rs 183 bn in November but the stock has been dwindling since its listing. The scrip has tumbled about 70% of its value compared to the issue price of Rs 2,150.

Compared to its IPO valuation of Rs 1.5 tn, the stock's valuation has now slipped below Rs 440 bn. Paytm Payments Bank was eyeing to apply for a small finance bank licence.

We will keep you updated on the latest developments from this space. Stay tuned.

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