Markets This Week: Geopolitics, Fed Rates, India-UK FTA, and Earnings Updates | Weekly Financial & Market Wrap (May 05 - May 09)

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Impact Analysis

India launched Operation Sindoor on Pakistan in retaliation to Pahalgam.

·       Over the last few days, the border situation has deteriorated, with both countries coming to a warlike situation.

·       India has already cancelled over 440 flights and shut down over 25 airports along the Northern and Western border.

The worsening border situation had its impact on the Sensex and on VIX

·       While the Sensex and Nifty have cracked sharply in the last 2 days, even the VIX spiked to above the 22 levels on NSE.

·       The Karachi Stock Exchange had to shut down after the index fell over 7% after India reported strikes on Lahore.

The US maintained status quo on rates in the May policy, despite pressures

·       Fed maintained the rates in the range of 4.25% to 4.50%, since the tariffs had the potential to slow growth and spike inflation.

·       However, Trump was totally unhappy with the decision, as he had been urging Powell to aggressively cut interest rates.

CME Fedwatch rules out rate cuts in June; next rate cut likely in July 2025

·       With Powell refusing to cut rates amidst macro uncertainty, the markets have pushed back the first rate cut to July.

·       However, CME Fedwatch is still expecting a total of 2 rate cuts by end of 2025, and 2 more rate cuts by end of 2026.

Donald Trump announced the much-awaited trade deal with the UK

·       To begin with, Starmer has focused less on boosting trade and more on limiting the damage to trade by reciprocal tariffs.

·       Like his predecessor, Rishi Sunak; Starmer also stuck to high-end sectors like biotechnology and artificial intelligence.

With the US-UK trade deal through, Tata Motors has been the big gainer

·       Jaguar Land Rover derives 33% of its sales from the US, and for the last one month it had halted sales to the US.

·       The deal on automobiles allows up to 1 lakh automobiles to be imported at 10% tariff; and 25% tariff will apply after that.

FMCG Q4FY25 saw 11% growth in sales, with smaller FMCG players shining

·       The revenue surge was largely driven by a surge in rural demand and the industry trend towards miniaturization.

·       Even as the consumption of personal care and food moderated, the thrust came from the traditional trade.

Asian Paints reported 45% fall in net profits to ₹692 crore on weak demand

·       The net sales of the company also fell by 4.3%, while the operating margins of the company shrank in the quarter.

·       While the decorative paints business came under pressure, the industrial paints segment witnessed a growth of 6% yoy.

Generative AI agility is helping small and mid-sized IT companies outperform

·       This is a sharp departure from the traditional pattern; when the biggies like TCS, Infosys, and HCL Tech led the show.

·       The impressive results, this time, are coming from the likes of Coforge, Persistent Systems, Hexaware and Mphasis Ltd.

In a tough quarter for FMCG, Britannia net profits grew 4% to ₹560 crore

·       Amidst weak consumption and higher commodity prices, Britannia stood out through strategic pricing and cost savings.

·       The company has also focused extensively on its distribution reach and now spans 2.9 million outlets pan-India.

CRISIL assigns “Negative Watch” rating on the debt of IndusInd Bank

·       The bank has been facing a crisis due to discrepancies in its derivatives book and the rising level of its gross NPAs.

·       The downgrade is only for the long-term debt ratings, while the short-term debt ratings remain stable as before.

L&T posts 25% higher net profits at ₹5,497 crore for Q4FY25

·       The outstanding order book position of L&T currently stands at ₹5.79 trillion, largely from the infrastructure domain.

·       While profits were better than estimates, the revenues at ₹74,392 crore fell about 3% short of the street estimates.

Warren Buffett officially announced his retirement, but stays as chairman

·       In the last 60 years that Buffett was at the helm, Berkshire Hathaway has outperformed the S&P 500 by 2X times.

·       One big question is why Berkshire Hathaway is still sitting on a cash pile of $348 billion stashed away in cash and treasuries.

LG Electronics to build a $600 million plant in the state of Andhra Pradesh

·       This will be the third plant by LG in India and this comes after the company had just decided to defer its IPO plans.

·       The company was planning a $1.50 billion offer for sale in India, which the company had deferred due to tough markets.

JSW Steel and lenders will file a review petition in SC on BPSL case

·       This comes after the Supreme Court ruled that Bhushan Power & Steel should be liquidated, and not sold to JSW.

·       This has created a problem for the lenders as it means that they would get a much lower realization under liquidation.

Musk’s Starlink gets Indian government letter of intent for SATCOM services

·       Starlink is a satellite internet service developed by SpaceX, the space venture of Elon Musk, giving low-latency bandwidth.

·       SATCOM services rely on distant geostationary services that are orbiting more than 550 KM above the earth

India UK FTA slashes auto tariffs from 100% to below 10% up to a quota

·       In FY24, the total Indian auto exports to the United Kingdom stood at $1,878 million, so it is surely a big chunk.

·       While the quota size is not clear, this FTA applies not only to automobiles, but also to auto components and ancillaries.

Five Indian AMCs accounted for nearly 58% of the total folio additions in FY25

·       These five AMCs included Nippon India AMC, HDFC AMC, ICICI Pru AMC, SBI Mutual Fund, and Motilal Oswal AMC.

·       While the other four are among the top 5 AMCs by AUM, the story of Motilal Oswal was about performance and NFOs.

NSE seeks intervention from Ministry of Finance to get its IPO approval

·       NSE IPO has been held up by SEBI since 2016 due to some gross irregularities brought to light in its colocation business.

·       Major investors including SBI, LIC, CPPIB and Morgan Stanley have been pressuring NSE for an exit through the IPO route.

Ather Energy had a disappointing listing on the stock markets on Tuesday

·       The tepid listing was broadly expected after the IPO got subscribed just about 1.43 times during the IPO.

·       Against the IPO price of ₹321, the stock touched an intraday high of ₹332, but eventually closed the day at ₹300 per share.

Ola plans to transfer its brand and its IP into the family office fold

·       The brand now moves under the direct control of Bhavish Agarwal, rather than being housed with the company.

·       However, the major investors in Ola appear to be totally fine with the decision as it is in tune with general practices.