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Stock Mantra: This largecap underperformer from pharma pack is set to challenge its 52-week high in 2 months

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Sun Pharma has been in a long-term uptrend. The stock, unlike its peers, is moving steadily and giving periodic dips. This price action has led to the formation of a higher top, higher bottom structure, says Siddharth Bhamre of InCred Capital. Buy it in the Rs 685-695 range, for a target of Rs 810, he recommends.


Sun Pharmaceutical Industries Ltd, with a market capitalisation of more than Rs 1.6 lakh crore, rose by about 38 percent in the last one year, compared to the 48 percent rally seen in the Nifty50, and 40 percent gain in the Nifty Pharma index in the same period.

In line with the benchmark indices, the Nifty Pharma also touched record highs on Friday, at 14,715, but Sun Pharma has been consolidating in a narrow range after hitting a high of Rs 721.90 on May 11, 2021.

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Since then, the stock has been moving in a 100-point range. The recent price action pushed the stock above the crucial resistance zone of Rs 665-670, which opens the door for the stock to challenge its 52-week high of Rs 721.

Experts feel that a breakout from the resistance levels, with high volumes, gives comfort to the bulls, and the next target is placed at Rs 810, which translates into an upside of over 17 percent from the July 16 price of Rs 688 on the BSE.

Sun Pharma 18 July-

Sun Pharma is India’s top drugmaker and the world’s fourth-largest specialty generic pharmaceutical company. The company develops, manufactures, and markets branded and generic formulations and active pharmaceutical ingredients (APIs) in India and the rest of the world.

“Sun Pharma has been in a long-term uptrend. The stock, unlike its peers, is moving steadily and giving periodic dips. This price action has led to the formation of a higher top, higher bottom structure, which is visible in weekly charts shown below,” Siddarth Bhamre, Director, Alternate Investments & Research, InCred Capital, said.

“This positive price structure is ensuring that the stock moves decisively above its previous resistance zone of Rs 665-670 in September 2018. From a short-term perspective, the stock is moving above its resistance of Rs 685-690, with volumes higher than the previous day in the first two hours of the trade,” he said.

Bhamre further added that long formations were observed at the beginning of the last week, which ensured a bounce from its support range of Rs 660-665. All the above factors suggest the stock may continue its upward trend.

The stock can be bought in the range of Rs 685-695, for a target of Rs 810, and a stop-loss can be placed below Rs 652. The time horizon is two months, recommends Bhamre.

Article Source:- Moneycontrol


CII calls for creation of a 'pandemic pool' to manage risks on long-term basis

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CII said that although on an aggregate, insurance companies have been able to withstand losses caused by the COVID-19 pandemic, the total capital available with them is less than the capital required to absorb those losses.


Industry body Confederation of Indian Industry (CII) has urged for a creation of a pandemic pool as the devastating impact of the COVID-19 crisis has made financial, administrative, and social systems fragile and vulnerable.

CII said that a majority of the pandemic-related risks have been covered by insurance companies in the form of life and health claims.

However, the interruptions and halt in the economic machinery could not be covered by insurance companies in most countries as the loss due to the peril of state-imposed lockdown has not been an explicit inclusive clause in the standard insurance contracts, CII said. 

It further noted that although on an aggregate, insurance companies have been able to withstand losses caused by the pandemic, the total capital available with them is less than the capital required to absorb those losses.

"CII, therefore, urges all stakeholders to recognize the significance of having a dynamic pandemic pool which is governed by the availability of capital and modeled for greater capacity, to ensure the long-term viability of the risk management solution which is critical for a high impact-low frequency risk like a pandemic," it said.

Chandrajit Banerjee, Director General, CII, said: “The Government of India along with financial regulators including Insurance Regulatory and Development Authority of India (IRDAI) have been working relentlessly on supporting the lives and livelihood by announcing various reform measures, products (corona kavach) and packages during the pandemic."

CII said that some initial financial support from the government would be required, which could gradually be reduced to near-zero levels as the pool becomes self-sufficient with accumulated surpluses over a period of 12-15 years.

