Crude oil prices touch four-week highs; silver outperforms gold, silver support at Rs 68,800 level

By Saumil Gandhi

Bulls were able to defend the $1900 mark in yellow metal; the latest bounce in gold was mainly supported by the softer US jobs market data. The job data reported an addition of 209,000 nonfarm payrolls for the month of June, which was lower than the market estimate of 225,000. On the other side, silver has outperformed gold prices in the prior week. In the energy pack, Crude oil prices have extended their gains and reached four-week highs. The recent rally in crude was mainly supported by supply concerns.

Bottom-fishing action was seen in the bullion complex by market participants at the end of the prior week; the rally from the lower level was mainly backed by a softer U.S. Jobs report and a weaker greenback. For the week, Comex gold settled marginally higher by 0.30%. In the meantime, the latest data showed that China continued to increase its gold holdings for the eighth straight month, with economic and geopolitical concerns, as well as a desire to diversify away from the US currency, driving the purchases, which also favored the bulls during the previous week. On the other hand, Money managers have increased their bullish gold bets by 12,733 net-long positions to 99,205, weekly CFTC data on futures and options shows.

Silver September MCX Futures closed at the Rs 71,310 mark and Comex Silver closed around the $23.08 mark, with a rise of 1.83% and 1.38%, respectively. The dollar index closed below the 102-mark, and this is the first weekly decline in the greenback seen after two consecutive positive weekly closings.

Going forward, we expect Investors will have a keen eye on upcoming FOMC member speeches, along with inflation numbers from China and the U.S. Such a data pack could offer further momentum to the dollar index and bullion pack. On the other hand, recent weakness in the rupee has also supported domestic bullion prices to rally higher compared to the global market trend.

We believe that for this week, the recent weakness in the greenback is expected to support the bullion market for the short term, and Comex Gold could move in a range of $1900 to $1960 with a moderately positive bias. Comex Silver has immediate support at $22.05, followed by $21.45, and resistance at $23.41 (100 DEMA) and then $24.25 per ounce.

Back home, MCX Gold August contact could move in the range of Rs. 58,120 to Rs. 59,560. MCX Silver September contract has resistance at Rs 73,025 and support at Rs 68,800 for this week.

(Saumil Gandhi, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Dollar plunges as US inflation cools-off; rupee sees volatility but remains range-bound on equity inflows, RBI buying

By Gaurang Somaiya

Rupee remained a bit choppy this week and volatility remained elevated after the release of inflation numbers on the domestic as well as global front. There has been quite a bit of see-saw that has been seen in the market and that is led by a couple of important events that unfolded on the global front. At the start of the month, we had robust private payroll numbers that led to strength in the dollar against its major crosses but slower inflation number just turned the table around for the greenback and it retraced to fall below the 100 mark.

This week, on the domestic front, no major cues are lined up and it will be the global factors and the move in the dollar that will guide the Indian Rupee. The Dollar Index is now below the psychological mark of 100 and further weakness in the greenback could trigger an up move in the major crosses including the rupee. From the US, retail sales and Philly fed manufacturing Index will be important to watch. Weaker-than-expected economic number could weigh on the dollar and thereby help the rupee extend gains. We expect the USDINR(Spot) to trade sideways with a negative bias and quote in the range of Rs 81.80 and Rs 82.80.

Global Currencies

The dollar fell to the lowest level in 15-months on back slower growth in inflation in the US. Data showed inflation grew at 3% in June in comparison to 4% rise in the previous month. Ahead of the release of the data most market participants remained cautious and volatility remained low. After the release of the economic data the dollar index fell below the 100 mark and seems to be sustaining below it. From the US, except inflation no other economic data was released and did not have much of an impact on the market. This week, market participants will be keeping an eye on the retail sales and Philly fed manufacturing Index from the US. Broadly, we expect the dollar to remain under pressure and quote in the range of 97.80 and 101.20.

