Markets Take A Big Tumble

The combined entity is expected to provide diverse strategic options and flexibility arising from cost efficiencies and synergies. By market capitalisation, India’s industrial growth, as per the Index of Industrial Production (IIP), edged up to 1.9 per cent in March from 1.5 per cent in February

Bears dominated the Indian equity markets over the recent fortnight. Headline equity indices Nifty 50 and Sensex plummeted by more than 7 per cent each. Weak global cues, incessant geo-political crisis, mixed earnings season, discouraging economic data and a fear of stagflation among market participants are the key factors that drove the downfall in equity markets. BSE Mid-Cap and Small-Cap indices tanked ~10 per cent bearing the brunt of heavy FII selling. All sector indices have closed in the red territory. BSE Metal and Realty indices are among the Top Losers of the pack, plunging 17.76 per cent and 13.50 per cent, respectively.

As per data released by the National Statistical Office, retail inflation faced by Indian consumers soared to a near eight-year high of 7.8 per cent in April from 6.95 per cent in March, with rural inflation accelerating to 8.4 per cent and urban parts of the country experiencing 7.1 per cent inflation. The previous high in the Consumer Price Index (CPI)- based retail inflation was recorded at 8.33 per cent in May 2014. Consumer Food Index (CFI) reached a multi- month high of 8.38 per cent in April from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.

Higher vegetable and cooking oil prices globally were among the key drivers for the CFI to get into an upward spiral. This is the fourth month in a row that retail inflation has stayed above the 6 per cent mark, which is the outer limit for inflation tolerance under the monetary policy framework. According to data released by the Ministry of Statistics and Programme Implementation, India’s industrial growth, as per the Index of Industrial Production (IIP), edged up to 1.9 per cent in March from 1.5 per cent in February. During 2021-22, the IIP grew 11.3 per cent against an 8.4 per cent contraction in 2020-21.

Billionaire Gautam Adani outbid Ultratech Cement and JSW Group, winning the race to acquire Swiss cement major Holcim’s stake in Ambuja Cements as well as its subsidiary ACC for USD 10.5 billion (i.e. ~₹ 81,361 crore), including the open offers. This is the largest-ever acquisition by the Adani Group and also happens to be India’s largest ever merger and acquisition transaction in the infrastructure and materials sector. During the fortnight, the boards of directors of Larsen and Toubro Infotech (LTI) and Mindtree approved a composite scheme of amalgamation of both these independently listed IT services’ companies under the Larsen and Toubro Group. The combined entity will be known as LTIMindtree. Prior to the merger, Larsen and Toubro owned 61 per cent of Mindtree and 74 per cent of LTI. Upon the merger coming into effect, all shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree.the merged entity will become the fifth-largest IT services’ provider in the country.

Morgan Stanley has lowered its forecasts for India’s economic growth over the next two fiscal years, stating that a global slowdown, surging oil prices and weak domestic demand would take a toll on the country. The multinational investment management firm expects gross domestic product (GDP) growth will be 7.6 per cent for FY23 and 6.7 per cent for FY24, 30 basis points lower than the previous estimates. The cut in forecast for growth indicates a pronounced economic impact from the Russia-Ukraine conflict that has led to a rally in crude prices, further thrusting retail inflation in India. Trading data shows that FIIs were net sellers over the fortnight to the tune of ₹ 32,701.03 crore while DIIs were net buyers to the tune of ₹ 26,735.36 crore.