"This is the opportune time for India to have the first-mover advantage in the creation of the pandemic pool with a two-pronged strategy of going beyond the insurers and government by inviting international reinsurers to supplement capital contribution for the pool and to incentivize state governments to participate with additional supplementary capital for greater protection to their denizens," he added.

Suggesting three points in order to raise capital for the pandemic pool, CII said that Pandemic Bonds in the form of risk-linked securities could be considered to raise at least 5 percent capacity or pool limit. It also said that insurance companies can issue bonds through special-purpose vehicles another suggestion is to have a larger private partnership and to tap capital beyond the insurance and reinsurance industry by including contribution or premium paid to the pool as eligible CSR expenditure, CII noted. 

Lastly, it also suggested a GST waiver on the premium collection of the pool, similar to other government-backed schemes in order to encourage enhanced contribution from individuals and businesses to be covered under it.

Article Source:- Moneycontrol

Stocks slide, bond yields dip as inflation worries linger

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Equity markets declined as investors turned risk-averse, with defensive stocks gaining both on Wall Street and in Europe.

The slide on Wall Street is surprising given earnings from the companies that have reported second-quarter results so far have surpassed estimates by 22.1%, Credit Suisse said in a note. (Image: Shutterstock)

The slide on Wall Street is surprising given earnings from the companies that have reported second-quarter results so far have surpassed estimates by 22.1%, Credit Suisse said in a note. (Image: Shutterstock)

Global stock markets ended lower on Friday as investors grappled with fears of rising inflation and a surge in coronavirus cases while the dollar edged higher after upbeat U.S. retail sales data reaffirmed an economy in strong recovery mode.

The Commerce Department said retail sales rose 0.6% in June, contrary to an expected decline, adding weight to those who say inflation will run faster than the Federal Reserve forecasts and force interest rates to rise sooner than it projects.

Yet bond yields pared most initial gains, with the benchmark 10-year U.S. Treasury note trading at 1.2987%, or a scant 0.2 basis points higher on the day. The Fed's dovish outlook outweighed fears of a prolonged inflation spike.

Equity markets declined as investors turned risk-averse, with defensive stocks gaining both on Wall Street and in Europe.

MSCI's all-country world index, a gauge of global shares, closed down 0.62% at 719.17. The index scaled a record peak earlier in the week but lost 0.61% by the week's end.

In Europe, the FTSEurofirst 300 index fell 0.38% to 1,754.64. European defensive shares rose, with real estate, utilities, and healthcare up between 0.5% and 1% as worries about the coronavirus mounted.

England's coronavirus crisis could return again surprisingly quickly, the British government's chief medical adviser said, before lifting all pandemic-led restrictions on Monday despite rising COVID-19 cases.

In California, Los Angeles county will reimpose a mask mandate this weekend, the latest sign of public health officials struggling with rising cases of the Delta variant.

The slide on Wall Street is surprising given earnings from the companies that have reported second-quarter results so far have surpassed estimates by 22.1%, Credit Suisse said in a note.

Removing year-ago comparisons show earnings are up decently from levels two years earlier and inflation is likely running about 2.6%, once last year's low baseline is removed, said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

"That should ultimately be acceptable to the (equity) market and permit an ongoing upward grind," Pride said. "My one hesitation is equity market valuations are high."

Economically sensitive industrials, energy, financials, consumer discretionary, and materials are projected to more than double earnings, while so-called big tech and non-cyclicals are expected to grow 36% and 10%, respectively, Credit Suisse said.

The Dow Jones Industrial Average closed down 0.86%, the S&P 500 slid 0.75%, and the Nasdaq Composite lost 0.80%.

For the week, the Dow lost 0.53%, the S&P 500 fell 0.97% and the Nasdaq shed 1.87%. The S&P 500 real estate index rose to a record high on Friday.

Gold prices dipped as a stronger dollar dulled bullion's appeal, while bond yields were subdued after Fed Chair Jerome Powell this week pledged "powerful support" to ensure the U.S. economic recovery does not falter.

