The way I look at it, there are two major challenges to the RBI as it embarks on rate hikes. This is a problem for the US too. In fact, former treasury secretary, Larry Summers has pointed out that there is a distinct possibility that too much hawkishness from the Fed could result in a recession. That is a potent risk in the Indian context also. At the end of the day, the RBI has the twin challenges of managing the market narrative and avoiding a recession.

What do we understand by managing the narrative? Market volatility is normally caused by the gap between perception and reality. Hence, the RBI must ensure that the market is shown a glide path on rates instead of arbitrary decisions as that would give more comfort for the financial markets. The 40 bps rate hike may have taken the markets by surprise but it surely prepares them for a more hawkish RBI approach in future, and that is the message.

But, the real challenge is that the Indian economy has just about grown by 1.95% in IIP over pre-COVID levels and this advantage cannot be forsaken. India also runs a different kind of risk amidst rising rates, apart from the R-word. When RBI embarked on rate hikes in 2018, the tightness in money markets caused implosion of ILFS and DHFL. This time, markets will take another 75 bps hike in the stride as it would only reverse the COVID rate cuts.

Over the weekend, the deal to buy out Holcim’s stake in Gujarat Ambuja was sealed with Adani group the winner as was already anticipated. The deal (including the open offer to the shareholders of Ambuja and ACC) will cost the Adani group a total sum of $10.5 billion, or approximately Rs.81,300 crore. This deal will create the second largest cement producer in India after Ultratech. Now Adani will have combined cement installed capacity of 71 MTPA.

Adani group will pay $6.4 billion to Holcim for their 63.2% stake in Ambuja Cements plus their 4.48 % stake in ACC. This also gives Adani indirect control over the 50.05% stake that Ambuja already holds in ACC. Post this deal, Adani will spend another $4.1 billion to make an open offer to non-promoter shareholders of Ambuja and ACC to acquire 26% of these companies. At the end of the deal, Adani will have management control of ACC and Ambuja.

There was little respite on Monday and it market another day of sharp correction in the markets, although the fall was more subdued. However, most metal stocks took a hit amidst fears of more hawkishness from central banks and sustained supply chain constraints facing manufacturers. Nifty is down 16% from the peak.

The breadth of Nifty was unfavourable at 5:45 with some respite only from auto stocks and FMCG stocks. During Friday, the VIX tapered to the 23.65 levels. On institutional flows, the foreign investors sold equities to the tune of Rs.3780 crore while domestic investors bought equities to the tune of Rs3,170 crore. FPIs sold over Rs2.10 trillion in last 7 months overall.

Let us also look at the global markets scenario. On Friday, the Dow was up 466 points while NASDAQ closed up by 434 points; a sharp rally in the US markets overall. European markets were up over 2.5% on average while SGX Nifty is trading positive with gains of 35-40 bps in early trades. The US market optimism is likely to rub off on the Indian markets too.

Let me address your query on whether markets can bounce. The indices are hinting at being in an oversold zone so there could be a bounce from these levels. However, till there is a cloud over macros, markets will favour selling at higher level. For now, traders can use bounces to sell the market or sell higher strike call options on the Nifty as a safe route.

Zydus Lifesciences has pioneered the launch of a new class of the “Bemdac” drug in India. The purpose of this drug is to treat uncontrolled LDL cholesterol. People who have uncontrolled levels of LDL cholesterol are vulnerable to a range of cardiovascular diseases. Bemdac will go a long way in giving them relief with a generic drug that is more effective and at the same time is also priced more reasonably.

The potential market in India is huge, which is becoming the cholesterol capital of the world. There are approximately about 112 million adults in India suffering from LDL cholesterol, and nearly 50% of these people are intolerant to the existing statin therapy. Bemdac enriches the cardiac care portfolio of Zydus, which includes Atorva, Clopitorva, Zyrova and Pivasta and Bemdac enriches this list. Zydus was formerly known as Cadila Healthcare.