A sharp up move was seen in both these major crosses Euro and Pound; the move was driven more by weakness in the dollar than by its own fundamentals. From the UK, employment and GDP numbers were released and data showed the unemployment rate in the UK rose marginally to 4% in comparison to 3.8%. At the same time, the UK economy shrank less-than-expected suggesting that the widely forecasted slowdown caused by high inflation and higher interest rate was not underway. This week, inflation and retail sales numbers from the UK will be important to watch; expectation is that inflation could come in marginally lower and that could weigh on the currency a bit after rallying in the last few weeks.

Japanese Yen was one of the volatile currencies amongst the major crosses following suspected intervention from the Bank of Japan. Market participants also have started to build expectations that policymakers that the BoJ may start to change their view on the deflationary mindset. We expect that volatility for the safe haven currency could continue to remain elevated this week as well. For the USDJPY, the pair could be trading in a wide range and in the zone of 137.50 and 140.50.

(Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Influencer marketing is a must have for digital marketing: reveals report

Social Beat’s Influencer.in released, ‘The Influencer Marketing Report 2023’ . It presents a comprehensive look at the industry providing insights on Influencer Marketing and its trends. The report for 2023 was compiled based on over 500 survey responses by Indian content creators, and over 50 marketers in the June to August period of this year. The report offers actionable insights for brands intending to include influencer marketing in their marketing mix.

One key revelation included the increasing popularity of Short-Form Videos with over 92% of influencers preferring generating content using this medium with YouTube Shorts emerging as the preferred platform for content creation. This reflects broader social media trends towards quick, visually engaging content.

Brand spends on Influencer marketing remains low with most apportioning only 5-10% of their marketing budgets to this medium.

61% of brands prefer to work with micro creators over celebrities as they are often seen as being more authentic and relatable to their followers, which can make them more effective at driving engagement and sales.

While macro-influencers and mega-influencers are also popular, they tend to be more expensive to work with. If you want to reach a large audience quickly they’re a good option, but may not be as effective at driving engagement as micro- and mid-tier influencers.

Short-Form videos and authenticity drive Influencer Marketing in 2023. The survey revealed 92% of Influencers preferred content using short-form videos, a huge shift in influencer activations. YouTube emerged as the preferred platform for more than 51% of influencers.

Short-form video content like Reels and YouTube Shorts the most popular format among Influencers.

“Influencer marketing is poised to play a significant role in the future of our brand’s marketing mix. Its ability to connect authentically with our audience, facilitate niche targeting, and diversify our content offerings makes it a compelling channel. I am confident in our decision to continue investing in influencer marketing, adapting our approach as the landscape evolves and leveraging its potential to drive sustained growth and customer acquisition,” Arjun Bhatia, chief marketing officer & SVP, Bharat Matrimony, said.

Challenges

57.8% of the influencers surveyed feel that the most commonly cited challenge is that the budgets do not align with demands or expectations.

51% of male influencers said brands were too focused on short-term goals and metrics rather than thinking long-term.

Many also mentioned tight delivery timelines imposed by brands as an issue as this constraints creativity and quality.

“The Influencer Marketing Report 2023 showcases the growing preference among brands for authentic connections with their target audiences through micro-creators. As well as the graduation in sophistication with influencers using AI and other tools. Over 50% of creators use AI for content creation while around 33% use it for engagement and writing. Brands now have the opportunity to engage with select influencers as long-term brand partners to provide more specific content,” Arushi Gupta, Business Head, Influencer.in, said.

Influencers are now actively seeking tools, including ideas and content creation using AI, to enhance their performance. Nearly half, at 48%, are in search of workflow optimisation dashboards, while a substantial 46% are actively seeking tools to keep them well-informed about emerging trends. While 50% are using AI tools to generate content ideas.

