Markets opened above yesterday’s closing point.
All sectors’ stocks rose today except for the FMCG stocks. PSU bank stocks and realty stocks rose the most.
Global markets: US markets and Asian markets rose. European markets rose (as of 6 pm IST).
News
The government approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, providing 100% government credit guarantee for MSMEs and 90% for the non-MSMEs as well as the airline sector to boost liquidity amid the disruptions due to the West Asia conflict.
India’s composite PMI (manufacturing + services) rose to 58.2 in April (vs 57.0 in March). Services PMI rose to 58.8 (vs 57.5 in March). This means economic activity rose more in April than in March.
India and Vietnam have upgraded their ties to an Enhanced Comprehensive Strategic Partnership and set a $25 billion trade target by 2030. They also signed multiple MoUs across various sectors like rare earth, digital payments, medical regulation, etc.
SEBI has defined ‘significant indices’ as those that are tracked and benchmarked by mutual funds with the cumulative AUM exceeding Rs 20,000 crore. Index providers managing such indices must now register with SEBI within 6 months.
Stocks Updates
Bank of Baroda: received PFRDA approval to act as a sponsor for pension fund and plans to set up a pension fund management company, subject to regulatory approvals.
Cholamandalam Investment: allotted NCDs worth Rs 500 crore on a private placement basis at a coupon rate of 8.08% per annum, maturing 5 June 2029.
Polycab: net profit rose 32.28% year-on-year to Rs 2,672 crore in the Jan-March quarter. Dividend announced: Rs 47 per share.
Hero Moto: net profit rose 25.72% year-on-year to Rs 1,460 crore in the Jan-March quarter. Dividend announced: Rs 75 per share, with 24 July as the record date.
CG Power: net profit rose 34.39% year-on-year to Rs 365.49 crore in the Jan-March quarter.
Godrej Consumer: net profit rose 9.68% year-on-year to Rs 451.77 crore in the Jan-March quarter. Dividend announced: Rs 5 per share, with 12 May as the record date.
Trent: revised the record date for its 1:2 bonus share issuance from 29 May to 4 June. It also revised the record date for the dividend from 10 June to 12 June.
Word of the Day
Asset Reconstruction Company (ARC)
It is a company that buys bad loans (NPAs) from banks and tries to recover the money.
Banks sell these bad loans to ARCs at a discount to clean up their balance sheets and reduce risk.
The ARC then recovers money by restructuring the loan, coming to terms of settlement, selling the borrower’s assets, or taking legal action.
Example: A Rs 100 loan becomes bad. The bank sells the loan to the ARC for Rs 60 to avoid complete loss. The ARC works to recover more than Rs 60 and make a profit.
6 Day Course
Theme: India’s relation with USD
Day 3: Wednesday
Something to note is that the exchange rate is generally getting weaker.
Which means, over the last few decades, we have only needed more and more INR to get 1 USD.
Why is this?
The main reasons for this are our big crude import bill, our trade deficit, and US interest rates.
We spend a lot of money importing crude oil. This means demand for USD goes up, increasing its price.
Similarly, we tend to import more than we export. Again, this means we need more USD. This increases its price.
Another factor is the interest rates. When the US increases its interest rates, more money moves to the US since its bonds are considered very safe.
This results in more money flowing from all over the world to the US, increasing the price of the USD.
The RBI does not try to control it but does try to reduce the sudden ups/downs in the exchange rate.
Featured Question
Q. “After rebalancing of nifty 50 index, suppose a stocks comes out of Nifty. But then it would become the biggest stock in the Nifty Next 50 index, as it is no. 51 company by market cap. Is the above statement true?”
Simple answer: not necessarily.
Index rebalancing occurs only twice a year.
So, a company could have become smaller and its rank might have fallen much below the 51st rank before it might be removed from Nifty 50.
Many factors are at play when deciding which companies will be in the Nifty 50.
Free float market cap is used to decide the rankings of companies for Nifty 50.
This means it is possible for larger companies with higher promoter holdings to be ranked below a company with a lower total market cap but higher free float market cap.
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