A quick note on – Global market expectation and historical reaction from FOMC rate cut.
Markets are heading into the most divided Fed meeting since 2008 odds of a 50 bps cut had shot up couple of hours ago and are again now cooling down. Despite the polls allowing a shot higher in the 50 bps cut side of the market, history suggests why markets do not want a 50 bps cut.
– Over the past 40 years there have only been 2 instances wherein the Fed has started with a 50 bps cut and both times it did not end well for the S&P500. This benchmark ended lower by -15% and -22% over the next 12 months in these 2 instances wherein the interest rate cut cycle commenced with a 50 bps cut.
– On the other side, all rate cuts in the same period studied (40 years) which started with a 25 bps cut have positive 12 month returns after the initiation of rate cut cycle.
– Why is this so ? – Because rate cuts which commenced with a 50 bps cut came in during the time of crisis viz -a viz – 2001 – dot come bubble and 2007 – global financial crisis.
– Historically interest rate cycles which begin with a 25 bps cuts have generated an average return of 10% in the next 3 months and a 50 bps cut (hard landing) is only needed if the economy is in a crisis.
– S&P500 returns historically have been an average of ~15% from the first rate cut if there is no recession in the economy while if there is a recession then the same index loses ~15% on average in the first year.
Fed is likely to attempt a soft landing with a 25 bps cut regardless of the expectation by market participants as this could avoid a major market reversal.
The market is currently implying an S&P 500 move of +/- ~100 points after the Fed decision on Wednesday.
Yesterday, Indian indices pared intra-day gains to close lower on Wednesday. While the BSE Sensex was down 131.43 points to 82,948.23, the Nifty closed 41 points lower at 25,377.55. Here are stocks that are likely to remain in focus on Thursday, September 19, 2024:
Aditya Birla Capital:
The company notified the exchanges that it received the RBI’s ‘no objection’ certificate to merge Aditya Birla Finance into itself.
BPCL:
The oil marketing company clarified concerning a CPCB report over the failure to install a vapor recovery system.
Ion Exchange:
The company secured a Rs 161 crore order from Adani Power to install water and environment management solutions.
ICICI Bank:
The lender’s stock price closed at a record high of Rs 1,288.05 apiece on the BSE on Wednesday, reaching a market cap of Rs 9 lakh crore.
IREDA:
The company received the Centre’s nod for fundraising of up to Rs 4,500 crore via equity issuance to qualified institutional buyers.
Nazara Tech:
The company raised Rs 900 crore for a strategic investment in absolute sports.
Power Grid:
The company emerged as the successful bidder to establish an inter-state transmission system comprising the establishment of a 765/400/220kV substation in Kurawar, Madhya Pradesh.
REC:
The power financier has signed agreements worth Rs 1.12 lakh crore with renewable energy firms to finance a pipeline of green energy projects.
NTPC :
Subsidiary NTPC Green Energy has filed draft papers with the capital markets regulator to raise Rs 10,000 crore via an IPO.
GE T&D India :
Promoters Grid Equipments & GE Grid Alliance BV will be selling up to 11.7% equity stake in the company via an offer-for-sale (OFS), with an option to additionally sell up to a 3.9% stake as part of an oversubscription option. The floor price has been fixed at Rs 1,400 per share. The OFS will open for non-retail investors on September 19 and for retail investors on September 20.
GMR Power and Urban Infra :
The board has re-appointed Srinivas Bommidala as Managing Director and Subbarao Gunuputi as Executive Director, effective January 31, 2025. Additionally, the board has re-appointed Madhva Bhimacharya Terdal as Executive Director, effective August 8, 2024.
SBI:
The country’s largest bank said it had raised Rs 7,500 crore via the issuance of its second tranche of tier-II bonds.
SpiceJet:
The budget carrier’s Rs 3,000 crore share sale garnered a positive response from qualified institutional buyers.
Zomato:
The good delivery aggregator notified the exchanges that it has received a GST demand order including interest and penalty worth Rs 17.7 crore from the West Bengal Assistant Commissioner of Revenue.
Macrotech Developers: The Company is set to boost its stake in three digital infrastructure entities with a Rs 239.56 crore acquisition of Ivanhoe Warehousing’s interest, aligning with its growth strategy.
Reliance Power :
The board will meet on September 23 to consider the raising of long-term resources from domestic and/or global markets via the issue of equity shares and/or foreign currency convertible bonds.
Aditya Birla Capital :
The company has received a ‘no objection’ letter from the Reserve Bank of India (RBI) for the merger of Aditya Birla Finance with itself.
Pudumjee Paper Products :
The company has awarded a contract for a 15.4 MW solar power project to Prozeal Green Energy.
BL Kashyap and Sons :
The company has received a new order worth Rs 221 crore from SSS Realty. This brings the total order book to Rs 3,546 crore as of the current date.
