Indian equity market round-up: COVID drives recovery

UK Investor Magazine
-
2
Indian equity market round-up: COVID drives recovery

·      Reserve Bank of India commences improvement procedure in the FI-Index of the stock market. The index includes the financial aspects of the insurance, investments etc., sectors to find the suitability of services.

·      The market sentiment on 17thAugust 2021 has remained neutral in India. A profit booking session has been seen in the Banking Stocks. Bank Nifty Index has been observed to be traded in red for the day.

·      Indian stock markets hit their all-time highs on 13thAugust 2021. Nifty hit 16,500 and BSE Sensex hit above 55,000 level. Currently, the market is trading on a similar level.

·      Indian markets are at their all-time highs while few stocks are recovering from the fatal effects of the Covid-19 2ndwave.

·      According to the Retailers Association of India, the retail sales in July 2021 has been 72% up. This data has been compared to the sales percentage before the pandemic.

·      Indian rupee opens 3 paise weaker than US dollar in the currency market.

· Trading session in the market today has been observed as flat trading with an average sell-off in banking stocks.

Big Boomers: 17thAugust

IT industry lifted the market to reach a new level in Nifty -16600. The stock-specific action in the IT industry has been shown below:

Infosys

Infosys is a multinational service provider for business consultation, outsourcing and IT Services. The current stock price of Infosys is 1,734 listed in NSE/BSE as the symbol INFY. INFY is a quality stock in the IT industry which is values at an expensive valuation from the market end. In the news, Infosys is in continuous talks to invest in Tidal Scale Inc at $0.45 million. The current market capitalization of Infosys stands at 741,783 (Rs. Cr.). With the previous close of 1,704 in the stock price on 16thAugust, the stock gained around 40 plus points in the trading session. The price is closed at 1,741.65 on 17thAugust.

Wipro

Wipro Limited is a technology company providing its services for global clients in consulting and business processes. It has been noted that it is ranked as the 29thlargest company by its revenue (Fortune India 500). With the 3.40% gain from the previous close of 614.05 the current stock of Wipro is priced at 634.90 per share. The current market capitalization of Wipro is 347,878 (Rs. Cr.). The company is one of the top gainers on 17thAugust trading session.

HLC Tech

HCL Tech is a technology service provider which helps the global enterprise in technology transformation and development. HCL tech’s stock price is traded at 1142 in the recent market. The market capitalization of the company is 309697. Price and volume growth in the company is depicting positive returns to the past investors. HCL tech is one of the competitors with the IT giant-Infosys.

Top Movers

The stocks listed below are the quality stocks of the Indian market which have attractive and strong shareholding patterns:

Titan Company

Titan Company Ltd. is an Indian company that is known for manufacturing and selling luxury products. The share of the company is listed both on NSE and BSE. In the latest session of trading, the stock has managed its levels at 1874.45 with an increase of 37.35 points. There is a strong shareholding and an increased chart pattern in the stock.

Dabur India

Dabur Limited is a leading brand in India that brings to its customers’ wide range of Herbal products. The share of the company is listed on both exchanges with an increased share price of 596.60 in the current trading session. The company has strong market visibility and chart pattern.

Bajaj Finance

Bajaj Finances Limited is one of the Bajaj groups companies which have diversification in the Indian market for lending business. BFL is considered a profitable company with an increased share price of 6,410 in the current session.

What does soaring wage growth mean for the pension triple-lock?

Liam Roche
-
0
What does soaring wage growth mean for the pension triple-lock?

The state pension triple-lock increases pensions by the highest out of earnings, inflation and 2.5%

Average earnings are up by 7.4% excluding bonuses, while this figure rises to 8.8% with bonuses included, according to data released by the ONS on Tuesday.

The soaring wage growth is bringing eyes on to pensions and what the ramifications are for the state pension triple lock.

There has been calls to scrap the state pension triple-lock, which increases pensions by the highest out of earnings, inflation and 2.5%.

This would mean that pensioners would be set to receive a substantial uplift in their income.

“This poses a problem because the Conservative Party committed to maintaining the triple-lock in their manifesto. An 8% rise will put huge pressure on the public finances at a time when the Treasury is already staring down a fiscal black hole,” said Tom Selby, head of retirement policy at AJ Bell.