Mark Haefele, chief investment officer at UBS Global Wealth Management, adviser to many of the world's super-rich, said he expected rates to move higher as the recovery fully takes hold.

"We believe the downward trend in yields will reverse as confidence in the economic recovery mounts. However, we see a rebound in 10-year yields to 2% by year-end as consistent with continued rally inequities."

In Europe, Germany's 10-year yield fell to a new three-month low in cautious trade ahead of next week's European Central Bank meeting.

Oil ended the week lower, sapped in volatile trade by expectations of growing supplies just when a rise in coronavirus cases could lead to lockdown restrictions and depress demand.

Brent crude settled down 12 cents at $73.59 a barrel. U.S. crude rose 16 cents to end at $71.81 a barrel.

U.S. gold futures settled 0.8% lower at $1,815 an ounce.

In foreign exchange, major currencies were little changed on the day but the dollar headed for its best weekly gain in about a month. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.10% to 92.675.

The euro slid 0.02% at $1.1810, while the yen rose 0.17% at $110.0500.Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4%, weighed down by a 1.1% drop in China's blue-chip index and a 0.8% fall for Taiwanese shares.

The Asian weakness was in large part driven by lackluster earnings from TSMC, Asia's biggest firm by market capitalization outside China, which saw its shares fall 4.1%.

Article Source:- Moneycontrol



Tatva Chintan Pharma Must Subscribe in the public issue of Tatva Chintan Pharma

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Tatva Chintan Pharma Chem IPO GMP & Important details 2021


Recommendation - Long Term Investment and Good Listing Gains* 


Issue Opens - 16th July, 2021 (Friday)

Issue Closes - 20th July, 2021 (Tuesday)


Issue Size - Rs 500 crore (At Upper Price Band)

Fresh Issue -Eq Shares of ₹10

(aggregating up to ₹225.00 Cr)


Offer for Sale - Eq Shares of ₹10

(aggregating up to ₹275.00 Cr)


Price Band - Rs 1073-1083


Face Value - Rs 10


Minimum Lot Size - 13

Minimum App Amount - Rs 14079/ at Upper End


Objective of the Issue

The net proceeds from the IPO will be utilized towards the following objectives;

-Funding organic and inorganic growth initiatives.

-Meet general corporate purposes.


Who are selling in IPO

The offer for sale consists a selling of Rs 23.3 crore by Ajaykumar Mansukhlal Patel, Rs 81.4 crore by Chintan Nitinkumar Shah, Rs 73 crore by Shekhar Rasiklal Somani, Rs 10.3 crore by Darshana Nitinkumar Shah, Rs 34.2 crore by Priti Ajaykumar Patel, Rs 34.2 crore by Ajay Mansukhlal Patel HUF, Rs 11 crore by Kajal Shekhar Somani, Rs 1.1 crore by Shitalkumar Rasiklal Somani, and Rs 6.5 crore by Samirkumar Rasiklal Somani.


Who are Promoters of the Company

The company is promoted by Chintan Shah, Ajay Patel and Shekhar Somani, each of them has over 24 years in the specialty chemicals manufacturing industry and has established strong business relationships with domestic as well as overseas customers.

Chintan Nitinkumar Shah is the Managing Director on the board. He holds a bachelor's degree in engineering, with a specialisation in computer science from the Maharaja Sayajirao University of Baroda. He has over 24 years of experience in the specialty chemical manufacturing industry.

Ajaykumar Mansukhlal Patel and Shekhar Rasiklal Somani are Whole Time Directors on the board. Manher Chimanlal Desai, Subhash Ambubhai Patel, and Avani Rajesh Umatt are independent directors on the board.

Company Background

Incorporated in June 1996, Tatva Chintan is a specialty chemicals manufacturing company engaged in the manufacture of a diverse portfolio of structure directing agents (SDAs), phase transfer catalysts (PTCs), electrolyte salts for super capacitor batteries and pharmaceutical and agrochemical intermediates and other specialty chemicals (PASC).

