Which sectors moved equity markets in July 2022?

  • India Infoline News Service
  • 01 Aug , 2022
  • 8:45 AM
Central bank hawkishness continued in the month of July 2022. In the last 4 months between March and July, the Fed hiked rates by 225 basis points of which 150 bps hike happened in June and July alone. The RBI was also not too far behind. It has hiked repo rates by 90 bps since May 2022 and CRR by 50 basis points. The RBI is all set for another rate hike when it meets in early August. Central bank hawkishness has been the big story.

The US inflation for June touched a multi-decade high of 9.6% making aggressive rate hikes almost inevitable. Inflation in India has tapered but WPI inflation continues to be elevated above the 15% mark. The real worry that spooked markets in the last few months is that the enthusiasm of central banks to tighten could result in a recession. This could have a huge impact on industrial and GDP growth. That is already evident in IMF estimates.

The good news for the Indian markets came from FPI flows. After nearly $30 billion of equities got sold in the first 6 months of 2022, July saw net inflows of $618 million into equities. Of course, the inflow looks paltry compared to the extent of outflows, but the good news is that the undertone appears to have changed. We await confirmation from August data. However, if the rupee settles beyond 80/$, there is the risk of imported inflation, with negative implications for markets.

Nifty gains 8.73% in a difficult July 2022

In a sense the change in tone of the markets was visible in the first half of the month itself. However, the real thrust to the markets came in the second half of the month with the Nifty closing with gains of 8.7% in July after four consecutive months of negative returns on the Nifty. The buying was seen across sectors like banking, financials, FMCG and metals. Even IT and Oil stocks saw a late recovery in July 2022.

Here is what triggered the sharp rally in July.

a)      Recession, or let us call it the fear of recession, has many negative ramifications. However, one positive ramification that it had for Indian markets is the easing of oil prices. Crude which had touched a high of $132/bbl just a couple of months back, dipped below $100/bbl, albeit briefly. Through the month, the price of Brent crude stayed subdued in the range of $103/bbl to $107/bbl, giving much needed respite.

b)      You can almost call it a turnaround in the FPI sentiments during July 2022. From net selling equities of nearly $30 billion in the first six months of 2022, FPIs have been net buyers of $618 million in equities in the month of July. The figure is small, but it is an indication that foreign investors are not being risk-off any longer.

c)      Towards the end of July, the Fed hiked rates by 75 bps after hiking by 75 bps earlier in June also. Now Fed has hiked rates by 225 bps since March 2022, taking the Fed rates to the neutral levels. What this means is that any rate hike above this level would have a proportionate negative impact on GDP growth. The dot plot chart is pencilling the Fed to hike rates by another 100 to 125 basis points by end of 2022.

d)      There was no let-up in US inflation, although the Indian CPI inflation did show some respite. US inflation was at a high of 9.6% while Indian inflation veered towards 7%. However, the WPI inflation above 15% hints at intense supply chain pressures on the Indian economy.

The first quarter results have just started to come out and the early indications are that margin pressures are still a reality across most of the key infrastructure sectors. However select sectors like FMCG have handled these margin pressures a lot better. Also, the top line growth continues to be robust across most of the sectors.

All sectors positive but metals, banks and consumer stocks shine

Here is a quick look at how the key sectors performed in July 2022. Out of the 10 sectors evaluated for July 2022, all the 10 sectors gave positive returns. While 6 sectors outperformed the Nifty, there were 4 sectors that gave lower returns than the Nifty. Among general indices, Nifty was up 8.73%, Mid Cap index up 12.03% and Small Cap up 8.60%.

Data Source: NSE

All sectors gave positive returns in the month of July 2022, so our focus would be more on the star sectors that did better than the benchmark Nifty. Metals were the star of July gaining 17.7%. Apart from toning down the export taxes on metals, hopes of a revival in China also  helped. Realty gained 17.04% on robust home sales reports. But the big news came from the banks and the consumer stocks in July 2022.

While PSU banks gave 14.38% returns in July, private banks also gave an impressive 13.90%. Early results for the first quarter indicate a clear improvement in profits due to lower provisioning in the quarter and improved asset quality. Lower credit costs also helped the private banks expand their net interest margins (NIMs) in the quarter.

Among the consumer stocks, both consumer durables and FMCG did much better than the Nifty with returns of 13.16% and 12.80% respectively. Both these sectors saw strong pricing power, growth in top line, better volumes on a sequential basis and an overall pick-up in rural and institutional sales. FMCG companies, especially the blue-chip majors, managed their product mix better to improve margins.