However, pension legislation allows the government to estimate the growth in earnings in whichever was it deems appropriate.

“Historically it’s the May to July earnings growth figure that’s been used for the triple-lock calculation, and expectations are this could be around 8% when published next month. However, pensions legislation allows the Government to estimate the rise in earnings as they see fit, and doesn’t tie them to the headline rate published by the ONS,” Selby added.

This would allow the Conservatives to keep their manifesto promise to maintain the triple-lock, while curbing the cost of the state pension.

“Coincidentally, the ONS has now started publishing a figure which tracks the growth in underlying earnings in the economy, stripping out the distortive effects of the pandemic. The latest data released shows that headline earnings grew at 7.4% year on year (not including bonuses), but underlying earnings grew at somewhere between 3.5% to 4.9%, a considerably lower rate.”

“By choosing the lower of these figures, the Government could legitimately cut the state pension bill by around £3.5 billion compared to using the headline rate (the OBR estimates a 1 percentage point rise in the rate creates £0.9 billion more of pensions spending),” says Selby.

This approach could allow the government to get the best of both worlds when it comes to the triple-lock. It allows them to keep their manifesto without putting additional strain on public finances.

Selby believes that while the Conservatives have committed to maintaining the triple-lock, its longer-term survival remains in doubt.

What is the impact of events in Afghanistan on global markets?

Liam Roche
-
0
What is the impact of events in Afghanistan on global markets?

The events unfolding in Afghanistan in front of the world’s eyes will now be added to the lost of issues to look out for for investors as markets take on board the fact that the Taliban has regained power.

This is what Nigel Green, chief executive and founder of deVere Group, as the Taliban seized Kabul, the capital of Afghanistan, from where thousands desperately tried to flee.

It comes as President Joe Biden made the decision to remove troops from Afghanistan following Donald Trump’s decision to withdraw US forces as part of an agreement between America and the Taliban.

Green does not however feel that the news coming out of Afghanistan will send an immediate shockwave through global stock markets.

“Investors are currently more focused on other key factors that could impact returns,” he said, adding that “these include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”

Green does however believe that the Taliban’s power grab will be on the radar of investors among a growing list of global issues.

“There will be questions regarding stability in the Middle East, the global influence of the U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi,” said Green.

Early in trading in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. European markets are set to open lower on Tuesday as investors monitor the Afghanistan crisis. On Wall Street, U.S. stock index futures were slightly lower after the Dow and S&P 500 on Monday closed at record highs.

The deVere CEO concludes: “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.

“As ever, investors’ best tool to avoid risk and seize opportunities is to remain invested and ensure proper diversification across asset class, sectors, currencies and regions.”

Kristina Hooper, Invesco’s chief global market strategist, sees a Federal Reserve policy mistake and the Covid-19 delta variant as bigger threats to the US economy and stocks.

“This [Afghanistan] is certainly a human tragedy. It’s a disaster,” she told CNBC on Monday. “Yet, what we have learned time and time again is no matter how big the disaster [and] no matter how significant the geopolitical risk seems, it rarely has much of an impact on markets.”

UK job vacancies surge as wages rise

Liam Roche
-
0
UK job vacancies surge as wages rise

Over the last quarter the number of vacancies reached 953,000

Job vacancies are at a record high as the labour market continues its robust recovery, official figures have revealed.

For the three months to July, the number of vacancies reached 953,000, the Office for National Statistics (ONS) said.

During the same period the unemployment rate fell to 4.7%, as the yearly growth in average pay was 7.4%.

Rishi Sunak, chancellor, said: “Today’s figures show that our Plan for Jobs is working – saving people’s jobs and getting people back into work.”

“I know there could still be bumps in the road but the data is promising – there are now more employees on payrolls than at any point since March 2020 and the number of people on furlough is the lowest since the scheme launched.”

The number of people in employment rose again, by 182,000 to 28.9m in July, but remained 201,000 below pre-pandemic levels. As the economy recovered, job vacancies rose to a record high of 953,000 in May to July – 168,000 more than before the pandemic.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The world of work continues to rebound robustly from the effects of the pandemic. 

“The number of people on payroll was up again strongly and has now grown over half a million in the past three months, regaining about four-fifths of the fall seen at the start of the pandemic.”

