Business News

Mumbai: Overseas investors sold Indian equities worth ₹26,610 crore across 16 sectors between February 1 and 15 according to data from NSDL.Financial services continued to bear the brunt of unabated foreign selling as investors dumped shares of ₹5,344 crore in the first 15 days of February after selling around ₹25,000 crore in January. In 2024, they pulled out shares worth ₹58,280 crore from the sector. Banks and lenders are bearing the brunt of the foreign selling because of their dominant weights on the Sensex and Nifty. So when overseas investors sell Indian stocks, they end up selling bank shares the most. Moreover, concerns over the rise in bad loans are also weighing down sentiment."The delinquencies are likely to rise in the banking sector in the personal loan and credit card segment while the credit offtake is anticipated to fall, which is negative for the sector in the next couple of quarters, said Siddarth Bhamre, head of institutional research, Asit C Mehta Intermediates.118433675Fast Moving Consumer Goods (FMCG) and capital goods witnessed foreign selling worth ₹4,336 crore and ₹3,206 crore respectively after selling around ₹5,000 crore in each sector last month. The Union Budget on February 1 when the government cut income taxes to boost consumption, was expected to be a trigger for these consumer-related stocks but after the initial surge the rally fizzled out. Investor appetite for capital goods has dimmed in the absence of immediate triggers"The overall budget allocation for capex spending was lower than expected and since the valuations were relatively higher, which led to selling in capital goods sector stocks," said Pankaj Pandey head of retail research, ICICI Securities.Even though the valuations have come off, the growth for FMCG companies is expected to remain in mid-single digits and the sector is likely to underperform the benchmark Nifty, said Pandey.Bhamre said that the tax benefit is likely to take its full effect in the next year and no immediate spending is likely. “While the FMCG and consumption-based stocks moved up based on sentimental basis post Budget, they have fallen since,” said Bhamre. Global investors offloaded shares worth over Rs 2,000 crore in oil & gas, consumer services and construction materials sectors. Overseas investors bought shares worth Rs 5,337 crore across seven sectors in the first half of February.Telecommunication sectors witnessed inflows worth Rs 2,337 crore while foreign investors infused funds worth Rs 1,534 crore and Rs 693 crore in healthcare and Information Technology (IT) sectors respectively. “The inflows in sectors like telecom, healthcare and IT is likely due to their defensive nature,” said Bhamre. “With the dollar appreciating, IT is where one would choose to hide.” Analysts said that as of now, the intensity of the selling seems to have reduced but it’s tough to predict if there is a conclusive bottom in pace. Further foreign selling heavily depends on further developments on Trump’s tariffs tantrum, said Pandey. “The aggravation in the sell off is anticipated to reduce as foreign investors generally invest in large cap stocks, and while the valuations in these stocks may not be attractive, they are fairly valued,” said Bhamre.

The stock of Sonata Software, a mid-tier IT services exporter, has lost 24% over the past two weeks after the company reported lacklustre December quarter performance affected by ramp down in a key client account. The stock is likely to remain under pressure given the spillover effect of the project ramp down on the fourth quarter revenue and profit. A turnaround is expected in the second half of FY26 given a sustained momentum in the order bookings. Analysts have cut FY26 revenue and earnings estimates due to the weakness in the short term.Sonata provides digital engineering and modernisation solutions to global clients across verticals including technology, media and telecom (TMT), retail, manufacturing and distribution (RMD), banking, financial services and insurance (BFSI), and healthcare and life sciences (HLS). The company’s domestic business formed 74% of the revenue while international business contributed the rest.118421778For international business, the US and Europe contributed 78% and 11% to revenue respectively while the remaining was from the rest of the world in the December quarter. The company added 11 new clients during the third quarter. While it was higher than eight added in the prior quarter reflecting improving momentum, it was still lower than 13 compared with the year-ago quarter indicating room for further recovery.In addition, client concentration for the international segment increased during the December quarter as top 10 customers contributed 66% to revenue compared with 56% a year ago while the concentration of the top 20 clients rose to 78% from 69%. This is a cause of concern as any slowdown in the business of top clients will impact Sonata’s performance significantly.For instance, the performance of the international segment was affected in the third quarter due to a ramp down for a client and a one-off discount given to a TMT customer. The division’s revenue grew by 2.8% sequentially to $ 87 million. This was slower than the 44.4% growth in the domestic revenue at Rs2,111.1 crore. The project ramp down also affected the consolidated operating margin before depreciation and amortisation (EBITDA margin), which shrank by 250 basis points sequentially to 6.5%.The company had earlier guided for $ 1.5 billion in revenue by FY26 compared with $ 1 billion in FY24 with an EBITDA margin in the low 20s.Given the slower project ramp ups, it now expects to achieve the target by FY27.IDBI Capital expects the first half of the next fiscal year to be better than the second half of the current fiscal year given a strong order book. Though the brokerage has retained a buy rating on the stock, it has reduced the revenue and earnings per share (EPS) estimates for FY26 by 6% and 26% to Rs 10,888 crore and Rs 18.5 respectively. It has also cut the 12-month price target by 9% to Rs 635.

The Centre has extended the tenure of NITI Aayog Chief Executive Officer (CEO) B V R Subrahmanyam by one year, according to a Personnel Ministry order. Subrahmanyam, a 1987-batch retired Indian Administrative Service (IAS) officer of Chhattisgarh cadre, was in February 2023 appointed to the post for a period of two years. The Appointments Committee of the Cabinet has approved extension in Subrahmanyam's tenure as NITI Aayog CEO for a period of one year beyond February 24, 2025, the order said.

Depository firm NSDL is targeting to launch its much awaited Rs 3,000-crore initial public offering (IPO) by next month, a senior official said on Thursday. As a market infrastructure institution (MII), National Securities Depository Ltd (NSDL) also needs other approvals apart from the draft red herring prospectus, the official said, adding that it is this approval which has a looming deadline. "Our dates are expiring next month. We are rushing against time to get things done fast. We will try (to launch the IPO before that)," the official said, replying to a specific query on the timeline for the IPO. The 12-month deadline for the DRHP expires in September, but it is the MII approval given by Sebi which is prompting the depository handling a bulk of India's dematerialised accounts to expedite the share sales process. Asked if the choppy market conditions are leading to a delay, the official said even in this situation there are some offerings hitting the market. Responding to a question on the reasons behind the delay in share sale, the official pointed towards challenges on the manpower front, saying the amount of work to be done is very large. NSDL had received a go-ahead from Sebi for the IPO in September last year. As per reports, NSE, State Bank of India (SBI) and HDFC Bank plan to offload 5.72 crore equity shares in the issuance which will be a complete offer for sale (OFS). Last week, NSDL had reported a 30 per cent jump in its December quarter net at Rs 85.8 crore, up from Rs 66.09 crore in the year-ago period. Its total income had increased 16.2 per cent to Rs 391.21 crore in the October-December 2024 period.