Follow us onTwitter,Instagram,LinkedIn,Facebook

Stock markets climb in early trade, Sensex up 232.43 points, Nifty gains 71.85 points; extend rally for 2nd day running

Equity benchmark indices began the trade on an optimistic note on Tuesday, extending their previous day’s rally, amid firm trend in global markets.

The BSE Sensex climbed 232.43 points to 65,229.03 in early trade. The NSE Nifty gained 71.85 points to 19,377.90.

Bharti Airtel, Axis Bank, Reliance Industries and IndusInd Bank were among the laggards.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong were trading with gains.

The US markets ended in the positive territory on Monday.

Global oil benchmark Brent crude declined 0.02 per cent to USD 84.40 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,393.25 crore on Monday, according to exchange data.

The BSE benchmark had climbed 110.09 points or 0.17 per cent to settle at 64,996.60 on Monday. The Nifty gained 40.25 points or 0.21 per cent to end at 19,306.05.

Xiaomi Pad 6 buying guide: 10 things to know before you spend Rs 26,999

1/10

Xiaomi Pad 6 has officially arrived in India. With its premium all-metal design and high-end feature set, Xiaomi is looking to undercut OnePlus. Its real kicker though is the tablet’s affordable price. The Pad 6 starts at just Rs 26,999 even as the OnePlus Pad can go up to Rs 40,000.

2/10

The Pad 6 has a body made of metal. It weighs 490g and measures 6.51mm.

3/10

It has an 11-inch 2.8K resolution LCD display with a 7-stage 144Hz refresh rate (30/48/50/60/90/120/144Hz) and up to 550nits of peak brightness.

4/10

The panel supports Dolby Vision.

5/10

Xiaomi Pad 6 has the Qualcomm Snapdragon 870 inside. It is powered by an 8,840mAh battery and supports 33W fast charging.

6/10

You get a 13MP camera on the rear and 8MP camera on the front.

7/10

The tablet runs MIUI 14 for Pad with Android 13.

8/10

Xiaomi will sell a custom keyboard and stylus accessories for the Pad 6.

9/10

While the keyboard will cost Rs 4,999, the second-generation Xiaomi Smart Pen will be available for Rs 5,999. You can also get a separate case (without keyboard) at a price of Rs 1,499.

10/10

Xiaomi Pad 6 with 6GB RAM and 128GB storage price is set at Rs 26,999. A model with 8GB RAM and 256GB storage will set buyers back by Rs 28,999.

Mphasis: Growth to rebound in FY25; Driving incremental efforts to stimulate growth engines

We hosted Nitin Rakesh, the MD & CEO of Mphasis, at its prestigious flagship conference, AGIC 2023 Through his presentation, he touched upon the implications of Generative AI (subset of LLM) on business operations and the cannibalisation impact it may pose to the technology service lines.

Moreover, we also attended Mphasis (MPHL)’s analyst meet recently. The key takeaways from the meet are:

However, it’s pertinent to note that Mphasis’ present valuation, with a valuation of 22x FY25E EPS, appears to adequately incorporate the anticipated rebound in earnings growth for the following year. As a result, we reiterate a Neutral stance on the stock, and our target price (TP) of Rs 2,250 is based on a multiple of 21x FY25E EPS.

Customer-centric strategy drives positive outcome

MPHL is focused on augmenting customer stickiness to have a complete ownership of the business solutions and participate in the account planning process, instead of just delivering project-based solutions through RFPs. The company believes that it has built robust account mining and scaling teams (Tribes and Squads) that participate in cross-functional activities. Further, the strong GTM strategy is augmenting these teams, and shortening the sales cycle by deeper mining and large deal origination activities. The NCA strategy is progressing very well and the company has been successful in onboarding strategic logos (potential to scale) and acquiring large deals.

BFS continues to be the key focused vertical

BFS continues to be an anchor vertical for MPHL. With matured BFS vertical, the company is exploring other emerging markets and seeking referral points through the top-10 banking accounts. BFS is a key vertical (~50%) and has driven a major part of the offshoring.