IT, oil and pharma did not measure up to the Nifty

The IT industry has been a pressure point for the last few months. The pressure this month came after TCS, HCL Tech, Wipro and Infosys reported weak margins and elevated levels of attrition. Manpower cost is becoming a big challenge. Oil stocks were also subdued but picked up steam in the second half after the government toned down the windfall gains tax. However, the downstream oil companies showed pressure in quarterly numbers due to the squeeze on marketing margins. In the pharma space, there was a lot of pressure on the healthcare stocks, especially the hospitals and diagnostic labs.

July 2022 has given some hope after a rather difficult and challenging 2022. Markets have weathered FPI selling manfully. It remains to be seen if they can weather the macro storm.

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Swiss Military Consumer Goods acquires 100% stake in AAA Shenyang Container Seal

  • India Infoline News Service
  • 19 Apr , 2022
  • 11:04 AM
Swiss Military Consumer Goods Ltd at their Annual General Meeting held on September 04, 2021, the company have acquired 100% shareholding of AAA Shenyang Container Seal Private Limited and established a wholly owned subsidiary of the Company for RFID Seal business. AAA Shenyang Container Seal Private Limited shall be treated as Material Subsidiary of the company.

As per regulatory filing, Promoshirt SM Private Limited, a Company which is substantially owned and controlled by our Promoters, Anuj Sawhney and Ashita Sawhney, had entered into a Joint Venture Agreement with Hongkong Shining Fortune Trading Co. Limited, Hongkong, on May 24, 2018, for the sole purpose of establishment of a Joint Venture in the name of AAA Shenyang Container Seal Private Limited, for the purpose of producing eseals, other security seals and parts, communication equipment, electronic information technology development, electronic product sales and import and export of business.

Since the company has acquired 100% shareholding of AAA Shenyang Container Seal Pvt. Ltd. from both Joint Venture partners at the fair value calculated as per RBI guidelines, therefore transection between company and Promoshirt SM Private Limited falls within the ambit of related party transection at arm's length prices.

The Company has acquired 20,76,111 equity shares (100%) of AAA Shenyang container seal Private Limited and 1 equity share is transferred to Anuj Sawhney as nominee shareholder to complying with the statutory requirement of minimum number of shareholders in a private company.

RFID technology e-seal facilitating the port logistics automation and cargo tracking Digitalization / Integration in the supply chain. Companies increasingly using item-level Radio Frequency Identification (RFID) to trace and track the goods for inventory control purpose and also and supply chain management. The use of RFID e-seal in seaport container terminal is growing notably.

Seeing to the market size and future business potential one of the associate company of Promoters started a joint venture with one Chinese Partner (having requisite experience in making of RFID ESeal for Indian Market) to ensure supply for the Indian Market and successfully running a profitable venture for the last 3 years.

In India RFID e-seal used in transport from exporter hub to custom terminal with a preclearing customs procedure by integrated the logistics and Customs aspects as per government directives. Indian Custom implemented use of RFID E-Seal for self-sealing container by exporter and accordingly present market size is approx. 24,00,000 to 36,00,000 unit of RFID E-Seal yearly basis which will increase with the advent of new regulation for the ease of tracking of the container and its movement.

Accordingly, Company had decided to acquire the profitable venture of RFID e-seals.

At around 11:05 AM, Swiss Military Consumer Goods was trading at Rs29.65 per piece higher by 4.77% on the BSE.

Which sectors moved equity markets in September 2022?

  • India Infoline News Service
  • 03 Oct , 2022
  • 5:12 AM
If July and August were the months of hope and optimism, September 2022 was the month that the markets were mugged by hard reality. After heady FPI inflows in August, the FPI sentiments turned back once again in September as FPIs moved from being net buyers to being net sellers. Towards the end of September, the FPIs had sold equities worth over $900 million, despite being net buyers for the first 3 weeks. Nearly $2.3 billion of equities got net sold by FPIs in the last 8 trading sessions of September 2022.

Not surprisingly, the Nifty ended the month with negative returns. The Nifty fall of -2.56% may not appear to be really bad after 2 successive months of rise. However, the fall got accentuated after the Fed announced a 75 bps rate hike. If on one looks at the sectoral mix, it is the rate sensitives like realty and automobiles that took the biggest hit during the month. Apart from the rates; sticky inflation, recession fears and a consistently falling rupee are not really helping matters.

