Discover the reasons behind FIIs’ ₹1,500 crore divestment in Indian equities and how it impacted the market. Explore Reliance’s Q2FY24 success, driven by its retail subsidiary and strong EBITDA in the O2C segment. Get insights into the market’s rebound after six days of losses and its future outlook. Read the full article for in-depth analysis
Market Recap: FIIs Divest ₹1,500 Crore in Indian Equities, While DIIs Inject ₹314 Crore as Nifty50 Ends Losing Streak
In a recent turn of events, foreign institutional investors (FIIs) continued their selling trend in the Indian stock market, coinciding with the domestic market’s resurgence after six consecutive days of losses. On the other hand, domestic institutional investors (DIIs) displayed their confidence by infusing ₹314 crore into Indian stocks on the same day.
As per data from the National Stock Exchange (NSE), FIIs collectively purchased ₹9,360.25 crore worth of Indian equities while simultaneously selling ₹10,860.38 crore, resulting in a net outflow of ₹1,500.13 crore. In contrast, DIIs made investments amounting to ₹7,135.99 crore and divested ₹6,822.30 crore, resulting in a net inflow of ₹313.69 crore.
The selling spree by FIIs can be attributed to the backdrop of rising US bond yields and the strengthening of the dollar index, which have collectively dampened market sentiment.
Vinod Nair, Head of Research at Geojit Financial Services, noted, “The domestic market rebounded significantly compared to the sharp corrections seen in the previous session, primarily due to restrained FII selling and a moderation in currency and global bond yield volatility. So far, the Q2 results have been decent and in line with optimistic estimates.”
October has witnessed considerable pressure on the domestic market, driven by factors such as substantial gains in US bond yields, foreign capital outflow, lackluster Q2 earnings, and geopolitical tensions. As of now, the Nifty 50 index has declined by approximately 3% in October.
On the day of the market’s turnaround, the Nifty 50 closed 190 points higher, or 1.01%, at 19,047.25, while the Sensex concluded at 63,782.80, registering a gain of 635 points, or 1.01%. This rebound was likely attributed to value buying following a recent market correction, driven by concerns related to interest rates, bond yields, and geopolitical issues like the Israel-Hamas conflict.
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Notably, mid and small-cap stocks outperformed the benchmark indices on this particular day. The BSE Midcap index rose by 1.70%, and the Smallcap index recorded a gain of 1.89%.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, highlighted, “Over the past week, both Nifty and Sensex experienced declines of approximately 2.5%, making them among the top losers in the global equity markets. Smaller companies faced even greater challenges, with Nifty Midcap down by 3% and BSE Smallcap down by 2%. Factors contributing to this downturn included higher global interest rates, growth concerns, and lackluster Q2FY24 earnings.”
The future trajectory of the market remains uncertain, as tensions in the Middle East, combined with persistent US Treasury yields at around 5%, have triggered a risk-off sentiment. Despite the recent rebound, market experts anticipate continued volatility in the wake of crucial economic events and the ongoing earnings season.
Siddhartha Khemka, Head of Retail Research, expressed, “Despite the strong rebound, we suspect the benchmarks are not out of the woods yet. For markets to remain buoyant, some resolution is needed between the ongoing Israel-Hamas conflict. Technically, a confirmation of significant strength in Nifty can only be established above the 19,700 mark.”
From a technical perspective, Rupak De, Senior Technical Analyst at LKP Securities, pointed out, “After a series of consecutive down days, the Nifty has momentarily halted its descent due to an oversold chart setup. However, it’s worth noting that the index closed well below the critical breakdown level of 19,250. Unless it rises above this level, the market may continue to show a tendency towards selling during any upward movements.”
In summary, the Indian stock market recently experienced a contrast in investor sentiment, with FIIs divesting a significant amount while DIIs displayed confidence through their investments. The market’s future trajectory remains uncertain, influenced by global economic factors and ongoing geopolitical tensions.
Reliance Industries Q2 FY24 Results: Net Profit Soars 27% to 17,394 Crore, Driven by Strong Retail Business
The official site of Reliance Industries : https://www.ril.com/
In its fiscal quarter from July to September 2023 (Q2FY24), Reliance Industries (RIL), led by billionaire Mukesh Ambani, reported a substantial 27% increase in its consolidated net profit, reaching ₹17,394 crore compared to ₹13,656 crore in the same period the previous year. This impressive growth in net profit can be attributed to higher EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and the robust performance of Reliance Retail.
Reliance Retail, a significant subsidiary of RIL, witnessed a 21% increase in net profit, reaching ₹2,790 crore during the September quarter. However, the telecom arm of Reliance Industries experienced a smaller increase in profit compared to the previous seven quarters due to higher expenses.
The O2C (Oil-to-Chemicals) segment of the company faced challenges stemming from subdued global demand in a well-supplied market, resulting in lower PE and polyester chain deltas. Despite these challenges, the segment’s EBITDA grew by an impressive 36% year-on-year (YoY) to ₹16,281 crore, and the EBITDA margin increased by 350 basis points to 11%. This success can be attributed to strong domestic demand, optimized feedstock costs, and the strength in gasoline and PVC margins.
Isha Ambani, Executive Director of Reliance Retail Ventures, expressed, “We have delivered yet another quarter of stellar performance and achieved an all-time high across financial metrics. The performance is a testament to our customer-centric approach that defines Reliance Retail, and we look forward to serving our customers this festive season with renewed optimism and enthusiasm.”
In terms of the media business, revenue from operations grew by 20.4% YoY, amounting to ₹1,865 crore. However, the segment reported a loss of ₹111 crore during the quarter, in contrast to a loss of ₹29 crore in Q2FY23. The telecom arm’s average revenue per user (ARPU) rose by 2.6% YoY to ₹181.70, compared to ₹180.50. Furthermore, Reliance Jio added 11.2 million net subscribers during the September quarter.
Reliance Industries’ total revenue from operations remained almost flat at ₹2.34 lakh crore. The growth in the fashion and lifestyle, grocery, and e-commerce segments contributed to the revenue increase, along with the rebound in earnings from the oil and gas business.
Know weather reliance industry a Nifty 50 company or not? : https://financetalks.co.in/nifty-50-companies-and-how-the-nifty-index-is-calculated/
In a separate development, Jio, a part of Reliance Industries, has played a pivotal role in India’s 5G capacity, contributing to 85% of the overall 5G capacity in the country. Jio has deployed over 10 lakh 5G cells across all 22 circles of India and has provided one of the fastest 5G internet speeds globally. Notably, Jio’s 5G rollout is powered by a 100% in-house 5G stack, designed, developed, and manufactured entirely by Indian talent.
These results and developments demonstrate the continued growth and diversification of Reliance Industries and its subsidiary, Reliance Retail, in a competitive and evolving business landscape.
FAQs
- Q: Why did foreign institutional investors (FIIs) sell ₹1,500 crore in Indian equities, and what impact did it have on the market?
- A: FIIs divested ₹1,500 crore in Indian equities amid rising US bond yields and a strengthening dollar index, which influenced market sentiment. The article discusses the factors driving FIIs’ selling spree and its consequences.
- Q: What contributed to the recent success of Reliance Industries in its Q2FY24 results, and how did its subsidiaries perform
- A: Reliance Industries reported a 27% increase in net profit during Q2FY24. This remarkable growth was attributed to the strong performance of its retail subsidiary, Reliance Retail, and the significant rise in the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in the Oil-to-Chemicals (O2C) segment. The article provides insights into these contributing factors.
- Q: What were the market dynamics that led to a rebound in Nifty50 and Sensex after six days of losses, and what can we expect in the future?
- A: The Nifty50 and Sensex gained 1.01% each after a six-day losing streak. The article explores the market dynamics that fueled this rebound and discusses the future outlook, taking into account geopolitical tensions, US Treasury yields, and economic events.