Bank Index Takes The Lead
The Securities and Exchange Board of India (SEBI) last week approved seven initial public offerings (IPO), including that of Paytm, which plans to raise a minimum of Rs 16,600 crore in the biggest ever scheduled share sales in India.
During the fortnight, frontline equity Indian benchmark indices Nifty and Sensex corrected by 2.62 per cent and 2.16 per cent to end at 17,857.25 and 61,305.95, respectively. BSE Mid-Cap and Small- Cap indices further underperformed the broader markets by plummeting 5.48 per cent and 6.03 per cent, respectively. As the economy powers back towards the pre-pandemic levels, India’s government expects tax revenues for the current financial year to be 10 per cent above the budget, beating forecasts for the first time in four years. India’s economy grew 20.1 per cent between April and June versus a 24.4 per cent contraction during the same period last year.
The government is likely to launch the next tranche of the Bharat Bond exchange-traded fund (ETF) by December and expects to raise over Rs 10,000 crore to fund the growth plans of central public sector enterprises. The funds raised through the debt ETF will help in smoothening the borrowing plans of the participating CPSEs or public sector banks. It will also help them in meeting their capital expenditure needs. Over the fortnight, FMCG, Realty and Metal indices plunged by more than 7 per cent each, while Auto and Power indices sunk by more than 4 per cent each.
The BSE Bankex index was the only one to end in the green territory, up by 0.88 per cent. According to Acuite Ratings and Research, the Indian banking sector is set to witness a fresh round of consolidation over the medium term, spread over the FY 2022-2024 period, primarily driven by large private sector banks. To quote from the rating agency’s report, “Consolidation is eminent also because many small-sized private banks continue to face chronic asset quality problems which constrain their capital availability. Hence, there is uncertainty on their scalability and business sustainability over the short to medium term.”
“In contrast, the larger banks have built a comfortable capital cushion which can insulate them from any asset quality stress,” the report adds. India Inc.’s earnings season for the quarter ended September, 30, 2021 has gotten off to a buoyant start thanks to the substantial gains posted by banks, metals and energy companies. The combined net profit of the 222 companies that have declared results for Q2 of financial year FY22 has surged 24.1 per cent year-on-year (YoY) to a new high of around Rs 70,400 crore, and is higher than the Rs 65,550 crore seen in Q1FY22.
The Securities and Exchange Board of India (SEBI) last week approved seven initial public offerings (IPO), including that of Paytm, which plans to raise a minimum of Rs 16,600 crore in the biggest ever scheduled share sales in India. Others that got the regulator’s nod are Policybazaar, ESAF Small Finance Bank, Anand Rathi Wealth, Tarsons Products, Sapphire Foods and HP Adhesives. Trading data shows that FIIs were net sellers to the tune of Rs 8,264.91 crore while DIIs were net buyers to the tune of Rs 571.35 crore during the fortnight.
