The stability and benefit of investing in Digital Gold

By Mahendra Luniya

Gold has been a part of portfolios for long times. It has proven to be a hedge against inflation and has helped in difficult times. Now the world is witnessing a shift in the way investors invest in gold. The shift is towards digital gold, an easier and more transparent way of investing in gold. Digital gold products have mitigated many concerns related to gold such as purity, additional charges, storage burden and more. Let us discuss the two prominent types of digital products.

2) Gold ETF: These are mutual funds which invest in gold and are regulated by SEBI. This is one of the most pocket friendly way of owning gold as the ticket size to buy is one unit, the price of which is around Rs.50/-

Stability and benefits in digital options

1) SGBs: SGB is backed by the RBI making it one of the least risky investments and the 2.5% interest gives an additional earning which makes it more attractive as earning interest is not possible in any other form of gold investing. This product even makes accumulation easy as one can easily buy units from RBI (when they are issued) or from the secondary market where they are tradable like any other listed security. The product adds stability to investing in digital gold as it is backed by RBI so there is negligible risk of default or purity of the gold. The product makes buying gold cheap. GST is not applicable on the SGB purchase so the investors save 3% of their money while buying.

These bonds also have discounts: – Yes, a discount on gold price! The bonds being a new product have low liquidity in the stock markets. Hence these bonds trade at a discount to the spot market price of gold. So, an investor who wants to buy and hold gold for the long term can consider buying SGBs from the stock market where it is witnessed that the discount ranges from 3-7% against the on-going market price of gold.

2) Gold ETFs: These mutual funds invest in pure gold. Investors can buy and sell these from the stock exchanges where these are listed. Gold ETFs give investors the option to invest in very small amounts. The price of each unit is currently around Rs.50/- allowing investors to allocate money to gold in an easier and effective manner. These funds are regulated by SEBI and hence adding trust to the investment option.

These ETFs also do not attract the 3% GST on purchase. Although they attract an annual expense fee which can go up to maximum 1% per year. One should compare the expense ratios of different fund houses while buying Gold ETFs.

Benefit of digital gold compared to physical gold

1) Purity: There have been concerns related to purity of the gold being bought in the physical form for years, whereas in digital gold this concern is completely mitigated.

2) GST: Investors are required to pay 3% GST while buying gold in physical form thus reducing the potential returns. That isn’t the case with digital products.

3) Making charges: Making charges are charged by jewelers on buying gold bullion or jewelry. They can range from 2-18% depending on the type of gold purchased. This money is saved in digital gold.

4) Storage: Most of the investors in India buy gold bullion or jewelry and keep it in Bank lockers. These lockers attract annual rents. This yearly outflow of money is not required in digital options.

5) Interest: The physical option requires yearly outflow of money, to keep gold secure whereas in products like SGB investors get a yearly inflow of Interest.

6) Price difference: While dealing in physical gold one must have noticed two different prices, one for selling and one for buying. While selling gold investors jewelers pay less to the investors as compared to what is prevailing in the market. This difference can range from 2-3%. This is not the case in digital gold where the buying and selling prices are the same.

Thus, to conclude, any person who wants to buy gold only from the perspective of investment should always think of digital gold so that they have most of the returns and enjoy the benefits it carries.

(Mahendra Luniya, Chairman, Vighnaharta Gold. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Ant Group sells 3.6% stake in Paytm for Rs 2,037 crore

A subsidiary of Chinese fintech giant Ant Group on Friday sold a 3.6 per cent stake in Paytm for Rs 2,037 crore through open market transactions.

The shares of Paytm’s parent One97 Communications was sold by Antfin (Netherlands) Holding BV.

Antfin offloaded a total of 2,27,54,823 shares in 14 tranches, amounting to a 3.58 per cent stake in One97 Communications, according to the block deal data available with the BSE.

The shares were sold at an average price of Rs 895.2 apiece, taking the combined transaction value to Rs 2,037 crore.

Post the transactions, Antfin shareholding has declined to 20.21 per cent from 23.79 per cent stake in the company at the end of June quarter, as per shareholding data available with the exchange.

Shares of One97 Communications fell 0.54 per cent to close at Rs 899.30 per piece on the BSE.

Ant Group is part of Jack Ma’s Alibaba Group.