For the week ended 13th May 2022, 80% of the top-10 stocks were in the red. The total value depletion in these stocks was Rs248,373 crore. Among big losers; Reliance lost Rs130,628 crore, SBI Rs35,074 crore, ICICI Bank Rs29,280 crore and Infosys giving up Rs16,869 crore. There were more weekly losers. HDFC Bank gave up Rs14,427 crore, Bharti Airtel ceded Rs11,533 crore, TCS Rs7,154 and HDFC fell by Rs3,409 crore. Hindustan Unilever was the surprise gainer during the week adding Rs10,514 crore to its market cap.

For the March 2022 quarter, Tech Mahindra sales revenues were up 30.9% at Rs1,339.82 crore. FY22 full year revenues were up 17.94% over FY21 at Rs46,646 crore. Interestingly, the QOQ growth in revenues in constant currency terms at 5.4%, was 50 bps better than the rupee growth in revenues. Tech Mahindra has also declared a final dividend of Rs.30 per shares taking the total dividend paid out for the year to Rs45 per share.

Net profits for Q4FY22 grew 39.24% at Rs1,506 crore helped along by dollar EBIT margins at 13.2%. Full year dollar EBIT margins stood at 14.6%. Net cash from operations fell 34.7% at Rs5,285 crore on spike in trade receivables. Free cash flow stood at $111 million while head count was up 4.2% at 151,173. Tech Mahindra had 62% onsite revenues. Net margins were 12.43% in Q4FY22 quarter compared to 11.11% in Q4FY21 and 11.95% in Q3FY22.

Let me talk about APL Apollo Tubes first. The company witnessed 62.9% growth in sales revenues for Q4FY22 at Rs4,080 crore. FY22 full year revenues were up 53.7% at Rs12,625 crore. APL Apollo Tubes reported 27% growth in sales volumes at 552K tonnes for Q4FY22 while for full year the sales volumes was up 7% at 1,755K tonnes. EBITDA per tonne for Q4 FY22 was up 2% at Rs4,823. For FY22, ROE was 28.8% while ROCE stood at a healthy 34.5%.

Let me now turn to the profit performance of APL Apollo Tubes. Net profits for Q4FY22 were up 36.73% at Rs163 crore and could have been still better but for input cost pressures. EBITDA for Q4FY22 was up 29% at Rs270 crore as interest cost fell 30% yoy on debt reduction program. Net margins were 3.99% in Q4FY22 quarter compared to 4.79% in Q4FY21. However, the NPM was higher compared to 3.70% in Q3FY22.

I will not turn to the second company held by you, the pharma major Alkem Ltd. Sales growth for the quarter was 13.31% at Rs2,484 crore. FY22 full year revenues were up 19.95% at Rs10,634 crore. While Alkem India sales were up 16.7% at Rs1,719 crore, global sales were up 7.3% at Rs741 crore. There was significant pricing pressures in the US markets resulting in subdued revenue growth overall, even as volumes remained robust

However, profits of Alkem fell sharply by -55.2% at Rs108 crore for Q4FY22. This was on account of significant pricing pressures in the US markets, as already stated. India growth was led by anti-infectives, vitamins and pain management verticals. Net margins stood at 4.33% in Q4FY22 quarter compared to 10.95% and 20.07% in Q3FY22. Incidentally, the EBITDA margins improved by 30 bps to 13.6%. R&D costs were a healthy 6.6% of revenues.

For the month of May 2022 so far, FPIs have withdrawn Rs25,200 crore from Indian equities in the first fortnight. Despite having sold over Rs2.10 trillion across debt and equity since October 2021, there appears to be little respite. Clearly, FPIs are worried about Fed hawkishness, rampant inflation and resurgence of COVID in China. Apart from Indian markets, FPIs were net sellers even in other emerging markets like Taiwan, South Korea and the Philippines in May. It is more of a risk-off trade visible among the FPIs versus the EMs.