Sensex recovers after falling 500 pts, Nifty under 17,000; RBL Bank tanks


The Hang Seng and the Shanghai Composite are trading 0.1% and 0.2% respectively. The Nikkei is trading 0.3%.

The US stock exchanges were closed on Friday for Christmas.

Wall Street indices closed higher in a shortened holiday week on Thursday as investors digested economic data and developments related to the Omicron variant spread.

The Dow Jones Industrial Average gained 197 points, or 0.6%, while the S&P 500 gained 29 points, or 0.6% and the Nasdaq Composite added 132 points, or 0.9%.

Back home, Indian stock markets opened deep in the red today. Markets have recovered some losses but are still trading in negative territory.

The sentiment has been cooled as several states such as Delhi, Karnataka, Maharashtra apply new restrictions due to the increase in Covid-19 cases.

Meanwhile, HP Adhesives, the adhesives and sealants company, made a decent debut on Dalal Street today. The company raised ??1.25 billion via its primary offering between December 15 and 17, the company having sold its share in the range of ??262-274 each.

The ESB Sensex trades 206 points. Meanwhile, the NSE Nifty is trading down 63 points.

Power Grid is among the top winners today. IndusInd Bank and Asian Paints, on the other hand, are among the biggest losers today.

The BSE Mid Cap index is down 0.4%. The BSE Small Cap Index trades on a flat note.

Sector indices trade in a mix with stocks from the real estate sector, metals sector and banking sector which record most of the sales.

Financial stocks are the center of attention today after the RBI accepted an internal task force recommendation to allow non-promoters to own up to 15% in private sector banks.

Shares of La Opala RG and KPIT Technologies hit their highest level in 52 weeks today.

The rupee is trading at 75.08 against the US dollar.

Gold prices are trading up 0.2% at ??48 203 for 10 grams.

In global markets, gold edged up today, remaining above the key US $ 1,800 per ounce level as slightly lower US Treasury yields offset a slight rise in the dollar.

Crude oil prices are mixed today, with Brent edging higher as U.S. crude futures slipped after airlines canceled thousands of flights to the United States over the Christmas holidays in the middle of the surge in Covid-19 infections.

In the news of the banking sector, RBL Bank is one of the most popular stocks today.

Private lender RBL Bank held a press conference at 4:00 p.m. on Sunday, December 26, a day after two important developments took place at the bank.

The bank announced that the Reserve Bank of India (RBI) has appointed Yogesh Dayal, managing director in charge of the communications department, as an additional director on the board of directors of RBL Bank.

At the same time, the bank also said that its board of directors approved the request of its managing director and CEO Vishwavir Ahuja to take leave with immediate effect.

Vishwavir Ahuja joined RBL Bank in 2010. Previously, he was Managing Director and CEO of Bank of America, India from 2001 to 2009.

At the press conference, RBL Bank said its business fundamentals were intact and could improve significantly, a day after the resignation of its top executive.

In recent months, reports have emerged that some bank employees have sought support from the Ministry of Finance to oversee operations, as they believe regulatory frameworks are being ignored by the bank’s senior management.

Rajeev Ahuja, acting managing director of the company, said the MFI sector is likely to always face challenges, so the bank will need to be careful and diversify.

Here is an exerpt :

Don’t expect the MFI book to impact our numbers in the future. We are cautiously increasing our portfolio of in-pocket MFIs and other banking engines will take over until the MFI picks up. I don’t see the need to raise capital in the next 8 to 12 months.

Note that an industry union – the All India Bank Employees Association (AIBEA) has written to Finance Minister Nirmala Sitharaman asking the government to protect the interests of depositors of RBL Bank and to consider merging it with a public bank.

The action for RBL Bank is important in light of the problems faced by private lenders like Yes Bank and Lakshmi Vilas Bank last year.

RBL’s total advances have doubled in recent years. From about ??290 billion in 2017, progress has crossed ??580 billion now, AIBEA said.

There are also reports that RBL Bank has become too involved in retail credit, micro-finance and credit cards and as a result burned its finger, which has weakened the financial situation, added the AIBEA.

RBL Bank shares are currently trading down 20%.

Turning to engineering sector news, Kabra Extrusion’s board met on Saturday to discuss debt and equity fundraising for the expansion of its future Battrixx technology brand.

Battrixx, part of Kabra Extrusion, provides advanced lithium-ion batteries with smart battery management systems to fuel the growth of India’s transition to green energy storage and electric mobility.

The developers and other investors have shown confidence to inject more capital into Battrixx, which will be used to continue the brand’s growth in the electric mobility sector.

A total ??1.1 billion will be raised initially through the issuance of warrants to promoters and foreign investors. According to reports, these funds will allow Battrixx to increase its annual production capacity in phases from 100,000 existing battery packs to 700,000 by the end of fiscal 2024 to meet growing demand in the industry. electric vehicle (EV) industry and other energy storage applications.

The board of directors of the company has also approved the raising of the necessary additional working capital up to a maximum of ??2 billion financial institutions.

Anand Kabra, Vice President and General Manager of Kabra Extrusion, said:

We are optimistic about the company, especially what we are doing in the electric vehicle (EV) business. We have clear goals and will use the funds to build capacity, modernize machinery, and continue research and development. We are eager to be part of the electric vehicle revolution.

Note that the size of the lithium-ion battery market in India is expected to grow from 2.9 GWh in 2018 to 800 GWh by 2030. In India, the central government has approved phase II of its FAME program with an expenditure of ??100 billion over three years from April 1, 2019, with 86% of the budget allocated to incentives to create an EV demand.

We will keep you posted on the latest developments in this space. Stay tuned.

The Kabra Extrusion share price is trading at 7.9%.

Speaking of electric vehicles, take a look at the graph below which shows the huge opportunity of two-wheeled electric vehicles. Here’s what Richa Agarwal, chief small-cap analyst at Equitymaster, wrote about it in a recent edition of Profit Hunter:

Over the past five years, sales of two-wheelers in India have been around 2 crore per year. Today the industry is cyclical and has been in recession for some time. So let’s consider moderate growth of 5% for the next 10 years.

By 2030, we envision sales of 2-wheel units of 3 crore. Even though a third of that is electric vehicle sales, that’s 1 crore of 2 electric wheels per year.

In the past 2 years, the average sales of 2 electric wheels were 1.5 lakh. From 1.5 lakh to 1 crore, it’s a 66x opportunity in 2-wheel electric vehicles.

View full picture

Electric two-wheeler volumes.

This is an annual growth rate of 52% over the next 10 years. It’s an almost vertical growth opportunity.

According to Richa, it’s like a gold rush. But like in any gold rush, the winners will be only a few.

(This article is syndicated from Equitymaster.com)

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