5 Factors Behind the Market Crash, Airtel's Tariff Hike, and Buzzing Stocks Today

Tue, 23 Nov Pre-Open

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Indian share markets ended deep in the red yesterday.

Benchmark indices fell sharply as investor sentiments remained jittery amid weaker global cues and amid the risk of a market correction.

Market participants resorted to heavy selling on disappointment over IPO valuations, cancellation of Reliance-Saudi Aramco deal and persistent selling by foreign investors.

At the closing bell yesterday, the BSE Sensex stood lower by 1,170 points (down 2%).

Meanwhile, the NSE Nifty plunged 348 points (down 2%).

Bharti Airtel and JSW Steel were among the top gainers.

Bajaj Finance and Bajaj Finserv, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 2.6% and 3%, respectively.

On the sectoral front, realty, energy, consumer durables and automobile stocks were among the hardest hit.

Shares of Bharti Airtel and Sheela Foam hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.1% at Rs 48,770 per 10 grams at the time of closing stock market hours yesterday.

Here are 5 Factors Why Indian Stock Markets Crashed

Weak global cues: Asian share markets turned cautious yesterday as data on Chinese retail sales missed expectations, though industrial output stayed solid, while more evidence of global inflation pressures helped gold to a three-month peak.

Chinese retail sales rose 17.7% in April a year ago, short of forecasts for a jump of 24.8%, while industrial output matched expectations with a rise of 9.8%.

The Hang Seng ended down by 0.4%, while the Shanghai Composite ended up by 0.6%. The Nikkei ended up by 0.1% in today's session.

Covid cases on the rise: Some countries in Europe are witnessing a fresh rise in Covid-19 cases.

Austria is believed to be reintroducing a lockdown to curb new infections, some other countries such as Germany, Slovakia, the Czech Republic and Belgium may introduce precautionary measures.

While the world is better equipped to deal with the pandemic, a sharp jump in cases across Europe could hurt the global economy and have an impact on most stock markets around the world.

Forex reserves decline: The country's foreign exchange reserves declined US$763 m to US$640.1 bn in the week ended 12 November 2021, RBI data showed.

In the previous week, the reserves went down US$1.1 bn to US$640.9 bn. It touched a lifetime high of US$642.5 bn in the week ended 3 September 2021.

In the reporting week, the decline in the foreign exchange reserves was on account of a dip in foreign currency assets (FCA), a major component of the overall reserves, the Reserve Bank of India's (RBI) weekly data released on Friday showed.

Fresh inflation concerns: Global market sentiments have weakened due to fear of rising inflation around the world. It is no secret that there has been a sharp jump in inflation around the world due to the Covid-19 pandemic.

Surging energy prices, demand and supply chain disruptions and many other factors have pushed up prices of essential and non-essential commodities across the globe.

Even in major economies like the US and UK, consumer prices rose at their fastest pace in October in almost 3 decades.

All of these signals have spooked stock markets around the globe and domestic investors are also concerned that it will have an impact on India's economic recovery.

A higher than expected rise in inflation could also force the RBI to start increasing key rates sooner, a move that could have a massive impact on the stock markets.

Major stocks in red: There was a broad based sell-off in most of the stocks yesterday. Index heavyweight stocks and recently listed IPOs, all fell. Maruti Suzuki (3.1%), Paytm (13%), Reliance Industries (4.4%) and State Bank of India (3.5%).

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, Brijesh Bhatia talks about why he is bullish on metal stocks, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be Poonawalla Fincorp.

CARS24, India's leading e-commerce platform for pre-owned vehicles and Poonawalla Fincorp (formerly known as Magma Fincorp) have announced their strategic partnership for quick and seamless consumer financing on vehicles bought from CARS24.

In this partnership, Poonawalla Fincorp will fulfill consumer loans originating through CARS24. Additionally, both parties will partake in the risk and rewards.

Commenting on this strategic partnership Vijay Deshwal, group chief executive officer, Poonawalla Fincorp said,

• We are delighted to partner with CARS24 to provide seamless financing to the pre-owned car customers.
  
  Owning a car has become a necessity in recent times and the pandemic has further accelerated that trend. With technology at its core, we at Poonawalla Fincorp aim to create a digitally enabled consumer lending platform and this partnership with CARS24 is a step in that direction.
  
  We are optimistic that this will be a great partnership and will provide hassle-free experience to the customers in fulfilling their dream of owning a car.

Poonawalla Fincorp is a non-deposit taking systemically important non-banking finance company (ND-SI-NBFC), registered with the Reserve Bank of India (RBI).

Bharti Airtel share price will also be in focus today.

Telecom service provider Bharti Airtel said it has decided to revise its prepaid tariffs with effect from 26 November 2021.

'Bharti Airtel has always maintained that the mobile average revenue per user (ARPU) needs to be at Rs 200 and ultimately at Rs 300, so as to provide a reasonable return on capital that allows for a financially healthy business model', the company said.

The telecom service provider also believes that this level of ARPU will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India.

The entry-level tariffed voice plan has been hiked by about 25%, while for unlimited voice bundles the increase in most cases is about 20%.

The sector has been waiting for a tariff increase and soon Vodafone Idea and Jio are expected to follow suit. The last hike was in December 2019.

Go Fashion IPO Subscribed 135.4 Times on Final Day

The public issue of Go Fashion, which owns the brand Go Colors, had been subscribed 135.38 times on 22 November 2021, the third and final day of bidding.

Investors put in bids for 1.1 bn equity shares against an offer size of 80.79 lakh units, as per the exchange data.

Retail investors have been active since day one of the bidding, buying shares 49.27 times their reserved portion, while the part set aside for non-institutional investors has been subscribed 262.08 times and that of qualified institutional buyers 100.73 times.

Go Fashion, which had a market share of around 8% in the branded women's bottom-wear market in the fiscal 2020, opened its Rs 10.1 bn public issue for subscription on 17 November 2021. The price band for the offer has been fixed at Rs 655-690 a share.

Incorporated in 2010, Go Fashion is the first company to launch a brand exclusively dedicated to the women's bottom-wear category. It has a pan-India network of 459 exclusive brand outlets (EBO) in the country, with a significant number of stores in southern and western India.

Reliance Industries-Aramco Deal Called Off

Shares of Reliance Industries tumbled over 4.5% after it shelved a proposed deal to sell a 20% stake in its oil refinery and petrochemical business to Saudi Aramco for US$ 15 bn.

In a statement, the company said,

• Due to evolving nature of Reliance's business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to re-evaluate the proposed investment in oil-to-chemical (O2C) business in light of the changed context.

It further added that it will continue to be Saudi Aramco's 'preferred partner' for investments in India's private sector.

Ambani had in company's annual general meeting of shareholders in August 2019 announced talks to sell a 20% in the O2C business, which comprises its twin oil refineries at Jamnagar in Gujarat, petrochemical assets and 51% stake in fuel retailing joint venture with BP, to the world's largest oil exporter.

At that time, he had announced the deal would close by March 2020. The deadline was missed and the company blamed pandemic controlling restrictions, imposed towards the end of March 2020, for hampering due diligence.

This year too, at the AGM, Ambani stated that the deal would close by the end of the year. At the same event, he also announced new energy forays, including a plan for developing one of the largest integrated renewable energy manufacturing facilities in the world.

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

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

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