Allcargo Logistics :
NTPC
Subsidiary NTPC Green Energy has filed draft papers with the capital markets regulator to raise Rs 10,000 crore via an IPO.
GE T&D India
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Promoters Grid Equipments & GE Grid Alliance BV will be selling up to 11.7% equity stake in the company via an offer-for-sale (OFS), with an option to additionally sell up to a 3.9% stake as part of an oversubscription option. The floor price has been fixed at Rs 1,400 per share. The OFS will open for non-retail investors on September 19 and for retail investors on September 20.
Indian Renewable Energy Development Agency (IREDA)
The Government of India has approved the dilution of up to 7% shareholding in IREDA through the Qualified Institutions Placement (QIP) route, in one or more tranches.
Microtech Developers (Lodha)
The company has executed Securities Purchase Agreements (SPAs) with Ivanhoe Warehousing India Inc for the acquisition of its shareholding in the Digital Infrastructure Platform entities—Bellissimo Digital Infrastructure Development Management, Palava Induslogic 4, and Bellissimo In City FC Mumbai 1—for Rs 239.56 crore. Post-acquisition, the company’s stake in these entities would increase to 70%, 66.67%, and 66.67%, respectively.
GMR Power and Urban Infra
The board has re-appointed Srinivas Bommidala as Managing Director and Subbarao Gunuputi as Executive Director, effective January 31, 2025. Additionally, the board has re-appointed Madhva Bhimacharya Terdal as Executive Director, effective August 8, 2024.
Ion Exchange (India)
The company has secured contracts worth Rs 161.19 crore from Adani Power to provide comprehensive total water and environmental management solutions for the process and utility needs of 2 x 800 MW units at the Raipur & Raigarh Ultra Super Power Projects. The projects are expected to be completed within 18 months from the award date.
Nazara Technologies
The gaming and sports media company announced its largest fundraise to boost its growth trajectory. The board has approved a preferential equity issue to raise Rs 900 crore. Additionally, Nazara has acquired an additional 19.35% stake in Absolute Sports, the parent company of Sportskeeda, for Rs 145.5 crore, with 50% of the consideration paid in cash and the remaining amount in stock. With this acquisition, Nazara now holds a 91% ownership stake in Absolute Sports.
Reliance Power
The board will meet on September 23 to consider the raising of long-term resources from domestic and/or global markets via the issue of equity shares and/or foreign currency convertible bonds.
Aditya Birla Capital
The company has received a ‘no objection’ letter from the Reserve Bank of India (RBI) for the merger of Aditya Birla Finance with itself.
Power Grid Corporation of India
Power Grid has been declared the successful bidder to establish an inter-state transmission system for projects in Madhya Pradesh. The company has received a Letter of Intent for the project, which includes establishing a new 765/400/220 kV substation at Kurawar, along with 765 kV & 400 kV D/C transmission lines and associated bays extension works at other existing substations in Madhya Pradesh.
Pudumjee Paper Products
The company has awarded a contract for a 15.4 MW solar power project to Prozeal Green Energy.
BL Kashyap and Sons
The company has received a new order worth Rs 221 crore from SSS Realty. This brings the total order book to Rs 3,546 crore as of the current date.
Allcargo Logistics :
LCL volume for August increased by 5% compared to last year and declined 1% compared to last month. FCL volume stood at 56,000 TEUs, registering its highest-ever monthly volume, with a growth of 10% year-over-year and 4% compared to the previous month.
Dish TV India :
The board has appointed Amit Kumar Verma as Chief Financial Officer (CFO) of the company, effective October 1, after the superannuation of Rajeev Kumar Dalmia.
Nippon Life India Asset Management :
The board has appointed Parag Joglekar as Chief Financial Officer (CFO) of the company, effective September 19.
Trident :
Trident Global BV, Netherlands, the wholly-owned step-down subsidiary, has applied for voluntary dissolution, effective September 17. Trident Global BV was inoperative, and this dissolution will not affect the performance or revenue of Trident.
Aavas Financiers :
The board has approved the issuance of up to 63,000 non-convertible debentures (NCDs) with a face value of Rs 1,00,000 each, amounting to Rs 630 crore, on a private placement basis.
Garden Reach Shipbuilders & Engineers :
The company has received a contract from Carsten Rehder Schiffsmakler and Reederei GmbH & Co, KG Germany, to deliver an additional four multi-purpose vessels. The order is valued at an additional $54 million, bringing the total value for eight vessels to $108 million.
Ugro Capital :
The board will consider raising funds via the issuance of non-convertible debentures through a public issue on September 23.
Bulk Deals
Restaurant Brand Asia :
Mirae Asset Mutual Fund has bought a 2.16% stake in the company at an average price of Rs 105 per share from promoter QSR Asia Pte Limited.
Nureca :
Copthall Mauritius Investment has bought a 0.64% stake in the company at an average price of Rs 384.08 per share.
