Oil ticks higher after China moves to support flagging economy

Oil prices ticked higher on Monday, along with equity markets, after China took steps to support its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen fuel demand.

Brent crude rose 22 cents, or 0.3%, to $84.70 a barrel by 0049 GMT while U.S. West Texas Intermediate crude was at $80.08 a barrel, up 25 cents, or 0.3%.

“Unfortunately, after last week’s modest (Chinese central bank interest) rate cut, the announcements above amount to another piecemeal measure that won’t alter investor gloom towards China,” he added.

China’s manufacturing purchasing managers’ index (PMI) due later this week will likely reveal more dour economic news around the world’s second-biggest economy, Sycamore said. The PMI is likely to remain in contraction territory for a fifth consecutive month, he added.

CMC markets analyst Tina Teng said a soft-landing scenario for the U.S. economy buoyed energy markets on Monday despite the Federal Reserve’s ongoing hawkish stance on rate hikes.

Brent and WTI posted a second week of loss on Friday after Fed Chair Jerome Powell said the U.S. central bank may need to raise rates further to cool still-too-high inflation.

However, oil prices remained above $80 a barrel on support from falling oil inventories and supply cuts from the OPEC+ collective of oil producers.

In the United States, energy firms cut the number of active oil rigs for a ninth month in August, Baker Hughes said in its report.

Also, Tropical Storm Idalia has formed in the Caribbean and could strengthen into a hurricane and hit Florida.

The hurricane is forecast to miss oil and gas centres in the Gulf and the most likely impact is a day or two of power outages, said IG’s Sycamore. That “should see some short term support for the oil price”, he said.

Monsoon arrives in Mumbai! IMD issues yellow alert – See Photos

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The India Meteorological Department (IMD) has issued a Yellow alert for Mumbai, predicting heavy rainfall in several parts of Maharashtra for the next 4-5 days. The southwest Monsoon reached the financial capital on Saturday. (PTI Photo)

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In a statement, the weather office said, “The southwest monsoon has further advanced into some more parts of Central Arabian Sea, some more parts of Maharashtra.” (PTI Photo)

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Due to rain, Maharashtra’s capital witnessed waterlogging in several areas. People walk in the rain in Mumbai. (AP Photo)

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The ‘Northern Limit of Monsoon (NLM)’ now passes through Alibag, Solapur, Udgir, Nagpur (in Maharashtra), Mandla, Sonbhadra, Buxar, Siddharthnagar, Pantnagar, Bijnor, Yamunanagar, Una and Dras, IMD said. (PTI Photo)

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A woman enjoys rain near Chhatrapati Shivaji Maharaj Terminus in Mumbai. (PTI Photo)

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Earlier, IMD Mumbai said, “Conditions are favourable for the monsoon to move further towards Raigad, Thane, Mumbai and Palghar. Monsoon is likely to reach Mumbai by June 24.” (PTI Photo)

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Generally, the monsoon officially begins in Mumbai in the second week of June. The Met office had on June 18 provided an update on the onset of monsoon in the country. (PTI Photo)

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The Southwest Monsoon is in the process of resuming its trajectory post-Cyclone Biparjoy, which has been the longest storm in the Arabian Sea. (PTI Photo)

Continuity theme at Kotak Bank

In its analysis, ICICI Securities says the decision of Uday Kotak to step down from an executive role around 4 months ahead of the scheduled term has come as a somewhat negative surprise. Important to note is that Kotak would still remain associated with the bank as a non-executive director (thereby ensuring continuity).

The key monitorable for the stock would be the candidature and transition of the new MD & CEO. Considering the culture at the bank, promotion of an insider to the top job (vs a lateral hire) would be preferred by investors, in our view. There is no change in our earnings estimates. Maintain HOLD on the stock with the target price cut to Rs1,850 (earlier: Rs 2,000), valuing it at 2.6x FY25E core bank ABV (earlier: 2.8x).

Asset quality remains steady, and the strong CASA ratio will limit pressure on margins and enable a 15% PAT CAGR over FY23-25E. We retain our Neutral rating with a TP of `2,000 (2.7x FY25E ABV and Rs 560 for subs), the analysts said.

Kotak resigned from the MD & CEO position of the bank, effective September 1, ’23. A founding member of the bank, he has been part of the institution for the past 38 years. His contribution was thus pivotal in guiding the bank through its transition from being an NBFC to obtaining a banking license in 2003 and evolving as one of the most successful and reputed financial organisations in the country. Under Kotak’s leadership, the bank has become the fourth-largest private bank and has established a prominent presence across the financial services spectrum, including asset management, broking, investment banking, life insurance, etc.

Kotak has cited significant personal and other family commitments, besides a sequenced leadership transition at the bank, as the key reasons behind his resignation from executive responsibilities. The terms for Prakash Apte (Chairman) and Dipak Gupta (Joint MD) will also end on December 31, ’23.