However, experts were cautious to say that the figures proved that there would number be a flurry of layoffs as the furlough scheme comes to an end.

Martin Beck, senior economic adviser to the EY Item Club, said: “Looking ahead, the jobless rate could feasibly creep up in the short-term: an easing of restrictions has made searching for a job easier, and this could result in people moving from inactivity to seeking a job and therefore being picked up in the numbers again.”

“But the risk of a serious increase in joblessness when the furlough scheme closes in September looks low.”

BHP reveals oil and gas merger with Woodside Petroleum

Liam Roche
-
0
BHP reveals oil and gas merger with Woodside Petroleum

The BHP share price surged on the announcement

Just a day after it confirmed it was in talks over an exit from the oil and gas industry, mining giant BHP (LON:BHP) is in the news again as it confirms its plans to merge its oil assets with Woodside Petroleum.

The new group would be among the largest independent energy companies in the world and in the top 10 for liquified natural gas (LNG) production.

The entity’s yearly revenue and underlying earnings (EBITDA) will come in at $8bn and $4.7bn respectively.

The BHP share price is up by 6.16% on Tuesday following the announcement.

“The market is clearly excited about the move and while investors are set to get shares in the combined venture rather than an immediate cash payout, this will give them the option of selling the shares should they choose and realising value that way,” says AJ Bell investment director Russ Mould.

After expected completion of the merger in Q2 of 2022, Woodside will issue shares to BHP shareholders.

52% will be held by Woodside shareholders, while 48% will be held by BHP shareholders.

“The news comes alongside results which encompass a big capital return to shareholders and a plan to tidy up the company’s corporate structure with its main listing widely expected to be in Australia and the green light on a new potash project.”

BHP has a clear strategy now of focusing on future-proofed commodities which are part of the transition away from fossil fuels.

BHP’s decision to analyse its operations comes as major miners are coming under pressure to eliminate, or at least reduce, their exposure to fossil fuels.

However, “Mr Henry and the board have a tricky balancing act if they are to strike the right balance between shareholder satisfaction and shareholder value,” says AJ Bell Investment Director Russ Mould.

Management may also be taking the view that now is a good time to sell, after a rebound in the oil price from 2020’s lows, as the global economy and travel begin to regain some sort of traction.

“The board will also want to avoid the risk that they are left with ‘stranded’ assets, should long-term demand for oil and gas tail off more quickly than anticipated, and take further hits to the valuation of those assets on its balance sheet,” said Mould.

FTSE 100 holds steady on UK jobs numbers

Liam Roche
-
0
FTSE 100 holds steady on UK jobs numbers

After extending yesterday’s losses early on, the FTSE 100 is flat in the first hour of trading on Tuesday, sitting at 7,146.

“Some well-received corporate results helped balance out wider downbeat sentiment linked to the signs of a Chinese slowdown which emerged at the beginning of the week and the turmoil in Afghanistan,” says AJ Bell investment director Russ Mould.

UK jobs figures were slightly better than expected and didn’t contain anything to alert the market, while US retail sales are likely to draw focus later on.

“Investors will be looking for any signs of cracks in the American recovery in the retail numbers but will also alive to evidence of mounting inflationary pressures,” said Mould.

FTSE 100 Top Movers

BHP (6.18%), Just Eat (2.72%) and Scottish Mortgage Investment Trust (1.10%) are leading the way on the FTSE 100 during the morning session on Tuesday.

Making up the bottom three of the UK index is IAG (-2.54%), Kingfisher (-2.43%) and Whitbread (-2.15%).

Just Eat investors concerned following pre-tax loss

Liam Roche
-
0
Just Eat investors concerned following pre-tax loss

Just Eat saw its market share rise by 10% in first half

Just Eat (LON:JET) saw the number of orders it received surge to 135m during the first half of 2021, an increase of 58m.

This was thanks in part to a sustained promotional push which also made an impact on the company’s balance sheet.

Just Eat made an underlying pre-tax loss in the UK of £60.6m compared to a £108m profit for the same period a year ago.

The food delivery company saw its market share rise by 10% as competition in the industry intensified as restaurants remained closed during lockdowns.

