Sensex tanks 650 pts, Nifty below 17,450; metal, IT stocks bleed

What made investors more nervous were concerns about a possible Russian attack on Ukraine with the US State Department pulling out family members of its embassy staff in Kyiv.

The Hang Seng is down 1.1% while the Shanghai Composite is up 0.1%. The Nikkei is trading on a flat note.

In US stock markets, Wall Street indices fell on Friday, with the Nasdaq posting its fourth straight day of declines after a weak forecast from Netflix sent its shares along with other streaming companies spiraling lower.

Inflation fears and concerns about the impact of higher interest rates also dampened investor sentiment.

The Dow Jones Industrial Average fell 450 points, or 1.3%, while the technology-focused Nasdaq Composite dipped 2.7% or 385 points.

Back home, Indian share markets are trading on a negative note.

The US Fed’s meeting is scheduled on Tuesday and Wednesday which will have a huge impact on the markets globally.

Meanwhile, as the Union Budget 2022-23 nears (scheduled for 1 Feb 2022), Indian share markets are likely to exert volatility as they have historically been volatile with negative bias in the fortnight preceding the presentation of the budget.

Market participants will track shares of Axis Bank, SBI Cards, HDFC AMC Indian Energy Exchange (IEX), and Zensar Technologies as these companies will announce their December quarter results today.

The BSE Sensex is trading down by 540 points. Meanwhile, the NSE Nifty is trading lower by 181 points.

IndusInd Bank is among the top gainers today. Bajaj Finance and Wipro, on the other hand, are among the top losers today.

Broader markets are faring worse compared to benchmark indices. The BSE Mid Cap index is down 1.7% while the BSE Small Cap index plunged 2.2%.

All sectoral indices are trading in red with stocks in the metal sector and IT sector witnessing most of the selling.

Shares of Adani Transmission and Cholamandalam Investment hit their 52-week highs today.

The rupee is trading at 74.42 against the US$.

Crude oil prices jumped today as geopolitical tensions in Eastern Europe and the Middle East heightened concerns about an already tight supply outlook, while OPEC and its allies continued to struggle to raise their output.

Gold prices are trading up by 0.3% at ₹48,392 per 10 grams.

Meanwhile, silver prices are trading down by 0.9% at ₹64,691 per kg.

Gold is higher today as investors await the US Federal Reserve’s meeting for confirmation on its interest rate hike path.

Meanwhile, concerns over inflation and Russia-Ukraine tensions kept bullion’s safe-haven allure intact.

Gold is seen as an inflationary hedge but is highly sensitive to rising US interest rates, which increases the opportunity cost of holding non-interest-bearing bullion.

In global markets, spot gold was flat at US$1,833.36 per ounce while US gold futures were up 0.2% to US$1,834.70.

Last week in India, gold was sold at a discount as a rise in domestic prices dulled demand and jewelers looked ahead to the annual budget.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years:

As you can see, barring just two years – 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

The recent price volatility in the bullion market has rattled many traders. Even with the recent volatility in prices, gold remains among the best performing commodities this year to combat the fallout from the coronavirus pandemic.

In latest developments from the IPO space, FabIndia is planning to raise up to ₹40 bn through an initial public offer (IPO) and in a novel approach, the company’s promoters also plan to gift more than 700,000 shares to artisans and farmers.

With this, the company is aiming to raise money from the markets at a valuation of more than ₹200 bn.

The lifestyle retail brand on Saturday, filed the draft red herring prospectus (DRHP) with market regulator for the offer that will include fresh issue of shares worth up to ₹5 bn. While the offer for sale (OFS) will be of up to 2,50,50,543 shares.

In order to reward and express gratitude to certain artisans and farmers engaged with the company or its subsidiaries, FabIndia’s two promoters – Bimla Nanda Bissell and Madhukar Khera intend to transfer 400,000 shares and 375,080 shares, respectively to them.

In the DRHP, the company has mentioned about its ESG initiatives, saying it believes that enabling and uplifting the people we work with, taking care of the environment, and being ethical in our conduct with have a long and lasting positive impact.

The six-decade-old FabIndia runs more than 300 Fabindia-branded outlets and more than 70 organic India stores nationwide. It sources products from over 2,200 farmers directly and deals with over 10,300 farmers through their associates.

Note that FabIndia is the latest among a host of retailers including Go Fashions and Biba that have either tapped the markets or targeting their IPOs later this year.

Go Fashions had raised ₹10.1 bn via its IPO and made a stellar debut on the bourses in November 2021, listing at a 90% premium to its issue price. Meanwhile, other players like Manyavar owner Vedant Fashions and Biba are also preparing for an IPO.

How FabIndia’s IPO sails through remains to be seen as it comes at a time when retailers are reeling under low sales and dwindling footfalls in stores amid a threat of third wave.

Moving on to stock specific news…

Bandhan Bank and ICICI Bank are among the top buzzing stocks today.

Private lender Bandhan Bank on Friday reported a 36% rise in its net profit at ₹8.6 bn for the quarter ending December 2021. The lender had reported net profit of ₹6.3 bn in the year-ago period.

Its net interest income (NII) for the quarter grew by 2.6% to ₹21.2 bn.

Gross non-performing assets (NPAs) as on December 2021 were at ₹94.4 bn as against ₹87.6 bn as on September 2021. Meanwhile, net NPAs as on December 2021 stood at ₹24.1 bn.

Despite technical write off of ₹12 bn during the quarter, the bank’s provision coverage ratio improved from 74.1% as on September 2021 to 74.4% as on December 2021.

Shares of Bandhan Bank are presently trading up by 3.6%.

Bandhan Bank is not the only private lender hogging the limelight today as ICICI Bank’s earnings beat estimates.

ICICI Bank reported a 25% YoY rise in standalone net profit at ₹61.9 bn on top of a 23% jump in net NII at ₹122.4 bn.

ICICI Bank’s net NPA ratio declined to 0.85% from 0.99% in the preceding quarter, the lowest since March 2014.

The bank said it is the market leader in electronic toll collections through FASTag, having a market share of 39% by value in electronic toll collections with a 42% growth in collections.

ICICI Bank share price is trading higher by 0.8%.

(This article is syndicated from Equitymaster.com)