Sustained margin delivery by flexing multiple levers

MPHL’s offshore mix has witnessed a significant shift to 48% in 1QFY24 from 42% in FY20, which largely absorbed the incremental costs and delivered stable margins over the last eight quarters. Pyramid rationalisation, improvement in utilisation and growing offshoring have largely supported margin, and kept it within the guided band.

Gen AI to support and augment IT operations

On a boarder sense, the management was quite optimistic on the implications of Generative AI on executing and augmenting business activities that require cognitive and analytical capabilities. The interactive language model would replace manual operations that involve repetitive and mundane tasks such as support desk, contact center agents and iterative business operations.

Although management indicated an early sign of recovery in mortgage business with improving revenue visibility on its BFS portfolio, we maintain our Neutral rating on the stock factoring in the near-term weakness in Direct business. However, the weakness will be offset by better medium-term growth due to strong deal wins.

Rishabh Instruments IPO subscribed 31.65 times on last day of bidding

The Initial Public Offering (IPO) of global energy efficiency solution company Rishabh Instruments was subscribed 31.65 times driven by heavy demand from institutional buyers on the last day of bidding on Friday.

The IPO received bids for 24,65,71,162 shares against 77,90,202 on offer, as per the NSE data.

The IPO comprises a fresh issue of equity shares aggregating up to Rs 75 crore and an Offer For Sale (OFS) of up to 94.3 lakh equity shares by its promoter group shareholders and an existing investor.

The company has fixed a price band for the IPO at Rs 418-441 per share.

On Tuesday, the company said it raised Rs 147.23 crore from anchor investors.

Proceeds from the issue worth Rs 59.50 crore will be used towards financing the expansion of its manufacturing facility in Nashik and for general corporate purposes.

The company’s equity shares will be listed on the BSE and the NSE.

DAM Capital Advisors, Mirae Asset Capital Markets (India), and Motilal Oswal Investment Advisors Ltd are the book-running lead managers to the issue.

The Nashik-based firm is focused on electrical automation, metering and measurement, precision-engineered products with diverse applications across industries, including power and automotive sectors.

Nifty to gradually head towards 19700, Bank Nifty may consolidate; RIL, Tata Motors among preferred stocks

By Dharmesh Shah

The equity benchmark extended gains and clocked a fresh all time high backed by strong FII’s inflow. As a result, Nifty settled the previous week at 19332, up 0.7%. The broader market relatively outperformed the benchmark as Nifty midcap, small cap gained 0.9% and 2.5%, respectively. Sectorally, PSU Banks, Oil & Gas, Auto remained in limelight while IT and private banks relatively underperformed during the week.

Technical Outlook

The Nifty started the week with a positive gap (19189-19246) and recorded fresh All Time High of 19523. However, profit booking in recently run up stocks from the higher levels amid volatile global cues led index to par some of intra-week gains. Consequently, weekly price action resulted into small bull candle carrying higher high-low, indicating continuance of positive bias.

We reiterate our positive stance and expect Nifty to gradually head towards our earmarked target of 19700. However, bouts of volatility owing to volatile global cues amid overbought conditions can not be ruled out. Key point to highlight is that, since March buy on dips strategy has continued to fare well as Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity since we do not expect index to breach the key support threshold of 19100. In the process, stocks specific outperformance is expected to continue amid onset of earnings. Our target of 19700 is based on 138.2% external retracement of Dec-Mar decline 18887-16828.

On the broader market front, Nifty midcap recorded a fresh All Time High and small cap index closed at 15 months high. The current up move is backed by sturdy market breadth as currently 77% stocks are trading above 200 DMA, highlighting inherent strength. Thus, focus should be on accumulating quality stocks on dips.

Sectorally, IT, Auto, PSU, Pharma would remain in focus. Key point to highlight is that, Nifty PSU banking index has approached near multi year highs. We expect, PSU bank index to give multi year breakout and rally 15%-20% over next few months and relatively outperform.