Last week, Antfin transferred its 10.3 per cent stake in One97 Communications to the fintech firm’s founder and CEO Vijay Shekhar Sharma.

The deal turned One97 Communications, which operates under Paytm brand name, into a majorly indian-owned company from being majorly owned by Chinese entities.

However, Antfin will continue to hold the economic rights of the stake that is being transferred to Sharma.

In January this year, Alibaba’s affiliate Alibaba Singapore E-commerce divested a nearly 3 per cent stake in mobile payments and financial services company for Rs 1,031 crore

Vishnu Prakash Punglia IPO Listing: Shares have bumper debut on bourses, list at 65% premium

Vishnu Prakash Punglia IPO: Vishnu Prakash Punglia shares listed at 65% premium over IPO price on NSE and BSE amid flat domestic market. The share debuted at Rs 163.3 on the BSE, as compared to the issue price of Rs 99. Vishnu Prakash Punglia shares’ grey market premium gained 60% on Tuesday, commanding a premium of Rs 60 over upper end of the IPO price, implying a listing price of Rs 159 per share.

Vishnu Prakash Punglia IPO subscription data

Vishnu Prakash Punglia IPO opened for subscription on 24 August and the issue was fully subscribed 87.82 times on the last day of subscription, helped by overwhelming participation from institutional investors. The Qualified Institutional Buyers (QIBs) category was subscribed 171.69 times, the portion for non-institutional investors received 111.03 times subscription and Retail Individual Investors (RIIs) quota got oversubscribed by 32.01 times. The employee portion was bid for 12.97 times. The public offer comprises a fresh issue of 3.12 crore shares. The infrastructure player has set the price band for the IPO at Rs 94-99 per equity share.

About Vishnu Prakash R Punglia

Vishnu Prakash R Punglia was incorporated in 1986 and the company is in the business of designing and constructing infrastructure projects for the Central and State Governments, autonomous bodies, and private bodies across 9 States and 1 Union territory in India. The company has design and engineering, procurement, project management and quality management teams along with a fleet of 499 construction equipment and vehicles. Its in-house teams deliver projects from design to completion which reduces dependency on third parties for key materials such as RMC, stone aggregates, bitumen and services such as design and engineering, transportation and logistics.

Perils of investing in unlisted shares: PharmEasy, Reliance Retail hurt traders who invested on FOMO

By Arihant Bardia

“An early bird catches the worm” is an idiom we have heard in some form or another. For years, Institutional Investors have been endeavoring to buy a good business early to capitalize on higher returns. HNIs have followed suit by chasing Pre IPO shares, but a few recent events have been a brutal awakening for them.

Another enigma is PharmEasy. The company raised its last round in Oct 2021 at a valuation of $5.6 billion after acquiring diagnostic chain “Thyrocare” for ~ Rs 4,500 crores. Soon, PharmEasy was the talk of the town, with the price per share going up in private markets from Rs 90 to Rs 135 in no time. However, things took a U-turn after that, as PharmEasy couldn’t raise its next round. The company took a large debt to finance the Thyrocare acquisition that is due for repayment. With the increased cost of capital and no possibility of IPO, there was no choice left. The company is in talks to raise Rs 2,400 crore through a rights issue at a valuation 90% lower than its last round. 

These examples are classic FOMO behavior. As investors, we often want to jump on the latest investment trend, fearing that we might miss out on potential gains. However, this fear can lead to impulsive decision-making, causing us to make irrational investment choices.

What can one learn from these examples

Never mimic Institutional Investors:

PE & VC funds are different animals with far different investment horizons & risk appetites. Also, they follow “Power Law” more diligently by spreading their bets. Also, the contours of the deals done by VC Funds are mostly in their favour. VCs widely use Liquidation Preference & Anti Dilution Rights. In PharmEasy, most investors who invested in the last round at $5.6 billion valuation have Anti-Dilution rights inbuilt, which means that if the company raised money at a lower valuation, they would be compensated by being given more shares, free of cost. For a round happening at a 90% lower valuation, the VCs will be allotted 10X more shares. HNIs who bought the shares from the market don’t have that protection.

Don’t Catch A Falling Knife:

Savvy investors believe in Averaging Up rather than averaging down. While it may look prudent to buy more of PharmEasy at Rs 50/share, if you bought initially at Rs 100/Share, you may feel your average has come to Rs 75/ share. But you have lost more now since the price is far lower. Throwing good money on bad money, not worth it. 

