Indian markets fell sharply in sympathy with global sell off that originated in the US and Japan last week. In the US, the inflation ticked up while the economy shrunk setting off worries about recession. In Japan, the Bank of Japan raised interest rates for the first time in decades which may impact carry trades. When interest rates are low in Japan, investors borrow yen cheaply and invest it elsewhere for higher returns. This is called a "carry trade." But when the yen starts getting stronger, these investments become less profitable, so investors rush to sell their investments and buy back yen. This sudden movement can cause trouble in global markets. This is what we are witnessing now. Today Nikkei index of Japan crashed 12.4%. The US futures are trading 4-6% lower in pre-market trading.
On Monday, 664 stocks advanced, 3414 declined and 111 remained unchanged, with an advance decline ratio of 0.19 on the Bombay Stock Exchange (BSE), indicating negative closing of stocks in broader markets. The trend of the major indices on Monday’s trading is given in the table below.
On NSE, 245 securities advanced and closed at a new 52-week high whereas 16 securities sank to close at their new 52-week lows. In sectoral indices, all indices ended in red, Nifty Metal, Nifty Media and Nifty PSU Bank were among the biggest losers.
What makes the carry trade specially dangerous is that many large investors use margin trading to amplify their returns. In margin trading, investors borrow money from their broker to make larger investments. For example, an investor might put in $100,000 of their own money and borrow $900,000 from their broker to invest a total of $1 million. This can multiply profits when trades go well, but it also multiplies losses when they don't.
When the yen strengthens unexpectedly, these leveraged investors might face margin calls, where they need to deposit more money or sell assets quickly to cover potential losses. This can force them to sell off a lot of investments at once, potentially causing a chain reaction of falling prices across various markets. Meanwhile, anarchy rules in Bangladesh as protestors threatened to break into Bangladesh President Sheikh Hasina’s residence. She is reported to have fled the country and army has taken over.
The Cabinet Committee on Economic Affairs (CCEA) has approved the investment of Rs5,792.36 crore (Cost to Completion) for SJVN’s 669 MW Lower Arun Hydro Electric Project (LAHEP) in Nepal at a levelized tariff of Rs4.99 per unit.
GAIL (India) (-5.25%) signed joint venture agreement with Coal India for setting up Coal to Synthetic Natural Gas (SNG) plant at Eastern Coalfield (ECL), Bardhaman, West Bengal.
Orient Cement (-1.63%) reported 0.86% fall in net profit at Rs 36.71 crore for Q1FY25 as compared to Rs37.03 crore for the same quarter in the previous year. Total income of the company decreased by 15.33% at Rs702.39 crore for Q1FY25 as compared to Rs 829.60 crore for the corresponding quarter previous year.
Insolation Energy’s (-5.00%) wholly owned subsidiary -- Insolation Green Energy has entered into a Memorandum of Understanding (MoU) with Ganesh Decor India for Solar Power Project Development in KUSUM C in Rajasthan (Awarded by Jodhpur Vidyut Vitran Nigam (JDVVNL). The total project size is 22.68 MW (AC)/ 29.484 MW (DC), which will be developed by the Company. The total value for developing these projects are estimated to be around Rs118 crore, including taxes.
Jash Engineering (-4.58%) received the consolidated orders worth Rs107 crore in the month of July 2024, which is the highest monthly order booking achieved by the company till date. Of the total orders worth Rs107 crore received in July, orders worth Rs38 crore are for Indian market and orders worth Rs69 crore are for markets outside India.
Zomato (-2.31%) collected Rs83 crore in platform fee from customers till March. Platform fee has been cited as one of the three key factors driving Zomato's Adjusted Revenue, which grew 27% year-on-year to Rs 7,792 crore in FY24.
TIL (+3.16%) signed a partnership agreement with Snorkel Europe to become an official sales and service partner for Northern and Eastern India, Andaman and Nicobar Islands, Nepal and Bhutan.
Mahindra & Mahindra’s (M&M) subsidiary -- Classic Legends (CLPL) has entered into a Joint Venture Agreement with Tube Investments of India (TIIL). CLPL and TIIL (-1.09%) agreed to incorporate a Joint Venture company (JVC) with shareholding in the ratio of 50:50 for the purposes of using the BSA Marks in India for motorcycles, its parts and accessories to be manufactured and sold by CLPL, in accordance with the terms and conditions of the Joint Venture Agreement and the Master Trademark Licensing Agreement to be executed between CLPL, TIIL and the proposed JVC.
Samvardhana Motherson International’s (SAMIL) (-9.18%) 100% subsidiary -- Samvardhana Motherson Innovative Solutions (SMISL) has received approval for acquisition of 34% stake of Motherson Auto Solutions (MASL) from Sojitz Corporation subject to satisfactory completion of conditions.
Tata Steel (-5.31%) and Welspun Corp (-3.45%) developed Hydrogen compliant API X65 grade pipes which successfully surpassed all necessary critical sour service and fracture qualification tests for transportation of 100% pure gaseous Hydrogen under high pressure (100 bar) at RINA, Italy. With this development, Tata Steel becomes the first Indian steel mill to produce hot-rolled steel for the transportation of gaseous hydrogen and Welspun Corp has become the first Indian pipe mill to produce Electric Resistance Welded (ERW) pipes.
Ambuja Cements (-2.55%) planned to invest Rs1,600 crore in Bihar to set up cement grinding unit at Warisaliganj in Nawada district. The 6 MTPA Warisaliganj cement grinding unit is the company’s first venture in Bihar, which is aggressively expanding its capacity in the country.
Tata Power Company (-5.55%) received Letter of Intent (LoI) from PFC Consulting (a wholly owned subsidiary of Power Finance Corporation) to acquire Paradeep Transmission, a project special purpose vehicle (SPV). The Project SPV (Paradeep Transmission) would be developed on Build-Own-Operate Transfer basis, to provide transmission service for 35 years from the schedule date of commercial operation (SCOD) which is 24 months from the date of SPV acquisition.
Earnings:
Century Enka (+4.39%): Net Sales was Rs528 crore in Q1FY25 up 23% YoY (Rs428 crore). Net Profit was Rs24.3 crore in Q1FY25 up 77% YoY (Rs13.7 crore)
Vinyl Chemicals (-5.39%): Net Sales was Rs156 crore in Q1FY25 up 35% YoY (Rs115 crore). Net Profit was Rs4.92 crore in Q1FY25 up 41% YoY (Rs3.50 crore).
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below:
