GDP grows 20.1% in Q1 but shows impact of second Covid wave

31/08/2021

India’s gross domestic product (GDP) grew 20.1% in the April-June quarter of 2021-22 from the low base of last year when the country was under a strict lockdown for almost two months to control the Covid-19 pandemic. The GDP had contracted 24.4% in the first quarter of 2020-21, the deepest quarterly contraction India ever recorded.

The GDP print for the first quarter is on a par with estimates in a Reuters poll of 41 economists, which had projected a 20% expansion. But it was a tad below the Reserve Bank of India’s projection of 21.4%.
According to data released by the National Statistical Office on Tuesday, the real gross value added for Q1 rose 18.8%.

Trade, Hotels, Transport and Communication Services Grew Fastest

Trade, hotels, transport and communication services recorded the fastest growth, at 68.3%. This sector had contracted 48.1% in the April-June period of last year. The manufacturing sector grew 49.6%, bouncing back after shrinking 36% in April-June last year.

While the comparison with year-earlier numbers shows the economy has rebounded strong, the impact of the devastating second wave of Covid-19 is clearly evident. The second wave hit India hard during April-

May this year, leading to several localised lockdowns and hurting business activity. This is obvious from the fact that India’s gross domestic product in absolute terms was Rs 32.38 lakh crore during April-June this year, down from Rs 38.96 lakh during the January-March period.

Another example is Private Final Consumption Expenditure, which indicates household consumption. Private Final Consumption Expenditure as a rate of GDP was 55.1%in the first quarter of this fiscal year compared with 55.4%a year earlier. The silver lining, however, is the increase in Gross Fixed Capital Formation to 31.6%from 24.4%.
 

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IPO flood to continue in September as nearly a dozen firms get ready for share sales

31/08/2021

India’s primary markets are already set for a record year with a large number of companies floating initial public offerings (IPO) to take advantage of the bullish investor sentiment. And after a busy August, almost a dozen companies are preparing to hit the market with their share sales in September.

Banking and financial services companies will likely lead the IPO bandwagon in the coming month while a handful of healthcare, chemicals and industrials companies will also launch their offerings to raise more than Rs 12,000 crore.

Sensex and Nifty at New Highs

These IPOs come even as India’s benchmark stock market indexes climb to record highs, with the BSE Sensex racing past the 57,000-mark on Tuesday and the Nifty 50 crossing 17,000.

Vijaya Diagnostics and Ami Organics will start the month with their IPOs opening on September 1. The pathology chain’s IPO aims to raise as much as Rs 1,895 crore while the size of Ami Organics’ share sale is Rs 570 crore.

The banking and financial services companies that have lined up their IPOs include Aditya Birla Sunlife Asset Management Company, Utkarsh Small Finance Bank, Fincare Small Finance Bank, Jana Small Finance Bank, ESAF Small Finance Bank and Arohan Financial. Another company is mortgage lender Aadhar Housing Finance, which had filed draft documents for its IPO in January but has yet to receive regulatory approval.

Other companies that have already received approval from the Securities and Exchange Board of India are low-cost airline Go First (earlier known as GoAir), Shree Bajrang Power &Ispat, Seven Islands Shipping and Shriram Properties.

These apart, Sansera Engineering, Penna Cement, Paras Defense, SupriyaLifescience and Bajaj Energy are also waiting for hit the market with their IPOs.

The bullish sentiment aside, some market watchers paint a picture of caution especially after some companies listed on the bourses in August at a discount. As many as 10 companies listed their sharesin August. However, CarTrade, Aptus Value Housing, ChemplastSanmar and Windlas Biotech made weak trading debuts. This, along with global cues, could introduce slight nervousness in the market despite the gush of liquidity.
 

To know more about IPOs and how to apply and check IPO allotment status click here

 

 

 

 

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Raghuram Rajan warns US Fed’s slow tapering may keep it behind the curve

31/08/2021

Former Reserve Bank of India governor and noted economist Raghuram Rajan thinks that the US Federal Reserve could be moving slower than it should in removing the monetary stimulus it had put in place in the wake of the economic crisis brought on by the Covid-19 pandemic.  

Rajan, who in 2013 had said that the Fed had moved too fast in tapering the stimulus, now says that the current crisis is different from the global financial crisis eight years ago, in that this time around there is an “enormous amount of fiscal spending”.

The university of Chicago economist, who also has an IIT-IIM-MIT pedigree to boot, said he is concerned that if the Fed does not fully account for the changed reality, “they may be behind the curve”.
“The Fed thinks it has time to slow-walk the tightening process, especially given longer-term disinflationary forces like aging, automation and globalization,” Rajan said in an interview to Bloomberg Television.

Rajan was the RBI chief from 2013 to 2016, a period that saw the US Fed swiftly remove the economic stimulus, which hit emerging market economies such as India hard, as foreign institutional investors began pulling out hot money from these capital markets. 

Rajan’s views concur with those of former US treasury secretary Larry Summers, who also thinks that if the Fed continues to go slow, it will have to act fact later, which could have a destabilizing impact on emerging economies.   

Rajan said that even though the Fed chairman Jerome Powell continues to stress on a gradual withdrawal, emerging markets remain cautious about an “abrupt change in stance” from the US central bank. 
Although Powell has said that the Fed could begin tapering the stimulus later this year if the US job recovery continues, he has been non-committal on when the pullback might actually begin. 
 