Be Willing to Wait for a Liquidity Event:

It may take far longer for a planned IPO to happen, even for stable, profitable businesses. The reasons could be any. Take NSE, for example, a great cash-throwing business whose earnings doubled in the last couple of years, but its IPO keeps on getting delayed for regulatory reasons. You can always sell at distressed pricing in private markets if you need money, but it takes a lot of mental strength.

Having said this, pre-IPO investing has a lot of merit and should be part of the “satellite” allocation of the portfolio, provided:

The allocation is within your risk framework.You are willing to be patient to hold these investments indefinitely without seeking interim liquidity.You have help from your advisors to overcome information asymmetry.

These are exciting times to be a risk investor in India, and given more time, Indian markets will mature to a better understanding of new-age businesses and start treating them differently. The key for an investor is to make lesser but informed decisions and stay patient.

(Arihant Bardia, CIO and Founder, Valtrust on Unlisted shares.Views expressed are the author’s own. Please consult your financial advisor before investing,)

Share Market Highlights: Nifty closes below 19260, Sensex below 64840; Adani Enterprise, BPCL among the top losers

Share Market News Today | Sensex, Nifty, Share Prices Highlights: Domestic equity indices NSE Nifty 50 and BSE Sensex ended in the red on Thursday. NSE Nifty 50 closed at 19,253.80, while the Sensex closed the trading session at 64,831.41. Smallcaps continued to make gains, with Nifty Smallcap 250 and Nifty Smallcap 50 adding 1.04% and 0.36% respectively. Bank Nifty and PSU Bank were the top losers among sectoral indices, while the gains were led by Nifty Realty and IT.

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15:37 (IST) 31 Aug 2023 Markets at close

The NSE Nifty 50 closed at 19,253.80, while the Sensex closed the trading session at 64,831.41.

14:51 (IST) 31 Aug 2023 Adani Ports, BPCL among top losers

Adani Ports & Special Economic Zone and BPCL are among the top losers on NSE Nifty 50 with losses of 3.40% and 2.83%, respectively.

14:22 (IST) 31 Aug 2023 Bank Nifty sheds over 260 points

Bank Nifty shed as much as 266.10 points, or 60%, to 43,966.50. IndusInd Bank and Bank of Baroda were among the top losers, with 2.02% and 1.93%, respectively.

13:46 (IST) 31 Aug 2023 Mphasis adds 3%

Mphasis is currently trading at a price of Rs 2,440, reflecting a 3.13% increase in its stock price.

13:36 (IST) 31 Aug 2023 JFS continues to gain

The share price of Jio Financial Services surged 4.99%, as reports suggested Reliance Industries’ demerged financial services arm might be excluded from Sensex today.

12:51 (IST) 31 Aug 2023 Nazara Tech adds 8%

Nazara Technologies share price gained over 8% to Rs 814 as the firm is mulling a fund raise by issuing equity shares on a preferential basis.

12:06 (IST) 31 Aug 2023 JFS jumps 4.8%

Jio Financial Services shares gain up to 4.8%, as reports suggested Reliance Industries’ demerged finacial services arm might be excluded from Sensex today.

10:57 (IST) 31 Aug 2023 Adani group shares tank

Shares of Adani group companies listed on the stock exchange witnessed a decline of up to 2%. This fall come after the release of fresh details by the non-profit Organized Crime and Corruption Reporting Project (OCCRP) the previous day, alleging that the Adani Family associates funneled millions into purchasing their own group’s shares via obscure investment funds located in Mauritius.

10:56 (IST) 31 Aug 2023 Derivative outlook

Nifty weekly contract has highest open interest at 19500 for Calls and 19300 for Puts while monthly contracts have highest open interest at 19500 for Calls and 19300 for Puts. Highest new OI addition was seen at 19450 for Calls and 19350 for Puts in weekly and at 19450 for Calls and 19350 for Puts in monthly contracts.

10:06 (IST) 31 Aug 2023 Aeroflex Industries lists with 83% premium

Aeroflex Industries has made a remarkable market debut, opening at Rs 197.40 with an 83% premium compared to its issue price of Rs 108 apiece.