Nifty closes 2.56% lower in September 2022

The Nifty returns of -2.56% in September 2022 may appear disappointing compared to +3.5% in August 2022 and an impressive +8.7% in July. However, there were several headwinds in September. The Fed was relentless in its hawkish mission, US growth dipped into negative for the second quarter in succession and India’s high frequency data was hinting at pressure on growth. Here are some of the key factors that determined the market trend for September 2022.
  1. Fed hawkishness remained the biggest issue. September was the third successive Fed meet where the rates had been hiked by 75 basis points and the Fed showed no signs of relenting. Powell continues to hold on to his “inflation control at any cost” argument. Not only is Fed ready for higher terminal rates, but it is also willing to heavily front load.
  2. FPI flows were the big challenge in September. The month of August 2022 had seen a sharp turn in sentiments with FPIs infusing $6.44 billion into Indian equities. After a promising start in September, the month closed with net FPI selling of $903 million. Also, with Indian bonds unlikely to be included in global indices in 2022, the bond markets could also see a sell-off in the next few weeks.
  3. The second quarter results start from the second week of October, and early signals are that sectors like cement, metals and IT may face pressure on the top line, apart from margin pressures. That is also making the FPIs somewhat wary of Indian equities.
  4. Growth is the other big variable that FPIs are worried about. The US GDP for June 2022 quarter contracted -0.9% after contracting -1.6% in the March quarter. The Fed hawkishness may not be pulling down inflation, but it is surely pulling down growth. As the slowdown takes deeper roots in the US, UK and EU, the markets expect India to be negatively impacted by lower export demand and lower spending.
  5. In terms of India’s monetary policy response, RBI hiked rates by another 50 bps, taking the total rate hike to 190 basis points since May 2022. That is likely to see a transmission into consumer and industrial loans. Also, the spike in cost of funds would have anyways depressed valuation estimates, which is yet to be factored in.
September represents a very delicate moment of flux in stock market sentiments. How the macros pan out in the next few weeks and how monetary policy reacts to it; would hold the key to the direction of the markets from here on.

September 2022 belonged to the defensive sectors

Here is a quick look at how the key sectors performed in September 2022. Out of the sectors evaluated for September 2022, 8 out of the 10 sectors gave negative returns, a classic example of negative bias. While 6 sectors outperformed the Nifty, there were 4 sectors that gave lower returns than the Nifty. Among general indices, Nifty was down -2.56%, Mid Cap index down -2.69% and Small Cap down -1.99%. The fall was across the board.

Data Source: NSE

In July, all the 10 sectors saw positive gains, while 8 out of 10 sectors gave positive returns in August 2022. In September only 2 defensive sectors viz. Pharmaceuticals and FMCG gave positive returns. While Pharma gave 3.32% for the month, FMCG index was up 2.09%. In the case of pharma, the rally was more on the back of dollar strength since much of pharma revenues still comes from the US. The dollar strength more than offset concerns over thinning of generic margins in the US amidst rising competition pressures.

The other major sector to outperform was the FMCG sector where there was a lot of defensive buying seen. Most FMCG plays in India are domestic plays on domestic purchasing power. That does not seem to have been really impacted if one looks at the top line of these FMCG companies. The other sectors that gave negative returns in the month of September but still did better than the Nifty include consumer durables, PSU banks, Private banks and metals. While metals have been a play on Chinese spending hopes, consumer durables was again a defensive play. In the case of banks, the higher rates are expected to be positive since the cost of funds is expected to rise slower than the yield on assets of the banks.

IT, oil and rate sensitives were disappointments in September 2022

While the banks were largely spared the impact of rate hikes, the rate sensitive sectors like autos and realty took it on their chin with negative returns of -4.27% and -9.44% respectively. Oil & Gas stocks suffered on sharply lower crude prices, which hovered below $90/bbl in the Brent market for a better part of the month. That hit most of the upstream and downstream oil stocks. The big disappointment, once again, was the IT sector. While strong dollar is a positive, the bigger concern is that a global recession would hit tech spending. That is likely to hit top lines of IT companies in the coming quarters.

If August was the month of hope, September 2022 was a hard return to reality. It was a reminder that the world economy is still in turmoil and the troubles are not going away any time soon.


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  • 19 April, 2022 |
  • 7:55 AM

AAA Shenyang Container Seal Private Limited shall be treated as Material Subsidiary of the company.

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