The Nifty continued to show weakness at higher levels as it corrected sharply towards the close of trade to end below 10,250. The sharp Nifty correction in the second half after a strong start underlined the inherent weakness in the market sentiments. The pressure came from stocks like Reliance Industries, Tata Motors and IndusInd Bank. IndusInd started correcting after market news flows about a major exposure to IL&FS group worth Rs.2400 crore. RIL has been weak since Q2 results. A/D ratio remained weak at 1:2 levels. The second quarter results also remain an overhang, but above all it is liquidity.
State Bank is already on a fund raising spree. SBI plans to raise Rs.25,000 crore during the financial year 2018-19 to expand its asset book and will include Rs.5,000 crore to shore up its capital adequacy. These funds could either be raised via a follow-on public offer (FPO) or through preferential allotments or QIPs. The funds are likely to be denominated in multiple currencies. SBI will also triple its lending to NBFCs to help them tide over the liquidity crisis. This was a commitment given by SBI to the NBFCs at the behest of the government to shore up the confidence in the bond markets.
Now Britannia is planning a big foray into broadening its dairy franchise with a big thrust to its India dairy business. To spruce up its presence in the dairy segment, Britannia plans to launch a slew of milk-based products, which will include a variety of milk shakes in tetra packs across India. Britannia already has a very strong dairy franchise with segmental leadership in cheese, dairy whiteners and yoghurts. This launch will cover the entire daily value chain. Dairy segment is likely to expand four-fold by 2022 and this move is intended to make the best of rising income levels across India.
Even as realty stocks struggle amid the pangs of RERA, weak retail off take and a liquidity crunch, Oberoi Realty surprised the street with 100% growth in Q2 net profits at Rs.214 crore. Oberoi results actually come as a breath of fresh air to the realty sector. Even the top line grew by over 101% at Rs.619 crore for the quarter. Real estate operations dominated the revenue mix with a 95% market share while hospitality services accounted for just about 5% of the revenues. The company has been typically been a very niche player with a predominant exposure to the Mumbai premium market.
The Tata group completed its formalities of totally exiting the telecom services sector as Tata Sons decided to write off its Rs.28,652 crore investment in telecom. Tata Sons, under Chandrasekharan, had exited the telecom business by selling its stake in Tata Tele to Bharti Airtel. This was after the price war in telecom had made it impossible for smaller players to survive in the telecom industry. The enterprise business of Tata Tele will be merged with Tata Communications. Tata Tele had its spectrum licenses cancelled by the court in 2012 and that had triggered the problems for the Tata Group. Tata Communications had acquired VSNL in 2001 and that continues to focus on the enterprises and telecom infrastructure business in a big way. Tata Tele had also signed a tie up with DoCoMo in 2009.
The high value paints segment may be facing some real problems. Asian Paints Q2 profits disappoints on higher raw material costs. A 14.4% fall in net profits to Rs.493 crore was much worse than what analysts had estimated for Asian Paints. The big culprit was the rise in the cost of the three principal raw materials for paint companies viz. crude oil, titanium dioxide and zinc oxide. This resulted in the operating margins contracting by 210 basis points to 16.9%. Inflation also impacted purchasing power and the festival season demand has also been quite slack this year.