09:28 (IST) 31 Aug 2023 Monsoon woes drag markets

“Unless the rains revive soon, the economy and markets will come under a cloud. It is important to remember that the RBI’s projection of FY24 inflation at 5.4% is based on a normal monsoon. Presently, the probability of a deficient monsoon is high. This will impact GDP growth and keep inflation elevated. The impact on the FMCG sector will be high. Investors may consider tweaking their portfolio with higher weightage for more inflation-proof segments like pharmaceuticals and export oriented sectors like IT.”

– V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

09:23 (IST) 31 Aug 2023 Gold outlook

“Gold reached a three-week high due to disappointing U.S. economic data, accompanied by silver touching a four-week peak in early trading. The dollar’s weakening, along with U.S. 10-year bond yields slipping below 3.15%, acted as catalysts, enhancing the appeal of precious metals. In INR terms, gold’s support lies at Rs 59,200 and Rs 58,950, with resistance at Rs 59,650 and Rs 59,810.”

– Rahul Kalantri, VP Commodities, Mehta Equities

09:19 (IST) 31 Aug 2023 Markets at open

Indian equity benchmarks NSE Nifty 50 and BSE Sensex saw a tepid open on Thursday. Nifty opened at 19,375.55, while Sensex gained around 90 points to begin the session at 65,178.33.

09:05 (IST) 31 Aug 2023 Technical View

“The short term trend of Nifty remains choppy. The lack of strength to sustain the upside bounce on Wednesday could possibly drag Nifty down to its immediate supports of 19250-19200 levels in the short term. On the upper side, the area of 19450 is likely to be a strong resistance,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

08:37 (IST) 31 Aug 2023 Bank Nifty outlook

“The Bank Nifty index experienced a significant bearish takeover, leading to a rapid correction of 600 points from the day’s high. As the index navigates this downward movement, its next significant support on the downside is positioned at 44,000. This level is crucial, given the substantial open interest built up on the put side.The overall market sentiment remains bearish, with considerable resistance anticipated around the range of 44,500 to 44,700 levels,” said Kunal Shah, Senior Technical & Derivative analyst at LKP Securities.

08:23 (IST) 31 Aug 2023 FII, DII data

Foreign institutional investors (FII) sold shares worth net Rs 494.68 crore, while domestic institutional investors (DII) bought shares worth net Rs 1,323.24 crore on 30 August, according to the provisional data available on the NSE.

08:15 (IST) 31 Aug 2023 JFS to be removed from Sensex today

“Sensex is poised to exclude Jio Financials today, unless the stock triggers a lower circuit (upper limit not a concern). Jio’s 1.1% weight in Sensex 30 Index means passive selling may involve around 60 million shares, equivalent to roughly USD 180 million. Should exclusion be deferred, the exchange will announce during market hours.”

– Nuvama Institutional Equities

08:13 (IST) 31 Aug 2023 F&O ban

The National Stock Exchange has Indiabulls Housing Finance and BHEL securities on its F&O ban list for 31 August.

08:00 (IST) 31 Aug 2023 Crude oil

Global oil prices were up in early trade on Thursday backed by tighter U.S. supply, with a focus on China factory activity due later in the day amid recent weak economic expansion data in the world’s second-biggest economy.

07:59 (IST) 31 Aug 2023 Currency outlook

“US Dollar and 10Y UST yields drops on downbeat US ADP Employment Change, revised down US Q2 GDP favor Fed policy pivot bias. German Harmonised Index of Consumer Prices beats estimates, bolstering the Euro as well. For USDINR, 82.45/50 acts as a support while 82.85 a resistance.”

– Kunal Sodhani, Vice President, Shinhan Bank.

07:57 (IST) 31 Aug 2023 Wall Street overnight

The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signalled a cooling U.S. economy, reinforcing expectations the Federal Reserve will pause rate hikes in September, according to Reuters. On Wednesday, the Dow Jones Industrial Average went up by 0.11%, the S&P 500 advanced by 0.38%, and the Nasdaq Composite climbed by 0.54%.