It is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the second largest position globally. In addition, it is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. As on March 2021, the company manufactured over 154 products across four broad categories.

Product wise Revenue Contribution


SDA (structure directing agents) - 40%

PTCs (phase transfer catalysts)  - 27%

Electrolyte salts                - 1%

PASC (pharmaceutical and agrochemical intermediates and other specialty chemicals) - 32%

Marquee Clients

Its clientele includes Merck, Bayer AG, Asian Paints, Ipox Chemicals, Laurus Labs, Tosoh Asia, SRF, Navin Fluorine, Oriental Aromatics, Atul Ltd., Otsuka Chemical, Meghmani Organics, Divi’s Laboratories, Hawks Chemical, Firmenich Aromatics, Jiangsu Guotai Super Power New Materials and Jade Chem.

Manufacturing Facilities

Tatva Chintan has two manufacturing facilities situated at Ankleshwar and Dahej in Gujarat, with an annual installed reactor capacity of 280 kilo liters and 17 assembly lines. In order to capitalize the growth opportunities in the specialty chemicals, the company is planning to add capacity at the Dahej facility, following which the installed capacity will enhance by 200 kilo liters and 14 assembly lines.


Financials

(Rs Cr)

                                        FY19        FY20      FY21

Revenue                        207          265         306

EBITDA                         34            55          66

PAT                               21           38           53

ADJ EPS (Rs)              9.3         17           23.6

Margins                       FY19      FY20      FY21

EBITDA Margin(%)    16.4%     21%    22%


Return:-

                                   FY19     FY20   FY21

RoE                          26%      32%    31.5%

ROCE                      20%      26%    27%   

        

Growth

During fiscal FY19-FY21, Tatva Chintan recorded growth in revenue at a CAGR of 20.7 percent and profit at a CAGR of 59.5 percent. During the same period, earnings before interest, tax, depreciation and amortisation (EBITDA) grew at a CAGR of 39.4 percent.

Recommendation

With focus shifting from China to India, Tatva Chintan is well poised to grow leaps and bound. Also it is largest player is  SDA segment. 

We recommend one should apply for Tatva Chintan IPO.


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Angel Broking shares surge 13%, hit record high after robust Q1 show, applies for name change

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The board, in its meeting held on July 15 approved the change of name of the company from 'Angel Broking Limited' to 'Angel One Limited' or Angel One Fintech Limited' or any other name as may be approved by the Central Registration Center of Ministry of Corporate Affairs.Angel Broking Ltd | The share price has surged 186 percent to 873.90 on July 1, 2021, from its issue price of Rs 306. It was listed on exchanges on October 5, 2020, with an issue size of Rs 600 crore.

Angel Broking Ltd | The share price has surged 186 percent to 873.90 on July 1, 2021, from its issue price of Rs 306. It was listed on exchanges on October 5, 2020, with an issue size of Rs 600 crore.

Angel Broking's share price hit record high on July 16 surging over 13 percent intraday after the company declared its Q1 numbers.

Angel Broking reported 19 percent increase in consolidated net profit at Rs 121.37 crore in Q1 FY22 over Q4 FY21.

The stock broker's consolidated net profit jumped 156.6 percent while revenue from operations jumped 94 percent in Q1 FY22 over Q1 FY21. Total income stood at Rs 474.5 crore in Q1 FY22 as against Rs 418.9 crore in Q4 FY21, a growth of 13 percent QoQ.

Its income growth was aided by strong growth in client base and high client activity.

Profit before tax increased by nearly 14 percent QoQ and 154.7 percent YoY to Rs 162.16 crore in Q1 FY22.

The stock was trading at Rs 1,194.45, up Rs 132.40, or 12.47 percent at 11:24 hours. It has touched a 52-week high of Rs 1,218.40. It has touched an intraday high of Rs 1,218.40 and an intraday low of Rs 1,109.15.

The company board declared an interim dividend of Rs 5.15 per share with a record date of July 26, 2021.