Apple 15-inch MacBook Air buying guide: 10 things to know before you spend Rs 1,34,900

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Apple’s newly launched 15-inch MacBook Air is going on sale globally and in India starting from today. This is now the biggest MacBook Air that Apple makes at the time of writing. Heck, it’s the biggest MacBook Air that it has ever made, period. It essentially builds on the 13-inch model from last year, it has the same M2 chip as well, and comes as a no-brainer for those looking for more screen real estate inside a visibly compact chassis.

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The 15-inch MacBook Air was launched at WWDC 2023. It is being billed as the world’s thinnest 15-inch laptop.

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You get a 15.3-inch Liquid Retina display with slim bezels and 1080p webcam up-top that’s housed inside a notch.

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The screen can peak 500nits and supports 1 billion colours. There is True Tone.

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Under the hood, you get Apple’s M2 chip with an 8-core CPU, a 10-core GPU, and a 16-core Neural Engine. This can be paired with up to 24GB of unified memory.

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The Magic Keyboard onboard features a full-height function row with Touch ID and Force Touch trackpad.

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You get two Thunderbolt ports and a headphone jack.

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MagSafe charging is available.

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Rounding off the package are a 6-speaker sound system with support for spatial audio and a 3-mic array.

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The 15-inch MacBook Air with M2 (8-core CPU/10-core GPU/16-core Neural Engine), 8GB of unified memory, and 256GB of SSD price in India is set at Rs 1,34,900. A version with double the storage— 512GB— will set buyers back by Rs 1,54,900.

Rupee rises 7 paise to 82.73 against US dollar in early trade

The rupee rose by 7 paise to 82.73 against the US dollar on Wednesday amid a positive sentiment in equity markets. Rising crude oil prices and strengthening dollar, however, weighed on the Indian currency, according to forex traders. At the interbank foreign exchange, the domestic unit opened stronger at 82.67 and hit the level of 82.74 against the greenback.

Later, the rupee was trading at 82.73 against the dollar, registering a gain of 7 paise from its previous close. On Tuesday, the rupee closed at 82.80 against the US dollar.

On the domestic front, GDP numbers will be important to watch and better-than-expected numbers could support the rupee, he said. GDP numbers are scheduled to be released on Thursday.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.08 per cent to 103.61. Brent crude futures, the global oil benchmark, rose 0.33 per cent to USD 85.77 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 291.53 points or 0.45 per cent higher at 65,367.35 points. The broader NSE Nifty advanced 78.20 points or 0.40 per cent to 19,420.85 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they bought equities worth Rs 61.51 crore, according to exchange data.

Nifty, Sensex may remain range-bound in near term; Cipla, India Cements among stocks to buy

By Shrikant Chouhan

On last Tuesday, the benchmark indices NSE Nifty 50 and BSE Sensex witnessed range bound activity. Among Sectors, IT continued the positive momentum, rallied over 1 percent whereas profit booking were seen in Media and PSU Banks stocks, as a result, both the indices shed over 1 percent. Technically, after a strong uptrend rally, the indices witnessed range bound activity.

Oberoi Realty Ltd

BUY | CMP: Rs 1054 | TARGET: Rs 1110 | SL: Rs 1030

The counter is trading in a rising channel constantly on the weekly scale. The higher high and higher low chart formations are apparent in the counter. Additionally, trend indicators such as MACD and ADX are showing bullish strength. Therefore, upward movement from the current level is very likely to remain in the near future.

CIPLA

BUY | CMP: Rs 1030 | TARGET: Rs 1080 | SL: Rs 1010

The stock has shown a remarkable rally from the lows in the last few weeks and the trend of the stock is still in the rising direction. The higher high and higher low series on weekly chart formation is evident in the stock. Hence, the formation is indicating a bullish continuation pattern to continue in the coming horizon.

India Cements Ltd

BUY | CMP: Rs 210.25 | TARGET: Rs 222 | SL: Rs 205

The stock has underperformed in the past few weeks and it has witnessed a downtrend. After the sharp correction from higher levels, the stock is currently trading in a range bound mode, which indicates accumulation at these levels. Therefore, upward movement from the current level is expected to resume in the coming sessions.

Siemens Ltd

BUY | CMP: Rs 3708 | TARGET: Rs 3890 | SL: Rs 3630

After a robust rally of the past few weeks, the stock went into a consolidation mode. At present, the structure is indicating a likely breakout of the consolidation phase. Hence, the formation indicates a further bullish trend  to resume from the current levels.

(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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,)

Oil trades flat as supply concerns offset worries over demand

Oil prices traded flat on Tuesday as worries that further possible U.S. interest rate hikes could pull down demand were countered by concerns a tropical storm off the U.S. Gulf Coast may impact supply.

Brent crude was flat at $84.42 a barrel by 0335 GMT, while U.S. West Texas Intermediate crude shed 2 cents to $80.08.