Stocks To Watch: Vedanta, Paytm, HDFC Bank, IOC, ONGC, GAIL, Coffee Day Enterprises, L&T, Bharat Electronics

Stocks in focus: GIFT Nifty traded 0.22% higher during Monday’s early trading session at 19,279, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex. The equity benchmarks closed in the red on Friday. Sensex tanked over 350 points to close at 64,886.51, while Nifty 50 slipped 0.62% to end trade at 19,265.80.

“The domestic market experienced another week of losses as investor sentiment was influenced by the Jackson Hole meeting outcome. Investors are eagerly awaiting insights from Fed officials to gauge the future prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid- and small-cap stocks demonstrated resilience and gained momentum,” said Vinod Nair, Head of Research at Geojit Financial Services.

Coffee Day Enterprises

Coffee Day Global, which operates the Cafe Coffee Day (CCD) chain, has been given a temporary relief against bankruptcy proceedings initiated by lender IndusInd Bank last month. The Chennai bench of the National Company Law Tribunal halted admission of IndusInd Bank’s plea against Coffee Day Global by the NCLT Bengaluru, till September 20.

IOC, ONGC, GAIL

Stock exchanges have slapped fines on state-owned oil and gas firms including IOC, ONGC and GAIL for their failure to meet listing requirements of having a requisite number of independent directors and women directors. Gas utility GAIL was slapped Rs 2.71 lakh fine, Hindustan Petroleum Corporation Ltd (HPCL) Rs 3.59 lakh, Bharat Petroleum Corporation Ltd (BPCL) Rs 3.6 lakh, Oil India Ltd Rs 5.37 lakh and a fine of Rs 5.37 lakh was imposed on Mangalore Refinery and Petrochemicals Ltd (MRPL).

Bharat Electronics

Bharat Electronics won new defence and non-defence orders worth Rs 3,289 crore during July and August 2023. The orders include a Rs 1,075 crore order from Hindustan Shipyards for supply of CMS, communication systems, electronic warfare systems and other sensors for fleet support ships.

L&T

Shareholders of L&T approved a buyback of 3.33 crore shares for a consideration of Rs 10,000 crore, with a maximum price of Rs 3,000 per share on a proportionate basis through tender offer route through stock exchange mechanism. The maximum share price comes at a 13.98% premium to Friday’s closing price of Rs 2,632.00 apiece on the NSE.

HDFC Bank

The private lender has reappointed Sanmoy Chakrabarti as Chief Risk Officer. He will hold the position for five years with effect from 14 December, 2023

Paytm

Societe Generale and Morgan Stanley picked up a 1.57% stake in Paytm after Antfin Holding BV offloaded 2.27 crore shares in One97 Communications, the parent company of Paytm, through a block deal on Friday.

(With agency inputs.)

RIL stock outlook: Analysts bet on company’s new age technologies focus

RIL stock is trading lower though the company reiterated aggressive growth plans across various business verticals and unveiled plans on new energy front at the AGM on August 28. While the street seemed disappointed about the absence of clear timelines regarding the telecom and retail IPOs, RIL plans to setup a battery giga factory by 2026 with its first CBG plant commissioned in Uttar Pradesh. The retail segment will focus on rapid store expansion and brand partnership/acquisitions to accelerate growth.

For the longer term, however, market analysts believe that the focus on new age technologies might be useful. Swarnendu Bhushan – Co-Head of Research, Prabhudas Lilladher highlights the continued emphasis on new age technologies by RIL, “We believe RIL provides a good investment opportunity given 1) its transition towards new age technologies and 2) cash flow for growth serviced from traditional refining and petrochemical segment. The company is trading at 12.8x FY24 consolidated EV/EBITDA and 22.7x FY24 consolidated PE. We estimate consolidated EPS CAGR of 10.7% for FY23-FY25E and value Refining and petrochemical segment at 7.5x FY25 EV/EBITDA, Digital services at 15x FY25 EV/EBITDA and Retail at 37x FY25 EV/EBITDA. Key risks are project execution and technology risk in new energy.”

According to JM Financial analysis, “The company reiterated its plan to transition its O2C business into a sustainable, green, circular and consumer integrated chemicals and materials business. It also restated its New Energy business roadmap and its Rs 75000 crore capex commitment and announced its foray into wind power generation. We maintain BUY on RIL (TP of Rs 2,900/share) as we believe net debt concerns are overdone, and also because RIL has industry leading capabilities across businesses to drive robust 14-15% EPS CAGR over the next 3-5 years.”