Commenting on Just Eat’s results, James Andrews, senior personal finance expert at money.co.uk, said: “Today’s news that Just Eat is expected to report profit loss will come as a further blow to the business, as its investors place increasing pressure on the sustainable future of the takeaway giant’s business model.”

“With shares struggling to return to anywhere near their October 2020 peak, some are predicting that share prices will tumble again. Shares fell by 9% after Just Eat’s company half-year earnings were released previously.”

The Just Eat share price is up by 2.72% during the morning session on Tuesday.

“With unease among the board, motions for a merger would hopefully allay some of the concern among Just Eat’s shareholders,” Andrews added. “This, along with careful investment in customer acquisition and expansion of the US strategy is likely what investors are looking out for to turn the group’s fortunes around. Whilst revenue grew by 53% compared to the same period last year, increased investment and spending has meant another profit loss for the company.”

“It’s also worth taking in the wider view of the sector, with Deliveroo’s shares soaring since it floated on the London Stock Exchange in March after interest and investment from international groups such as German company Delivery Hero.”

Plus500 sees annual revenue surpassing expectations despite profits falling

Liam Roche
-
0
Plus500 sees annual revenue surpassing expectations despite profits falling

Plus500 received a boost from high levels of volatility in the first part of 2020

Plus500 (LON:PLUS), the online trading platform, forecast its yearly revenue to surpass analysts’ expectations, while confirming its profit for H1 fell from the surge seen during 2020.

Analysts’ expectations are for revenue to come in at $476.7m for the year ending in December 2021.

Plus500 confirmed annual revenue of $872.5m for last year and $354.5m for 2019.

Trading platforms received a boost from high levels of volatility in the first part of 2020, when the pandemic brought about a sell-off in the market. Companies such as Plus500 profited from the trend, particularly from the hype around ‘meme stocks‘.

Plus500 saw an increase in its number of active users from 328,409 in H1 202 to 333,940 in H1 of this year.

The London-listed firm says its expansion into futures and trading markets supported its recovery from the second half of last year. The company acquired Cunningham Commodities, a futures commission merchants, and CTS, a technology trading platform, to allow it to more easily make the transition.

“Plus500’s outstanding performance in H1 2021 was driven by the ability of our technology to capture the current market opportunities and to consistently provide high service levels to our customers,” said David Zruia, chief executive officer of Plus500.

“We are also delighted to have made significant progress in delivering on our vision to become a global multi-asset fintech group, with the acquisition of Cunningham and CTS, which brings access to the substantial futures and options on futures market in the US and the recent launch of the ‘Plus500 Invest’ share dealing platform in Europe. Both investments help us to diversify our range of products and further broaden our geographic footprint.”

“Future growth will be delivered through continued organic investments in our business, our technology and targeted bolt-on acquisitions to further expand our CFD offering, launch new trading products, introduce new financial products and deepen engagement with our customers. Having increased our expectations for the outlook for the Group, the Board is increasingly confident that Plus500 will continue to deliver further growth and consistent levels of cash generation over the medium to long term.”

Rejected Marlowe gets upgraded

Andrew Hore
-
0
Rejected Marlowe gets upgraded

Marlowe (LON: MRL) had its bid approach to Restore (LON: RST) rejected by the latter’s management, but its regular acquisition activity is continuing to pay dividends and house broker Cenkos has upgraded its forecasts for the next two years.
The fire safety and compliance services provider has been built up via acquisitions and Restore would have been by far the biggest. Restore provides document storage and IT recycling services, so it has different businesses to Marlowe, although they are all business services.
There was no immediately obvious fit between the two companies, but Marlowe did h...

MTI Wireless broadens antenna base

Andrew Hore
-
0
MTI Wireless broadens antenna base

Demand is building up for the antennas manufactured by MTI Wireless Edge (LON: MWE) and it is not just from 5G telecoms. Along with the continued strong demand for the company’s other businesses, this underpins strong growth for the next couple of years at least.  
Recent wins for space and naval uses show the strength of the technology. The naval deal with Ultra Electronics involves the design and supply of antennas worth $570,000 over a 20-month period. There should be further orders after that.
5G demand continues to grow. First half antennas revenues declined, but the profit contribut...

1...867868869...1,779Page 868 of 1,779