Markets anticipate an 80% chance the Fed standing pat next month, Refinitiv’s FedWatch tool showed, but the probability of a rate hike in November is now seen at roughly 56%.

“It may be difficult for oil prices to maintain the strong bull trend (seen) in July at this stage. The U.S. and European economies will face downward pressure in the fourth quarter until interest rates peak,” said CMC Markets analyst Leon Li.

“So there might be a concern about demand, which puts pressure on oil prices. And China’s economy still hasn’t seen a significant improvement… Oil prices may remain volatile at this stage, and further increases in the future may require a rebound in Chinese data.”

China’s economic recovery has faltered on the back of a worsening property slump, weak consumer spending and tumbling credit growth, prompting Beijing to cut key policy rates to shore up activity in the world’s second-largest economy and oil consumer.

While prices since the start of the third quarter are up about 12% and 13% for Brent and WTI, respectively, following production cuts from OPEC+, the outlook for China’s economy continues to remain a concern, said analysts at National Australia Bank in a Tuesday note.

Meanwhile, Tropical Storm Idalia lashed western Cuba on Monday and was almost a hurricane as it headed toward Florida. The storm is likely to cause power outages and could impact crude production on the eastern side of U.S. Gulf Coast.

This week the focus will be on the U.S. personal consumption expenditures price index report that is due on Thursday and the August nonfarm payrolls data on Friday.

Sebi notifies stricter delisting rules for non-convertible debt securities

With an aim to protect investors’ interest, Sebi has notified a new framework prohibiting listed entities, with more than 200 non-QIB (qualified institutional buyer) holders of non-convertible debt securities, from delisting voluntarily.Under the new rule, the listed entity will have to obtain permission from all holders of non-convertible debt securities within 15 working days of receiving the notification of delisting.

The present rule allows entities to delist by giving a prior intimation to the stock exchange about the meeting of the board of directors, where the proposal for a voluntary delisting is considered.Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, in the new framework, approval of 100 per cent of the debt security holders has been mandated for delisting of debt securities.

Further, the mechanism would not apply to the delisting of a listed entity’s non-convertible debt securities that have been delisted under a resolution plan authorised under the Insolvency Code.In case of delisting pursuant to a resolution plan as per the provisions of the Insolvency Code, the details of delisting of non-convertible debt securities will be disclosed to the stock exchanges within one working day of the approval of the resolution plan under the Insolvency Code.

The new rule prohibits a listed entity that has “more than 200 securities holders excluding qualified institutional buyers (QIBs) in any International Securities Identification Number relating to listed non-convertible debt securities or non-convertible redeemable preference shares”.Sebi said that all the events pertaining to the proposal of delisting in respect of non-convertible debt securities, starting from the placing of the agenda for delisting to the board of directors and till the delisting is completed, need to be disclosed as material information to the exchange.

The listed entity will have to send the notice of delisting to the holders of non-convertible debt securities within three working days from the date of receipt of in-principle approval from the exchanges.Within five working days from the date of obtaining approval from all the holders of non-convertible debt securities, the listed entity will have to make the final application for delisting to the exchange.

Sebi said that the delisting proposal will be considered failed in case of non-receipt of in-principle approval from the stock exchange, such as non-receipt of no-objection certificate from the debenture trustee and non-receipt of approval from all the holders of non-convertible debt securities.In case of failure of the delisting proposal, the listed entity will have to intimate the same to the exchange within one working day from the date of such event of failure.To give this effect, Sebi amended LODR (Listing Obligations and Disclosure Requirements) Regulations.

Closing Bell: Nifty gives up 19300, Sensex slides 350 pts; HDFC Bank, ITC drag

Market Closing Bell: Domestic indices NSE Nifty 50 and BSE Sensex opened in the red on Friday, extending the global rout. Nifty 50 opened under the 19,300 level, lower by 90 points whereas Sensex just about defended the 65,000 level, starting the day’s session at 65,000.67. The broader markets traded in the red, with Nifty 100, Nifty 200 and Nifty Midcap 100 sinking up to 0.6%. Nifty Smallcap 100 outperformed, trading mildly higher at 0.04% in the green. All sectoral indices traded in the red, with Nify PSU Bank, Nifty Bank and Nifty IT leading losses.

Reliance AGM eyed

“Benchmark Indices opened weak in line with global cues ahead of the Fed meet and Powell’s speech today. Back home, all sectoral indices ended in the red with even the midcap Index down over a percentage. D-Street Bulls preferred to wait until Monday for the big AGM which probably could be of interest to investors,” said S Ranganathan, Head of Research at LKP Securities.

Nifty technical outlook

“The Nifty index has declined to a significant moving average (55EMA) support level. The sentiment is expected to stay bearish as long as the index remains below 19450, where the 21-day Exponential Moving Average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19240, it could potentially lead the Nifty towards the 19000 mark,” said Rupak De, Senior Technical analyst at LKP Securities.