India’s forex reserves jump above $600 billion; Spot USDINR to hover between Rs 82.30 and Rs 81.70

By Dilip Parmar

The Indian rupee appreciated for the second week in a row following dollar inflows. Local units remained the second best-performing currency among Asian baskets. In the week preceding, foreign institutions bought $1.2bn equities and $184mn debts while the rupee gained a quarter percent to 81.96 a dollar.

Outlook:

This week will be of high drama as we have 3 major central bank monetary policy decisions which could bring volatility back to the forex markets. Spot USDINR is expected to oscillate between Rs 82.30 and Rs 81.70.   

The ICE dollar index gained the most in 10 weeks amid a short-covering rally ahead of the Fed meeting. The yen tumbled more than 2% to 141.73 a dollar, on speculation the Bank of Japan won’t change its yield curve control program at this week’s policy meeting. Elsewhere, crude oil headed for a fourth weekly gain amid tentative signs of global market tightening.

Though the greenback trend remains bearish, short covering rallies may continue this week in anticipation of hawkish Fed and month-end adjustment. The ICE dollar index has support at 99.50 and resistance at 102.70.

CFTC Position

CFTC data for the week through July 18th reflect a significant deterioration in dollar sentiment. Speculative Accounts’ overall positioning against the dollar versus the major currencies reflected an aggregate short position of $19.9bn in the latest week. The week-over-week increase in aggregate dollar shorts of $7.4bn was the largest single-week positioning shift against the dollar since 2020.

What to Watch:

 All eyes will be on the Big 3 major central banks’ policy decisions. The Federal Reserve and European Central Bank are each expected to raise interest rates by 25 basis points. However, the most focus will be on policymakers’ signaling whether more hikes are likely or if they plan an extended pause. The Bank of Japan remains the outlier, with Governor Kazuo Ueda expected to continue pumping even as inflation remains above its 2% target.

(Dilip Parmar, Research Analyst, HDFC Securities Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Share Market Highlights: Nifty closes over 19430, Sensex above 65k; NTPC, JFS among top gainers

Share Market News Today | Sensex, Nifty, Share Prices Highlights: Domestic equity indices NSE Nifty 50 and BSE Sensex closed in the green on Friday. The NSE Nifty 50 closed at 19,435.30, while the Sensex closed the trading session at 65,387.16. The broader markets settled largely in the green, with Nifty Smallcap 50 and Nifty Smallcap 100 adding 1.61% and 1.17% respectively. Bank Nifty surged 1.02% to settle at 44436.10. Nifty Metal, Banks, Auto and IT were the leading gainers among the other sectoral indices.

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15:36 (IST) 1 Sep 2023 Markets at Close

The NSE Nifty 50 closed at 19,435.30, while the Sensex closed the trading session at 65,387.16.

14:34 (IST) 1 Sep 2023 Metal stocks gain

Nifty Metal index gained as much as 185.15 points or 2.78%. NMDC led the gains with a 5.32% increase, followed by Steel Authority of India (SAIL) at 4.74% and Hindustan Copper at 4.10%.

14:23 (IST) 1 Sep 2023 Nifty IT soars

The Nifty IT index gained over 1% in trade on Friday, as Persistent Systems, Tech Mahindra, and LTIMindtree led the gains.

13:45 (IST) 1 Sep 2023 Nifty PSU Bank zooms

The PSU Bank index gained 1.70% in trade on Friday, as Punjab National Bank, Bank of India and Canara Bank led the gains.

12:38 (IST) 1 Sep 2023 Gold outlook

“Gold prices retreated on Friday, with spot gold at Comex trading down by 0.05% at $1938 per ounce in the morning session. Gold prices reversed from a multiweek high in the previous session on the back of mixed US economic data and an uptick in the dollar index. The dollar index showed more than 0.40% of daily gains in the previous session, putting pressure on precious metals.”

– Saumil Gandhi, Senior Analyst (Commodities), HDFC Securities.

12:05 (IST) 1 Sep 2023 Nifty Auto zooms

The Nifty Auto index gains over one percent in trade on Friday, as Tata Motors, Maruti Suzuki and Bajaj Auto lead the gains.