The company's board consented to submit an application to Sebi to obtain approval for acting as a sponsor to mutual fund and to constitute a committee. It will oversee the activities in relation to the proposal of setting up of mutual fund business by the company.The board, in its meeting held on July 15 also approved the change of name of the company from 'Angel Broking Limited' to 'Angel One Limited' or Angel One Fintech Limited' or any other name as may be approved by the Central Registration Center of Ministry of Corporate Affairs.

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Titan Company share price trades in the red after Rakesh Jhunjhunwala reduces stake

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As per the June 2021shareholding pattern, Jhunjhunwala reduced his stake in Titan to 3.72 percent from 3.97 percent in the March quarter but his wife's holding remained unchanged at 1.09 percent


Titan Company share price traded in the red on July 15 after ace investor Rakesh Jhunjhunwala pared his stake in the Tata Group company in the June 2021 quarter, the third consecutive quarter that he trimmed his holding.

Jhunjhunwala cut reduced his stake in Titan, one of the best-known stocks in his portfolio, by 0.25 percent in the June 2021 quarter.

He and his wife together held a 5.5 percent stake in the jewelry-to-eyewear maker as of September 2020, which they reduced to 5.3 percent in December 2020, and then further cut it to 5.1 percent in March 2021. Now, after the June 2021 quarter, their stake in the company stands at 4.8 percent, according to BSE data.

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As per the June 2021 shareholding pattern, Jhunjhunwala alone reduced his stake in Titan to 3.72 percent from 3.97 percent in March 2021 but his wife's stake remained unchanged at 1.09 percent.

As of June 2021, their total shareholding in the company was worth Rs 7,294.8 crore, the highest among the stocks that are known in their portfolio.

The stock was trading at Rs 1,701.25, down Rs 9.85, or 0.58 percent at 0933 hours. It has touched an intraday high of Rs 1,708.90 and an intraday low of Rs 1,693.65.

Article Source: Moneycontrol

Zomato IPO opens for subscription today: Should you place an order?

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Zomato IPO: As it is the first startup in the Indian food aggregator space to be listed on the bourses, the enthusiasm among the investors is tremendous, said Parvati Rai of KR Choksey.

The Rs 9,375-crore IPO of Zomato, one of the leading food services platforms in India, has received a 'subscribe' rating from many analysts given the investors' appetite and interest in the listing of a new business, unique status in the food delivery space, huge growth potential in tier-II and tier-III cities and a strong network of restaurants.

Zomato will be the first food delivery aggregator startup to get listed on the bourses.

While assigning a subscribe rating to the issue, all the analysts Moneycontrol spoke to said the valuations look expensive compared to global peers. The company's loss-making status is a concern, they added.

Zomato opens its biggest public offer in last sixteen months, after SBI Card, for subscription on July 14, with a price band at Rs 72-76 per equity share.

It has already mobilised Rs 4,196.51 crore from 186 anchor investors on July 13, a day before the issue opening. And, the rest of the money will be raised in the next three days till July 16, via public offer.

The offer comprises a fresh issue of Rs 9,000 crore and an offer for sale of Rs 375 crore by Info Edge, the largest shareholder in the company. The net proceeds from the fresh issue will be utilized towards funding organic and inorganic growth initiatives (Rs 6,750 crore); and general corporate purposes.

"The IPO is valued at price-to-sales of 28.6-29.9 times FY21 revenues of Rs 1,993 crore, which is at a premium to other comparable global food delivery companies. While the Zomato IPO may seem expensive based on FY21 numbers, we believe that FY21 was an aberration as business was impacted significantly due to the first Covid wave and the ensuing lockdowns," said Jyoti Roy, DVP- Equity Strategist at Angel Broking.

Post a 23.5 percent de-growth in revenues in FY21 due to the Covid-19 pandemic, growth is expected to pick up sharply from FY22, Roy feels. Moreover, Zomato has been able to reduce its losses in FY21 despite a de-growth in the topline.

