>> Offshore India derivatives face US hedge fund blowup heat
>> Greedy HNIs burn fingers trying to make a quick buck in Wabco India OFS
>> Rupee bear says domestic unit may be heading to 76.5 level against dollar
>> BPCL buyer may have to make open offer for IGL, Petronet LNG
Hi there. Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh.
Let’s start with a quick glance on the state of the markets.
The trade setup on Dalal Street looked weak this morning, as Nifty futures trading on Singapore Exchange were flat. Stocks in other Asian market started steady, as investors awaited more details on the next leg of US stimulus spending and monitored the upward pressure on bond yields. Wall Street ended slightly lower overnight, as investors sold tech-related growth shares after US Treasury yields hit a 14-month high. In currencies, the rupee weakened about 1% on Tuesday against the dollar, its second-steepest decline in FY21, as global strength in the greenback and the surging year-end demand for dollars, needed to meet payments for imports, weighed on the domestic unit. Gold also dipped. Crude oil traded steady before the meeting of OPEC and its allies on April 1.
That said, here’s what else is making news.
A key technical indicator is pointing to a bullish outlook for mid-cap stocks. The Nifty Midcap 100 index formed the Golden Crossover pattern for the first time in last seven years, a situation that has opened up the possibility for sharp gains for these stocks in the coming months. The Golden Cross appears on a chart when a security’s short-term moving average crosses above its long-term moving average. Historically since the advent of Nifty Midcap 100 in January 2001, the index has seen a Golden Crossover on weekly charts only on two instances.
Ultra-rich investors badly burnt their fingers in Wabco India’s offer for sale. Seeking to make a quick buck, some HNIs had sold the shares last Thursday when the stock rallied almost 5% following the OFS announcement. Some had short-sold a few lakh shares between 5,700 and 5,900 rupees apiece, assuming that they can buy them through OFS at Rs 5,500-5,600 a share, as the floor price for it had been fixed at Rs 5,450 a share. But they did not get any allotment on Tuesday as a large bid came in at over Rs 6,000 a share at the last minute and the OFS price got fixed at Rs 5,662.
The Indian market is now facing the heat of a US hedge fund blowup. Holders of offshore derivative instruments that used to bet on Indian stocks are under pressure due to losses incurred by global investment banks in the Archegos Capital blowup. The banks are asking hedge funds with exposure to local markets through these derivatives to bolster margins for positions. This means the hedge funds will now need to provide additional security in the form of cash or collateral to these brokers, failing which they can liquidate client positions.
The rupee, Asia’s best-performing currency in March, is going to slide right back to levels last seen in the depths of the pandemic meltdown, according to Parul Mittal Sinha at Standard Chartered. The currency will drop toward 76.5 to a dollar — about 4% weaker than current levels — by the end of the year, said the head of macro trading, India and South Asia financial markets. That is the most bearish forecast seen among analysts surveyed by Bloomberg, and runs counter to expectations for it to stay strong.
The acquirer of the government’s majority stake in BPCL may have to launch two open offers apart from the one it will have to compulsorily make to shareholders of the company. BPCL is one of the promoters of joint ventures Petronet LNG and Indraprastha Gas with 12.5% and 22.5% stakes, respectively. The entity that takes over BPCL as part of the privatisation plan will get indirect control of IGL and PLL, which could trigger a mandatory open offer to the public, as there will be a change in promoter ownership.
NOW Before I go, here is a look at some of the stocks buzzing this morning…
HPCL has bought out the 50% stake of SP Ports, a Shapoorji Pallonji Group company, in a joint venture building a gas import terminal in Gujarat, for Rs 397 crore.
Punjab & Sind Bank said on Tuesday that it has classified its loan exposure of Rs 150 crore to IL&FS Transportation Network (ITNL) as fraud.
Shapoorji Pallonji & Company is understood to be negotiating with a group of foreign banks including Barclays and Deutsche Bank to raise rupee loans of Rs 500-1,000 crore each
L&T said on Tuesday that its construction arm has bagged orders which are collectively in the range of Rs 1,000-2,500 crore.
UltraTech Cement on Tuesday said it has prepaid its long-term loans of Rs 5,000 crore.
Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.
That’s it for now. Stay put with us for all the market news through the day. Happy investing!