11:01 (IST) 1 Sep 2023 India VIX outlook

India VIX increased by 14.75% from 10.51 to 12.06 levels in the August series. Volatility moved higher to 12.75 and remained on the higher band and created swings in the market and providing discomfort to the bulls.

10:25 (IST) 1 Sep 2023 Metal stocks gain

Metal stocks experienced significant gains today. Tata Steel led with a 4.31% increase, followed by Steel Authority of India (SAIL) at 3.64%. Jindal Saw, Jindal Steel & Power, and Welspun Corp rose by around 3%.

09:35 (IST) 1 Sep 2023 Headwinds affecting markets

“Headwinds stronger than tailwinds have pushed the Nifty down by 406 points in August. Some headwinds like weakening monsoon and sluggish global growth are likely to weigh on markets. And now there is another headwind coming from the Brent crude rising to $87. FPI flows in the cash market turned negative in August after strong positive flows in the previous three months. These headwinds will constrain a sustained recovery in markets.”

– V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

09:25 (IST) 1 Sep 2023 Currency outlook

“Recovery attempts continue, but limited to 82.8 as expected. Upsides momentum appears to be increasing, prompting us to expect a spurt to 83.09, if 82.8 gives away. The prospects of downside break would be renewed only on push below 82.5.”

– Anand James, Chief Market Strategist at Geojit Financial Services

09:19 (IST) 1 Sep 2023 Markets at open

Local stock indices BSE Sensex and NSE Nifty 50 began trading on a steady note on Friday. Nifty opened above the 19,250 level at 19,258.15, and Sensex rose by approximately 20 points from its previous close, starting at 64,855.51, maintaining its existing sideways trend.

09:06 (IST) 1 Sep 2023 Bank Nifty support, resistance

Bank Nifty has a strong support at 43,600, and below that it would gradually fall to 43,300-43,350 levels. The resistance exists at 44,000 levels. The Nifty IT index is exhibiting a mixed activity, which would keep the sentiment volatile.

– Shrikant Chouhan, Head of Research (Retail), Kotak Securities

08:40 (IST) 1 Sep 2023 Support, resistance levels

“Nifty closed in the lower half of the day’s range on the highest volume recorded for the quarter and marked the seventh distribution day in the rally. The drawdown was arrested near the support zone of 19,250-19,235 and it will be crucial that the zone remains intact on a closing basis to attract bullish strength.”

Support: 19,235 -19,190 -19,075

Resistance: 19,340-19,390-19,420

– Riches Vanara, Technical and Derivatives Analyst, Stoxbox.

08:21 (IST) 1 Sep 2023 Derivative outlook

On the Options front in the September monthly expiry, the 19,000 Strike put option has highest open interest with 64,26,550 contracts followed by the 19,500 Strike put option with 26,56,950 contracts. While on the call side, the 20,000 call has highest open interest with 25,04,150 contracts followed by the 19,500 Call strike with 21,27,950 contracts.

08:20 (IST) 1 Sep 2023 F&O ban list

The National Stock Exchange has Indiabulls Housing Finance and BHEL securities on its F&O ban list for 1 September.

08:13 (IST) 1 Sep 2023 Currency outlook

“USDINR spot closed 5 paise higher at 82.78, due to demand for dollars from corporates and oil marketing companies. Traders will keep a close watch on the US jobs data tomorrow. A strong data can push USDINR towards 83.00 by next week. We expect a range of 82.40 and 83.10 on spot.”

– Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities

07:49 (IST) 1 Sep 2023 Asian shares

Asian-Pacific markets traded in the green on Friday. Chinese indices Shanghai Composite and Shenzhen Component increased by 0.47% and 0.53% respectively. Japan’s Nikkei-225 rose by 0.62%, while Hong Kong’s Hang Seng index remained unchanged. South Korea’s KOSPI added a slight 0.02%.

07:46 (IST) 1 Sep 2023 Crude oil

Oil prices were set to snap a two-week losing streak as they rose for a fourth consecutive session on Friday due to tightening supplies and expectations of the OPEC+ group of oil producers extending output cuts to the end of the year.

07:46 (IST) 1 Sep 2023 Wall Street overnight

The S&P 500 ended lower and the Nasdaq higher on Thursday after U.S. inflation data matched estimates, underscoring expectations the Federal Reserve could pause its monetary tightening, according to Reuters. On Thursday, the Dow Jones Industrial Average fell by 0.48%, the S&P 500 slipped 0.16%, and the Nasdaq Composite increased by 0.11%.