Jyoti Roy expects losses to reduce further over the next couple of years due to a rebound in growth and improving unit economics. "Given the strong delivery network, high barriers to entry, expected turnaround, and significant growth opportunities in tier-II and tier-III cities, we believe that Zomato will command a premium to global peers and hence have a 'subscribe' recommendation on the IPO," he said.

Zomato reported a consolidated loss for the financial year ended March FY21 at Rs 816.43 crore compared to a loss of Rs 2,385.6 crore in FY20. Revenue from operations in the same period declined to Rs 1,993.78 crore from Rs 2,604.7 crore largely due to the impact of Covid-19.

Varun Singh and Kuber Chauhan of IDBI Capital also expect the company's losses to come down, going forward, driven by higher delivery charges (customers must pay for convenience) and reduction in competitive intensity (induced by consolidation).

"Valuation looks expensive from the near-term point of view (6 times FY21 gross order value versus 1-3 times multiple for global competitors), but given the non-linear growth opportunity, we believe it's better to stay invested in such companies," said the brokerage which recommended subscribe.

Analysts largely feel the traditional valuations metrics like price-to-earnings will not be the right measures to value such companies.

"A better way to value such high growth companies will be on Price to sales basis and compared with other global food delivery companies which are expected to witness similar growth trajectory over the next few years like DoorDash, Deliver Hero, etc," said Jyoti Roy.

As per Gaurav Garg of CapitalVia Global Research, customer acquisition costs, valuation, revenue, and competition from other players (in this example, Amazon and Swiggy) are a few aspects to consider for a tech-based firm.

Zomato is a technology-first organization leveraging artificial intelligence, machine learning, and deep data science to continuously drive innovations on its platform for its customers, delivery partners, and restaurant partners. The company runs an integrated product, design, engineering, and data science team without boundaries to boost collaboration and speed of output.

Zomato, having a strong brand name and recall across large and small Indian cities, has two core B2C offerings, Food delivery and Dining-out in addition to the B2B offering Hyper pure. Another important part of the business is Zomato Pro, which is the customer loyalty program and encompasses both food delivery and dining-out.

As of March 31, 2021, Zomato was present in 525 cities in India, with 3,89,932 active restaurant listings along with a presence in 23 countries outside India.

Listing Gains

Few analysts are recommending the issue only for listing gains given its first-mover advantage in the food delivery space, and tremendous enthusiasm among investors about this IPO.

"Zomato with first-mover advantage is placed in a sweet spot as the online food delivery market is at the cusp of evolution. It enjoys a couple of moats and with the economics of scale started playing out, the losses have reduced substantially. However, predicting the growth trajectory at this juncture is a little tricky for the next few years," said Sneha Poddar of Motilal Oswal.

She further said, "Though, valuing such early-stage businesses on plain vanilla financial matrix might not give the right picture and may look distorted. Investors with a high-risk appetite can subscribe for listing gains given fancy for unique and first-of-its-kind listing in the food delivery business."

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As it is the first start-up in the Indian Food Aggregator space to be listed on the bourses, the enthusiasm among the investors about the IPO is tremendous, and also, the company has a unique status of a UNICORN in the Indian Food Delivery space, said Parvati Rai of KR Choksey.

"From the valuation perspective, we are not very comfortable with the sky-high valuation that the IPO is valued at. As a result, we recommend our investors to 'subscribe' to the issue only for listing gains," she added.

Zomato enjoys the first-mover advantage and has built a strong brand name and recall across India. Its mobile application is the most downloaded food and drinks app in each of the last 3 fiscal years (as per RedSeer). During FY21, 32.1 million average MAU (monthly active users) visited Zomato's platform, of which 6.8 million MTU (monthly transacting users) placed transactions.

As per RedSeer, Zomato has consistently gained market share over the last four years to become the category leader in India in terms of GOV (gross order value).