On stock front, in large cap we prefer Axis Bank, SBI, Reliance Industries, Infosys, Hindalco, BEL, Tata Motors, Sun Pharma, Titan, DLF, IOC while in midcap Granules, Union Bank, Hind Oil Exploration, Graphite, Coforge, KPR Mills, Bhel, Brigade, NCC, EIH Ltd, Engineers India, Apollo Tyres will remain in focus

Structurally, the formation of higher peak-trough on the monthly chart signifies elongation of rallies that makes us confident to revise support base at 19100, as it is confluence of: (a) Since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 19123. (B) 50% retracement of current up move (18645-19523), at 19085.

Bank Nifty Outlook:

The Bank Nifty extended gains despite profit booking on Friday amid global volatility. Private banking stocks that have seen a run up over past few months were subject to profit booking. The Bank Nifty closed at 44925, up 0.4% for the week.

The weekly price action formed a small bodied candle with higher shadow indicating exhaustion of upward momentum as index rallied 17% over past fifteen weeks.

We expect index to consolidate this week amid positive bias in the 44000-45500 range. Sustaining above last week high of 45500 would indicate resumption of upward momentum towards 46300 in July as it s 138.2% external retracement of Dec-Mar decline (44151-38613). Buy the dips

PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround.

From structural perspective, Bank Nifty has retraced its December – March decline in faster time. Hence any temporary breather from hereon would provide fresh investment opportunity to ride the uptrend

The formation of higher peak and trough on the larger degree chart makes us confident to revise support base at 44000 as it is 61.8% retracement of most recent up move from lows of 43300 and confluence of rising 50 day ema.

(Dharmesh Shah – Head Technical, ICICI Securities. Views expressed are author’s own.)

Global Markets: Asian shares hit two-week high on Fed pause bets, China boost

Asian equities rose on Wednesday and the dollar wobbled as weak U.S. labour data bolstered bets that the Federal Reserve was likely done with its interest rate hikes, while beaten-down China stocks rose for a third straight day. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.86% to a two-week top and is on a three-day winning streak. The index though is down 6% in August and set for its worst monthly performance since February.

Japan’s Nikkei was up 0.5%, while the Australia’s S&P/ASX 200 index rose 0.64%. China shares have gained this week following the announcement of measures to lift investor confidence, including halving the stock trading stamp duty, loosening margin loan rules, and putting the brakes on new listings.

Investors’ focus will be on PMI data from China later this week that will highlight the state of the economy. Overnight, Wall Street ended sharply higher, while Treasury yields slid to three-week lows after data showed U.S. job openings dropped to the lowest level in nearly 2-1/2 years in July, signalling easing labour market pressures.

“‘Bad news is good news,’ as the data supported bets for a sooner end of the Fed’s hiking cycle despite the recent hawkish rhetoric of Fed Chair Powell,” Tina Teng, markets analyst at CMC Markets, said in a note.

With the Fed highlighting that the interest rate path will be heavily dependent on data, traders are tweaking their bets based on the latest indicators. Markets are pricing in an 89% chance of the Fed standing pat at its meeting next month, the CME FedWatch tool showed, and are now pricing in a 50% chance of another pause at the November meeting compared with a 38% chance a day earlier.

A much clearer economic picture will likely be revealed later in the week when U.S. payrolls and personal consumption expenditure reports are due.

U.S. Treasury yields were stable in Asian hours. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.3 basis points at 4.903%, easing away from the three week low of 4.871% it touched on Tuesday.

The drop in yields put pressure on a buoyant dollar. Against a basket of currencies, the dollar inched up 0.029% to 103.58 after slipping nearly 0.4% on Tuesday.The yen weakened 0.15% to 146.09 per dollar and remained at levels that led to intervention in the currency market last year by Japanese authorities.

The Australian dollar fell 0.32% to $0.646 after data showed Australian consumer price inflation slowed to a 17-month low in July, signalling that interest rates might not have to rise again.

