RBI's Monetary Policy Outcome, M&M's June Quarter Performance, and Buzzing Stocks Today

Mon, 9 Aug Pre-Open

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Indian share markets ended on a negative note on Friday.

Benchmark indices edged lower after the Reserve Bank of India's monetary policy outcome.

The central bank retained its real GDP forecast at 9.5% for the fiscal 2022 but revised the inflation forecast upwards to 5.7% from 5.1% for the same period.

At the closing bell on Friday, the BSE Sensex stood lower by 215 points (down 0.4%).

Meanwhile, the NSE Nifty closed lower by 56 points (down 0.4%).

IndusInd Bank and Adani Ports were among the top gainers.

Cipla and Reliance Industries, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 0.2% and 0.3%, respectively.

Sectoral indices ended on a mixed note with stocks in the energy sector, realty sector and metal sector witnessing most of the selling pressure.

Telecom stocks, on the other hand, witnessed buying interest.

Gold prices for the latest contract on MCX were trading down by 0.3% at Rs 47,473 per 10 grams at the time of closing stock market hours on Friday.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Mahindra & Mahindra.

Mahindra & Mahindra's (M&M) net profit before exceptional items surged to Rs 9.3 bn in June quarter from Rs 390 m in the same period last year.

The company's net profit after adjusting for exceptional items was Rs 8.6 bn in the first quarter of the year 2022 against Rs 680 m in the previous fiscal.

Revenue rose by 110% to Rs 117.6 bn from Rs 55.9 bn reported in the last year.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 185% to Rs 16.3 bn in the first quarter from Rs 5.7 bn reported in the same period last year.

Total vehicles sold aggregated to 85,858 units during the April - June quarter, up by 190% from 29,619 units sold in the same period last year.

Total tractors sold rose by 52% to 99,127 units from 65,195 units.

Its operating margin was at 13.9% despite Covid challenges and commodity price increases.

The company continued to focus on cost optimization and operating leverage helped maintain margins.

M&M's farm equipment sector (FES) delivered its highest ever first quarter profit before interest and taxes (PBIT) of Rs 10.8 bn in quarter one of the year 2022.

It recorded revenue of Rs 53.2 bn during the quarter. FES international subsidiaries record fourth successive quarter of PBIT.

The tractor industry witnessed strong demand growth (39%) during the quarter. The growth in company's volume (48%) led to highest domestic market share in 8 quarters (41.8%)

M&M's auto business continues to witness strong booking pipeline and its market share has increased compared to March 2021 quarter.

Glenmark Life Sciences share price will also be in focus today.

Shares of Glenmark Life Sciences made a muted market debut on Friday, as the scrip got listed at Rs 751.1 on BSE, a 4.3% premium over its issue price of Rs 720.

On NSE, the scrip debuted at Rs 750, up 4.2%.

Glenmark Life Sciences, a subsidiary of Glenmark Pharmaceuticals, is a developer and manufacturer of select high-value non-commoditised active pharmaceutical ingredients (APIs).

The Rs 15.1 bn initial public offering (IPO) by the API maker was sold from 27 July to 29 July and was subscribed 44.1 times.

The issue received bids for 663 m shares compared with 15 m shares on offer.

The portion reserved for qualified Institutional Buyers (QIB) was subscribed 37 times while the non-institutional investors' (NII) portion was subscribed 122.5 times.

The retail individual investors (RII) portion was subscribed 14.6 times.

Due to strong demand, the stock was commanding a premium of about Rs 87 in the unlisted market, a day before its market debut.

The proceeds from the fresh issue will be used towards the payment of outstanding purchase consideration to the promoter for the spin-off of the API business and funding the capital expenditure requirements.

Retail Ownership in NSE-Listed Companies at All-Time High

Retail ownership of companies listed on the National Stock Exchange (NSE) reached an all-time high in the June quarter, with participation of individual investors surging through a period of sustained gains for the broadest benchmark indices.

The bull run in secondary markets and a flurry of IPOs have helped channelise retail savings into the Indian capital markets.

The share of retail investors in NSE-listed companies as of 30 June was 7.18%, compared with 6.96% in March, or 6.89% five years ago.

The previous record was 7.10% in June 2009, when the broadest gauges globally were beginning to recover from the financial crisis.

Meanwhile, ownership of domestic institutional investors (DII) in Indian stock markets declined to an 11-quarter low.

Ownership of DIIs, which include domestic mutual funds, insurance companies, banks, financial institutions and pension funds, declined to 13.19% on 30 June from 13.42% as of 31 March despite net inflows of Rs 202 bn during the quarter.

Holdings of foreign portfolio investors (FPIs) also fell to 21.66% in the June quarter from 22.46% in March.

India has added more than 5 m new investors between April and July this year, and 53% of those registered are from states beyond the top five with the highest investor bases.

Overall, NSE's registered investor base has now crossed 45 m. Since 1 April 2020, nearly 23.6 m new demat accounts have been added in India.

Growth Projection Unchanged at 9.5%, Inflation Revised Upwards for 2022

The Reserve Bank of India (RBI) Governor Shaktikanta Das, in his speech on the Monetary Policy on Friday, said that the projected gross domestic product (GDP) growth for the financial year 2022 will remain unchanged at 9.5%.

The projected inflation for the same year has been revised upwards to 5.7%.

The governor also said that there has been encouraging movement in high frequency indicators. This implies that the economy is on the road of recovery.

India's retail inflation has been beyond the RBI's tolerance band for the past two months.

However, price pressures should ebb in the third quarter.

RBI Governor, Mr Shaktikanta Das said,

• The current assessment is that the inflationary pressures during April - June quarter of 2022 are largely driven by adverse supply shocks which are expected to be transitory.

In his speech, the governor stated that the economy is recovering from the setback of the second wave of the Covid pandemic.

He suggested that economic activity will pick up on vaccination. The July round of consumer confidence survey, returned optimism from a year ago, he added.

The RBI's Monetary Policy's decision at having an accommodative stance is aimed at prioritising growth and addressing distress in the economy.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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