Yesterday’s Market Performance

Nifty: 16529.10 I 164.70 (1.01%)
FII Buy Net: 819.77 CR
DAX: 15,977.44 I 39.93 (0.25%)

Sensex: 55437.29 I 593.31 (1.08%)
DII Sell Net: 149.50 CR
FTSE: 7,218.71 I 25.48 (0.35%)

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Howdy Toasters!

In today’s issue, we discuss;

• Retail Inflation cooled to 5.59% in July’21, IIP growth moderated to 13.6% in June. hah!!
• Westlife Development (WLDL IN) dropped its earnings, indicated a full recovery in July 21.
• Top movers and shakers of the market, other important financial news, and an educative concept to help you keep learning. Read along!

Wockhardt: 512.10 | 23.10 (4.72%)

• The share price jumped over 4% after the pharma company entered into an agreement with Dubai-based Enso Healthcare and Human Vaccine LLC for manufacturing and supplying Sputnik vaccine against COVID

Eicher Motors: 2,546.80 | -69.75 (-2.67%)

• The company share price slumped nearly 3 percent a day after it reported a consolidated profit after tax of Rs 237 crore for the quarter ended June

Note: Above are not owned by the authors of the newsletter and are neither recommendations to buy the stocks; not our style at FinLearn

Inflation (not again :P) reverting within a tolerance band (what you saying) 😕

• After two consecutive months of +6% prints, CPI (consumer price index) Inflation eased to 5.59% in July’21 and in the process reverted to the RBI MPC tolerance band of sub-6%

• Core Inflation (ex Food, fuel & intoxicants (haha, what?)) also eased to 5.86% (from 6.2% prior), albeit accompanied by higher sequential increases compared to June’21

• Separately, IIP growth moderated to 13.6% on June 21, but sequentially, activity inched upwards across sectors, helped by further easing in lockdowns;

• Current IIP activity however still trails June 19 levels (no pandemic effects), although high-frequency indicators (we want to know more as well) suggest improving growth momentum ahead, led by manufacturing

Nice! Can I get some more information please? (for sure bro, what are we here for?) 🤔

CPI & Core Inflation- 

• Sequential momentum has further ebbed for food overall (think: vegetables, meat & fish, milk, eggs & fruits all moderating, in varying proportions)
• Nonperishable items (think: cooking oil, cereals, and pulses) all moderated for the second month in a row, from their massive (?) sequential jump on May 21
• Energy inflation was largely flat (still around the INR 108 range though) due to stable international prices
• In the nonfood segment, personal care & effects and education led to a sequential jump in prices (education? weird) driving that number up

IIP – 

• On a 2 Yr CAGR basis, Industrial Activity is still down by 2.6%, although there are off-shoots to be enthused about (or that’s what the commentary suggests at least)
• Manufacturing is up 13% YoY, led by motor vehicles, textile products, electronics, and electrical equipment (you doesn’t say much, but it’s a start?)
• Among used based items, capital goods & infra and construction were upon you basis as well

Okay? That’s a lot of data, mate. What should I make from all this? 🤔

• CPI Inflation, even after easing to sub-6% levels, will likely be impacted in the near term from input price pressures (commodities inflation & margin pressures) + increased demand due to reopening of contact-sensitive sectors will drive core inflation ahead

• YET, these numbers still point to a sub-6% Core Inflation level, within the RBI’s tolerance band, and should ideally be interpreted positively for the markets (make your own judgment though, right?)

• The RBI is likely to take these numbers as an indication of inflation to be transitory in nature, and once again reiterating that the MPC reaction currently hinges more on growth revival becoming sustainable and long term

• I.e- the likelihood of rate hikes during the current fiscal decreases, maintaining status quo and present liquidity scenario (nice)

WestLife Development (Master Franchise for Mcdonald’s India*) delivers full revenue recovery in July 21 🙄

*West & South India

What else caught our eye? 👀

Airtel & Jio conclude a spectrum trading agreement (wait, what?) 

• Airtel has concluded a deal to sell 800 Mhz airwaves (in AP, Delhi & Mumbai circles) to Reliance Jio, marking the closure of a first of its kind deal between the heavyweights
• Received upon buying TATA Group’s consumer mobility business, Airtel was not utilising 800 Mhz to provide 2G services (which requires less than 5 units of airwaves) and therefore decided to trade them (transferring a liability of INR 469 crores as well)
• In the sub-Ghz category, Jio’s network has been built around the 800 Mhz band, most of which was used through a spectrum sharing agreement with Reliance Communications, and later bought through auctions.

TATA Group plans to raise USD 1 Bn for EV Unit 

• TATA Motors is in talks with bulge bracket buyout funds (think the likes who can single handedly write a cheque of USD 1 Bn) to raise growth capital for it’s new electric vehicles unit, valuing the entity at USD 7 Billion
• The company received shareholder approval to segregate its EV business into a different entity in March’21, and is in the process of transferring that business into a step-down subsidiary
• TATA Motors is the largest 4W EV player in the country (Nexon SUV, Tigor EV Sedan, Altroz HatchBack), with plans to launch 10 vehicles by 2025 (nice)

Air Travel gets costlier by 13% on the back of government orders

• Domestic air travel fares, which were initially capped in a lower & upper range by the Civil Aviation Authority, have been raised (on both ends) with the order stating that changes were conducted ‘keeping in mind the Covid-19 situation in the country’ (make it make sense please)
• The caps mentioned in the government order do not include passenger security fee, user development fee for the airports and GST, which are added on top, as the passenger books the ticket

Growth Investor