SUNDAY WEEKLY ISSUE #19 Hello EveryFinions,
This week, the finance minister tabled the budget for the year coming up. There were clear winners and losers from the policy measures that were announced. Hospitals, real estate, metal makers, PSU banks and textiles were the big winners while exporters, the bond market, farmers/rural India and IT companies had not much to take home. You are probably overwhelmed by the amount of news that came this out this week on this front. So, we won’t go much into it in our edition today.
However, the budget together with the economic survey that was released last week should drive some of our short-term tactical investment decisions. From a long-term perspective, the secular growth story that India is, will carry on – No matter the budget.
IN TODAY'S NEWSLETTER
MARKET UPDATE (WEEK ON WEEK CHANGE) SENSEX 50,731 8.7% NIFTY500 12,280 8.7% Brent Crude 59.34 7.0% Gold (per gram) 4,723 -4.3% NEWS IN BRIEF
IN LESS THAN A FEW HUNDRED WORDS Quarterly Results Update - Q3 FY21 We have had results from 400+ companies from our watchlist of 900+. Here is a preview of what these numbers look like at a high level.
OVERALL RESULTS ![]() Overall, sales and profits growth are generally positive. While y-o-y sales growth has been between -20% and +30%, y-o-y profit growth has been between -10% and 50% for most companies. This faster growth in profit compared to sales is primarily attributed to the aggressive cost cutting that most companies undertook earlier last year.
AUTO & AUTO ANCILLARIES ![]() Auto and Auto ancillaries have clocked record sales and profit growth this quarter. Profits grew by 85% for ESCORTS, 88% for TVS motors and 95% for SWARAJ Engines on a year on year basis.
BANKING AND FINANCIAL SERVICES ![]() Banking and financial services companies are a bit all over the place. Bajaj finance recorded a staggering 30% drop in profits on a year on year basis. While the company’s gross NPA was around 0.5%, it said that if the moratorium relief was not included its NPA figure would have been around 2.9%. 2-wheeler and 3-wheeler loans were showing the most sign of asset quality weakening with over 6% in Stage 3 NPAs (customers with more than 2 instalments pending). SBI life insurance also recorded similar profit drop of -40% year on year.
Cement companies continued their phenomenal winning spree. Average y-o-y profits growth excluding the outliers was a cool 265%! The commentary from India Cements shows a continuation in the trend of improving price realisation per tonne. Ultratech, JK Lakshmi and Shree cement were some of the top winners.
FMCG ![]() Sales and profits growth moderated for the FMCG businesses in Q3 on a quarter on quarter basis. Sales and profits grew by about 20% y-o-y for HUL (this is in spite of the fact that current quarter results reflect the merger between HUL and GSK Consumer Healthcare) while profits declined by 2% sequentially.
We are keeping an eye out as more results come in. You’ll hear more from us next week! QUIZ It was decided in the RBI’s monetary policy committee meeting which concluded this week to hold the REPO rate stead at 4%. What does this REPO rate actually stand for? COVER STORY Perceptions & Expectations ![]() This week, the RBI released its perception & expectation survey results for the month of January 2021. The perception & expectation survey is just that. A survey with a sample population of people to get their perception of the current economic/financial condition and their expectation for the future. The results are quite contrary to what the results would have been had the same survey been run with a sample population of stock market participants.
People’s perception of the current general economic situation in Jan-21 is much worse than the year ago period and has only slightly improved compared to May-20. ![]() Read more to find out what people said about income, employment & spending levels. IN CASE YOU MISSED IT... The worst investment you'll ever make ![]() We have written in length about making good investments – in equity markets, in bond markets, mutual funds and in our own selves too. But every one of us at several stages in our lives make some terrible investments too – bad career choices, bad relationships, bad financial investments and so on. Amongst them, there is especially one that we will all end up making and that is buying a car! Read more to find out why. ANSWER TO QUIZ REPURCHASE OBLIGATION That’s what REPO stands for. It is the interest rate at which the RBI lends money to commercial banks. But why is it called a repurchase obligation? Simple. When a bank needs funds, it takes one of the government bonds it holds to the RBI asking for a loan with the bond as a collateral. The central bank lends money under one condition – it is that when the bank has the funds it needs, it will be obligated to come back to the RBI and ‘repurchase’ this government security by returning the money. That’s why! THOUGHT FOR THE DAY So, we wait! ![]() READ/WATCH/LISTEN
From the writer in me, to the reader in you ♥
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