Zomato operates in a duopoly market and has created strong entry barriers with the widespread network. It operates in a highly underpenetrated market where of the total food consumption in India, only 8-9 percent is from restaurants, of which only 8 percent is online food delivery. This is highly underpenetrated when compared it with bigwigs like US/ China where restaurant food/online food delivery matrix stands at 40-50 percent each. As per RedSeer, the Food Services market in India is expected to grow at 9 percent CAGR over CY19-25. Thus "the sector provides a huge opportunity for Zomato to grow," said Sneha Poddar of Motilal Oswal.

Among other analysts, Meet Jain of LKP Securities, Shikhar Jain of Anand Rathi, Himanshu Nayyar of Yes Securities, and Saurabh Joshi & Ridhima Goya of Marwadi Financial Services also assigned 'subscribe' rating to the issue, while Rajnath Yadav of Choice Broking assigned a 'subscribe with caution' rating for the issue.

"The issue seems to be overpriced at the higher end of the price band. The company has certain positivities like asset light scalable business model, expanded target market post the pandemic, first-mover advantage in the food delivery business, etc. But its operations in almost duopoly market may attract regulatory actions, which would be negative for the company," Yadav explained

He further explained, "Also its operations are generating heavy losses, albeit some improvements in FY21, which we believe is not sustainable once socialization normalizes post-pandemic. Thus considering the above observations, we feel that this IPO is not for the retail investors, but investors with higher risk appetite with long term investment horizon can apply."

Article Source:- Moneycontrol


Sell USDINR; target of: 74.50 - 74.40 : ICICI Direct

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ICICI Direct, The rupee continued to appreciate on the back of positive domestic equities and no major rise in oil prices The dollar on Tuesday posted moderate gains.


ICICI Direct's currency report on USDINR

Spot Currency

The rupee continued to appreciate on the back of positive domestic equities and no major rise in oil prices The dollar on Tuesday posted moderate gains. A larger-than-expected increase in US June consumer prices pushed T-note yields higher and supported gains in the dollar. Also, weakness in US stock indices on Tuesday spurred some liquidity

Currency futures on NSE

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The US$INR pair is struggling at higher levels. Due to no major move in the Dollar index and strong domestic equities, we feel a move towards 74.4 is expected The dollar-rupee July contract on the NSE was at | 74.61 in the last session. The open interest fell 6% for the July series

Intra-day strategy

$INR JULY FUTURES CONTRACT (NSE)VIEW: BEARISH ON US$INR
Sell US$INR in the range of 74.60-74.64Market Lot: US$1000
Target: 74.50/ 74.40Stop Loss: 74.75
Support: 74.30/74.50Resistance: 75.00/75.30

CEA Subramanian hints that govt is unlikely to cut fuel taxes: Report

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In June, CPI-based inflation rose 6.26 percent, slightly lower than 6.30 percent in May.

Chief Economic Advisor KV Subramanian. (Image: ANI)
Chief Economic Adviser (CEA) Krishnamurthy Subramanian hinted that the government is unlikely to cut fuel taxes, though petrol and diesel rates are a record high.

"When we look at it from the inflation perspective, what is the contribution (of petrol and diesel) to inflation is something we have to keep in mind. So we should speak based on data on all these aspects," he told Mint, when asked if cut in fuel taxes is on the cards.

Subramanian said food inflation is a bigger concern. He said that reducing fuel taxes may not have a significant impact on retail inflation, since the weightage in the index is low.

"If you look at the last 6-7 years, anywhere between 35-60 percent of contribution to retail inflation comes from food inflation," he said as quoted by the publication.

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"Weightage of petrol and diesel in CPI (Consumer Price Index) is less than 3 percent while weightage of food is about 50 percent. Even if you consider second-round effects (of the fuel price hike), the weightage is about 5 percent. So if you do an analysis, it becomes very clear that the contribution is not that large."Subramanian also said rising crude oil prices are reflecting in overall inflation.

In June, CPI-based inflation rose 6.26 percent, slightly lower than 6.30 percent in May. Food inflation rose slightly to 5.15 percent in June, while inflation in the 'fuel and light' sub-group increased to 12.7 percent.

