While the recent spike in retail inflation had to do with volatile vegetable prices, which is seasonal and hence less of a worry, a stagnant core inflation print has a message: it means consumption growth is not reviving as much as one would have anticipated and if that begins to fall at some point, it would be bad news for the consumption stocks. Which is why demand-side booster from the Budget would be critical for this class of shares, and if the Finance Minister fails to put more money in pockets, they might take a plunge, deflating investor sentiment.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded 7 points higher at 7 am (IST), signalling indecisiveness on Dalal Street. Asian stocks resumed declines amid ongoing efforts to control the widening coronavirus outbreak. A bout of modest risk aversion returned to markets.
HERE'S WHAT TO WATCH  | Shares in Shanghai traded lower on the final day of trading for mainland Chinese equities before the weeklong Lunar New Year holiday. Stocks fell in Hong Kong, South Korea, Japan and Australia, while US futures were little changed. |
| Overnight, US stocks ended a volatile session along the flatline on Wednesday despite strong gains from IBM that lifted the overall technology sector. Dow dipped 9.77 points to 29,186, while S&P500 eked out a small gain, closing at 3,321 and Nasdaq notched an intraday all-time high, advancing 0.1% to 9,383. |
| Oil prices fell to their lowest in seven weeks on Thursday on concerns that the spread of a newly identified respiratory virus from China may lower fuel demand. At the same time a report showed oil inventories in the US rose last week. Brent crude futures slipped $1.05, or 1.7 per cent, to $62.16 a barrel. |
| The rupee strengthened by 2 paise to settle at 71.19 against the US dollar on Wednesday amid easing crude oil prices. |
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L&T Guidance Stays… L&T has maintained its guidance for 2019-20 despite a muted performance in the fiscal third quarter, when its results were hurt by a slowdown in contract execution and weak order intake. The engineering major said the business environment continued to be challenging, but its performance in the first six months of the year and an expected pickup in the fourth quarter, traditionally the strongest, gave it the confidence that it would be able to meet the targets of 10-12% growth in order inflows and 12-15% increase in revenue for the fiscal year. Analysts had predicted that the company may slash its order intake guidance.
Read More ZEE Pledge Clarity… Despite the lacklustre performance of Zee Entertainment Enterprises in the December 2019 quarter, its stock appreciated by 5.7% on Wednesday. The jump was largely on account of the clarity that emerged regarding the share pledging by promoters, which offered relief to investors. On the business front, they need to wait for a few more quarters before adopting a favourable stance. The future trend for the stock of India's largest media and entertainment company can be mapped using three major parameters: fundamentals, funding and scalability.
Read More Spike in Oil Demand… India's oil demand rose 1.8% in the first nine months of the current fiscal, slower than 2.7% in the year-ago period. Dependence on oil imports also rose as domestic production fell 5.8% in the same period. Diesel sales, which makes up 40% of all oil demand in the country, rose barely 0.8% in the nine months to December. Diesel sales dropped 0.7% in December from a year ago.
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Voda Won't Pay Today… Vodafone Idea has informed DoT that it would wait for the Supreme Court's decision on the adjusted gross revenue modification pleas, implying that it won't make any payments to the government by the January 23 deadline. Bharti Airtel is expected to follow suit. Both have filed modifications petitions in the Supreme Court, which will hear the matter next week. Meanwhile, five non-telecom PSUs, including GAIL, Power Grid and OIL, have either filed or are in the process of filing separate applications in the Supreme Court, seeking clarification on the applicability of the AGR order.
Read More Axis Slips on Asset Quality… Axis Bank reported a 4.4% rise in its third quarter net profit at Rs 1,757 crore, but slippages rose sharply and the bank had to provide more for bad loans. Asset quality was largely stable, loan growth was strong and net interest margin hit a 10-quarter high of 3.57%. CEO Amitabh Chaudhry said the environment remained challenging but the BB & below-rated book is at a seven-year low, which indicates that the normalisation process has started.
Read More Emami Debt Cut Bid... The Emami Group is in talks to raise Rs 1,500 crore through placement of non-convertible debentures and sell its 400-bed hospital in Bhubaneswar for about Rs 300 crore to help reduce promoters' pledged shares and become debt free, two senior industry executives said. The Kolkata-based diversified conglomerate is in advanced negotiation with JP Morgan, which is likely to subscribe to a Rs 1,500 crore issue of NCDs on a private placement basis in five group entities, including Emami Realty, Emami Capital Markets and Emami Frank Ross.
Read More Meanwhile... Easier Route Likely to End Tax Tussles… The government may adopt a mediation mechanism that will help companies determine their future tax liabilities and even settle disputes, said a person familiar with the development. The concept, which is widely prevalent overseas, is being discussed amid preparations for the February 1 Budget. The process involves examining tax legislation and all relevant facts in detail. Neutral mediators, chosen from a panel, will negotiate and arrive at a settlement. The decision is binding on both sides.
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