OMCs to register weak Q2 on fall in marketing margins

State-run oil marketing companies (OMCs) – IOC, BPCL and HPCL– are seen to have posted weaker earnings in the second quarter of the current financial year, due to a sharp fall in the marketing margins of petrol and diesel, after the rise in benchmark crude oil prices. However, analysts believe that a sequential improvement in the refining margins can provide some cushion for these downstream oil companies in the July-September quarter.

Although the OMCs may still have partly recouped the losses reported in the last financial year in the first half of FY24, the prospects are not bright for the second half of the current year.

The latter half of the second quarter saw a great volatility in the oil market owing to the production cuts by Saudi Arabia and Russia, in addition to those already in place by the Organization of Petroleum Exporting Countries. Crude prices, as a result, touched their highest level of $97/bbl since November 2022. Added to the concern was the outbreak of Israel-Hamas war.

Elara Securities, however, see a rise in the average crude inventory to $5.8/bbl in Q2FY24 compared to nil in Q2FY23.

OMCs diesel retail gross margin should post Rs 15.6/litre YoY gain but fall Rs 7.6/liter QoQ to Rs 2.1/litre,” Elara Securities said. It also expects gasoline margin to fall Rs 2.8/litre on quarter to Rs 7.9/liter but increase Rs 7.3/liter on a yearly basis.

Even though brokerage firms expects refining margins of the OMCs to go up, they remain cautious on the retail pricing of petrol and diesel which will primarily determine the earnings of these companies in the quarter that just ended.

Analysts at Prabhudas Lilladher expects that recovery in refining margins will take Q2 PAT (Profit After Tax) of the downstream companies to Rs 19,700 crore, 25.2% down from Rs 30,500 crore in Q1FY24.

The brokerage firm also sees OMCs EBITDA declining to Rs 34,000 crore, down 28.3% from the previous quarter. The adjusted PAT is seen declining 35.3% to Rs 197 billion.

Nuvama Institutional Equities foresees a decline of 51.8% in the EBITDA of OMCs from Q1FY24. The average refinery utilization of OMCs is estimated at 107.1% compared with 110.6 in the first quarter. The refinery utilization is however estimated up from 97.3% in Q2FY23.

However, even on the rise in Brent crude prices, the reported GRMs (gross refining margins) of OMCs is likely to rise sharply by $14-19 per barrel in the September quarter”, according to the brokerage.

Analysts at Motilal Oswal expects blended marketing margins for OMCs at Rs 5/5.4/5.1 per liter in Q2FY24 due to an increase in the Brent crude prices and stable retail fuel prices during the period.

The brokerage firm has further estimated Brent prices by Q4FY24 to be at $90/bbl and to remain at this level throughout FY25 as the International Energy Agency expects oil markets to tighten in the second half of the calendar year 2023. If crude prices surge even beyond, OMCs may find themselves in a more upsetting situation.

Over the past two quarters, OMCs have been posting profits until late September when crude prices rose significantly and these companies had to suffer under-recoveries to the tune of Rs 7/litre on sale of petrol and diesel.

gIOC (Indian Oil Corporation Ltd) is likely to report weak operating profit due to decline in marketing margins (Rs 4.4/ltr vs Rs 8.7/ltr in Q1),” Prabhudas Lilladher said in its preview. The firm also expects the company’s gross refining margin to be at $12.4/bbl.

While analysts see earnings of the OMCs taking a hit in Q2FY24, upstream companies, on the other hand, might seem to have benefited from high crude oil prices realizations due to lagged impact of windfall tax and also QoQ higher product sales.

Upstream companies ONGC and OIL are, however, likely to improve their Q2 PAT to Rs 12,200 crore compared with Rs 11,300 crore in Q4FY23, with steady net crude price realization post windfall taxes and capped domestic gas prices at $6.5/mmBtu, analysts at Prabhudas Lilladher noted.

Elara Securities also expect PAT for upstream companies to increase in the range of 13-22% on year. “ONGC oil & gas production fell 1% YoY but rose 1% QoQ while Oil India oil & gas production is likely to improve 1% YoY and 4% QoQ,” the firm said in its report.