Article Source:- Moneycontrol




G20 finance chiefs back global tax crackdown: Draft

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The meeting of G20 finance ministers and central bankers in Venice is their first face-to-face encounter since the start of the COVID-19 pandemic.


Finance chiefs of the G20 club of large economies have backed a landmark move to stop multinationals shifting profits into low-tax havens and win back hundreds of billions of dollars in lost revenues, a draft communique showed.

The agreement at talks in the Italian city of Venice is set to be finalized on Saturday and caps eight years of wrangling over the issue. The aim is for country leaders to give it a final blessing at an October summit in Rome.

The pact to establish a minimum global corporate tax rate of at least 15% in an attempt to squeeze more money out of tech giants like Amazon and Google as well as other multinationals able to shop around for the most attractive tax base.

While tax campaigners point to loopholes in the proposals and wanted a more ambitious crackdown, the move is a rare case of cross-border coordination in tax matters and could strip many tax havens of their appeal.

"We invite all members that have not yet joined the international agreement to do so," the communique seen by Reuters said of a number of countries still resisting the move.

Two sources said the statement was expected to be released at the end of talks on Saturday without changes.

That would represent a political endorsement of an agreement this month among 131 countries at talks hosted by the Paris-based Organisation for Economic Cooperation and Development.

Momentum for a deal accelerated this year with the strong backing of the Biden administration in the United States and many public treasuries around the world stretched by the massive financial support needed to shield pandemic-ravaged economies.

Geoffrey Okamoto, First Deputy Managing Director of the International Monetary Fund, called it a "net win for the world" but said work was still needed to simplify the agreement for countries, especially poorer ones, to take it on board.

"It has to be simple enough for the vast majority of the world to actually implement and administer it," he told Reuters.

CARBON FRICTIONS

If all goes to plan, the new tax rules should be translated into binding legislation worldwide before the end of 2023. However, a fight in the U.S. Congress over President Joe Biden's proposed tax increases on corporations and wealthy Americans could yet create hurdles.

Equally, there could be difficulties because European Union member states Ireland, Estonia and Hungary are among the countries that have not yet signed up.

"I am convinced that in the end, we will come to a joint decision in the EU," German Finance Minister Olaf Scholz told radio station DLF before heading to the talks.

The meeting of G20 finance ministers and central bankers in Venice is their first face-to-face encounter since the start of the COVID-19 pandemic.

The G20 members account for more than 80% of world gross domestic product, 75% of global trade, and 60% of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany, and India.

In an addition to earlier drafts, the communique said the support measures being put in place by wealthier countries to shield their economies from the ravages of the pandemic must be in line with central bank commitments to keep inflation stable.

"We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while remaining consistent with central bank mandates -- including on price stability," it read.

Concerns have been rising recently that ultra-loose monetary policy in many countries following the pandemic could unleash a surge in inflation, possibly testing major central banks' commitment to maintaining stable prices.

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The statement also urged faster distribution of COVID-19 vaccines, drugs, and tests across the world, but made no new commitments to that end, and called on the International Monetary Fund to come up with ways for countries to steer IMF resources towards needier nations.

The IMF said on Friday its executive board had backed a $650 billion allocation of IMF Special Drawing Rights, advancing the distribution of currency reserves to the Fund's 190 member countries towards a targeted completion by the end of August.

Climate change policy will also feature at the Venice talks. Speaking at a climate tax forum there before the G20 meeting, U.S. Treasury Secretary Janet Yellen called for better international coordination to avoid trade frictions.

She was speaking days before the EU unveils next week a so-called carbon border adjustment mechanism (CBAM) imposing levies on the carbon content of imported goods.

The scheme is an attempt to discourage "carbon leakage", the transfer of production to countries with less onerous emissions restrictions, but some trading partners fear it could act as a protectionist tool."Recognizing the different paths countries are taking to address climate change could help avoid policy measures to address carbon leakage that inadvertently create new international risks and spillovers," Yellen said.

Article Source:- Moneycontrol

 

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