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BTST stock ideas: September 1

01/09/2021

September 1

5paisa analysts bring the best intraday, short-term and long-term ideas for you. In the morning we provide best momentum stocks to buy or sell, while in the last trading hour we provide buy today sell tomorrow (BTST) ideas.

Here are the two BTST ideas for today

Following are the strategies:

Stock 1

PRESTIGE           

Current Market Price (CMP): 378            

Stop Loss (SL): 368         

Target Price (TP): 397    

Real-estate sector is moving

Holding Period: buy today sell tomorrow

Stock 2

CENTURY TEXTILES (CENTURYTEX)          

Current Market Price (CMP): 819            

Stop Loss (SL):  811        

Target Price (TP):  840   

Stock is coming out of consolidation

Holding Period: buy today sell tomorrow

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Flipkart co-founder’s Navi set for 10 passive mutual fund offerings

01/09/2021

Navi Mutual Fund, which is part of Flipkart co-founder Sachin Bansal’s financial services group Navi, has filed to launch ten new passive funds, as per documents filed with the Securities and Exchange Board of India (SEBI).

These would top up the maiden offering, Navi Nifty 50 Index Fund, which launched a new fund offering (NFO) in July. This is one of the cheapest index funds in the market.

The new funds for which the company has filed applications are Navi Nifty Next 50 Fund, Nifty Midcap 150 Index Fund, Nifty Smallcap Index 250 Fund, Navi Nifty 100 ESG Index Fund, Navi Nifty Bank Index Fund, Navi Nifty Commodities Index Fund, Navi Nifty IT Index Fund and Navi Nifty Pharma Index Fund. It has also filed for two US-focussed vehicles—Navi NASDAQ 100 Fund of Fund and Navi Total US Stock Market Fund of Fund.

All these are passive funds that trace the movement of an existing underlying index and does not involve a separate fund manager making investment calls. As a result, such funds are offered with negligible fee structures.

The international funds will give local investors an exposure to existing funds of global passive investments fund giant Vanguard. Interestingly, Vanguard had invested in Flipkart much before the Indian ecommerce major was acquired by Walmart three years ago. 

Bansal had co-founded Flipkart and is its former CEO. He sold his stake in Flipkart after Walmart bought the company. He is now building a neo-financial services empire and has struck a string of deals, including the acquisition of Essel Mutual Fund earlier this year.

In July 2021, Navi MF had launched the Navi Nifty 50 Index Fund, which became the cheapest index fund in the mutual fund industry.

To be sure, Navi is not the only new player in town. A bunch of others are looking to enter the fund management business lured by the monetary liquidity in the country.

These include NBFCs such as Bajaj Finserv, discount broker Samco Securities, mutual fund distributor NJ India and a bunch of portfolio management services firms such as Capitalmind, Helios, Alchemy and Unifi. Another player is White Oak Capital Management, which had acquired YES Mutual Fund a year ago.
 

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Nearly 18 unicorns could follow Zomato’s footsteps and float IPOs. Find out more

01/09/2021

If the stellar Rs 9,375 crore initial public offering of food delivery company Zomato left you impressed, wait for more.

A recent report by the investment banking arm of Bank of America says that as many as 18 Indian unicorns may be on their way to joining India’s IPO rush over the next 18-24 months. These 18 unicorns could raise as much as $11-12 billion thanks to the ample liquidity and the rush of retail investors, who have been driving the ongoing market rally, Gaurav Singhal, managing director of investment banking at Bank of America, told the Press Trust of India. 

Soonicorn, unicorn, decacorn

A unicorn is a startup that is valued at $1 billion or more. If a unicorn breaches the $10 billion mark, it is called a decacorn. A tech startupthat is on its way to becoming a unicorn is called a ‘soonicorn’.

How many unicorns does India have?

India has around 60 unicorns, with more than two dozen joining the list this year alone. Several reports, including one by Credit Suisse, say that the number of unicorns in India could cross the 100-mark this year, considering the amount of funding they are attracting. 

So, which unicorns could float IPOs?

At least five unicorns have already filed for IPOs. These are Paytm (Rs 16,600-crore issue), Ola (Rs 11,000 crore), Policybazaar (Rs 6,000 crore), Nykaa (Rs 4,000 crore) and Freshworks, which filed for a $100 million IPO on the Nasdaq.

Several other marquee names including Flipkart, Byju’s, and Oyo could tap the capital markets in coming years.Others on the list include Grofers, Pinelabs, Pharmeasy, Droom, and Delhivery. 
Many other tech startups that aren’t unicorns have also filed for IPOs. While CarTrade and gaming firm Nazara have already gone public, Tracxn and Mobikwik have also submitted their draft IPO documents.

Why the sudden rush?

Singhal attributes the surge in fund inflows into startups to the digital transformation that has disrupted everything in the wake of the coronavirus pandemic. He says that the pandemic-induced lockdowns have driven this rally, and that this along with the huge market potential for these companies has caught the attention of global investors.

Investors are looking for some sparks in new companies as they sit on a massive amount of capital. On top of this, India is a global growth story. Thus, lots of global funds and investors are chasing assets, he said.
But is there a significant potential for growth?

Singhal certainly thinks so. He says that in India, the internet companies do not even control 1% of the $3.4 trillion domestic equity market. In the US, the internet ecosystem dominates with 40% of the market capitalisation.