U.S. crude rose 0.32% to $81.42 per barrel and Brent was at $85.69, up 0.23%. Both benchmarks rallied more than a dollar a barrel on Tuesday on a soft dollar.Traders will be closely watching cocoa prices on Wednesday after the London cocoa futures on ICE rose to a 46-year high on Tuesday, buoyed by tightening supplies.

Top cryptocurrency bitcoin eased a bit in early Asian hours to trade at $27,554 after rising 7% on Tuesday. A federal appeals court ruled on Tuesday that the U.S. securities regulator was wrong to reject an application from Grayscale Investments to create a spot bitcoin exchange-traded fund.

Telcos may file review plea in SC on licence fee issue

Telecom operators who have been hit by an adverse judicial pronouncement relating to treatment of licence fee as capex instead of revenue expenditure, are likely to file a review petition in the Supreme Court. This will be on on the lines of the adjusted gross revenue (AGR) matter, where also they were hit by a adverse ruling in October, 2019.

They are also likely to seek clarity from the apex court whether the applicability of this order will be on retrospective basis (1999 onwards) or on the renewed licence period. A clarity is required here because some analysts feel that since the SC has given a view on the principle behind the taxation it should apply retrospectively.

For operators, which have completed the initial 20 years of the licence, the past tax shortfall would likely pertain only to the difference in payment timing and change in tax rate. However, there could be a significant impact of tax shortfall if the telecom operator concerned is still to complete the initial 20-year licence period or for the period after licence renewal, analysts at Kotak Institutional Equities.

Operators like Reliance Jio and Bharti Airtel would have to pay about Rs 15,000 crore in taxes, according to industry estimates. For Bharti Airtel, the amount (excluding the penalty) is expected to be Rs 6,000 crore for 2020-2023 period, whereas the same for Jio is expected to be Rs 8,500 crore from 2017-2023 period, according to estimates by Kotak Institutional Equities.

Currently, telecom operators treat licence fees as an expense also called revenue expenditure, which in a way lowers the net income and therefore lowers taxation amount. However, after the judgment, the licence fee would have to be treated as a capital expense, with a provision for amortisation of

the licence fee over the licence period.

The accounting change would lead to removal of licence fee from expenses and that would lead to higher operating profits. This would affect the cashflows as there will be a higher tax outgo initially. The difference between the two systems would lead to a tax shortfall for some years along with applicable penalties, analysts said.

“We note that change in treatment of licence fees paid from revenue to capital expenditure could lead to accrual of higher taxes in the initial period of the licence but potentially offset in later years

through higher depreciation and amortisation (D&A) charges,” Jefferies said in its report.

“So over a period of 20 years (the term of the licence period), it may get offset, although there could be some impact on NPV (net present value) given up-fronting of higher taxes in the initial period,” it added.

Offset against higher depreciation and amortisation charges mean that as per accounting rules, a company incurring capital expenditure on acquiring assets, etc, has to also include depreciation and amortisation value of that asset over the years in the profit and loss (P&L) statement. Therefore, in the absence of a licence fee under expenses, the tax liability impact can be net-off against the depreciation and amortisation (on licence fee) in P&L.

The Supreme Court on Monday held that the licence fee paid by them post July 1999 period should be treated as a capital expenditure and not as a revenue expenditure.

As per the National Telecom Policy 1999, telecom operators had to pay a one-time licence fee to start operations, along with a yearly licence fee based on their annual turnover. This was in contrast to the earlier policy, wherein they had to pay licence fee in one go.

Since operators usually defer the payment of licence fee or pay them in installments, the SC said the same does not change the nature of a capital expenditure into a revenue expenditure.

With its ruling, the Supreme Court overturned the Delhi High Court order of 2013 that had held that such payments should be partly treated as revenue expenditure and partly as capital expenditure – pre-1999 and post that year – which suited the operators.