Business News

Mumbai: India Inc's operating cash flow (OCF) weakened significantly in the half year ended September 30, falling to 71.4% of their earnings before interest, tax, depreciation and amortisation 81.8% in the previous six months (excluding banking, financial services and insurance).Free cash flow, meanwhile, plunged to 35.9% of profit after tax (PAT) from 55.1% a year earlier, according to data from Emkay Research.Discretionary, materials and industrials sectors were hit the hardest, facing weaker cash flows alongside rising capex. The slowdown in OCF is largely attributed to delayed government payments, according to analysts."The weak earnings growth was compounded by worsening cash flows," said Seshadri Sen, head of research and strategist at Emkay Global. "The silver lining is that delayed government payments, which likely caused the OCF weakness, should recover in the second half of FY25," he said. "While the capex pickup is a positive for the long term, the cash-flow challenges pose a near-term headwind for markets."115675594The net profit of Nifty50 companies grew just 2.4% YoY in the quarter ended September 30, while for the BSE 500 group, it fell 0.5%. Consumer discretionary companies reported a 1.4% drop in PAT, while energy firms suffered a sharp 49% fall."Weaker-than-expected demand, inventory stocking ahead of the festive season and a slowdown in government capex contributed to higher working capital needs in 1HFY25," said Rakesh Vyas, co-chief investment officer at Quest Investment Advisors. "Demand weakness is driven by rural economic challenges, reduced urban consumption, stricter unsecured lending norms and slower decision-making ahead of elections."In recent years, many companies have pursued expansion, driven by strong cash flow, balance sheet deleveraging and broad sector growth. In FY24, BSE 500 companies generated over ₹4 lakh crore in OCF, exceeding their capital expenditure requirements.Positive festive sales, boosted by better consumer deals, could help improve OCF in the second half of this fiscal year, analysts said."Election-related spending delays, high domestic food inflation, uneven rainfall and the global economic slowdown weighed on revenues and margins," said Vinod Nair, head of research at Geojit Financial Services. "Moving forward, we expect business conditions to improve in the December and March quarters, offering short-term relief to the market."According to Rakesh Vyas of Quest Investment Advisors, private sector investments may slow as companies delay new projects to align with weak demand conditions. "This moderation could help maintain strong balance sheets but highlights cautious sentiment in the face of subdued demand," he added.

Mumbai: India's equity benchmarks surged on Monday for the second straight session, as traders rode renewed bullish momentum fuelled by the BJP-led coalition's victory in the Maharashtra elections. The recent slowdown in foreign institutional selling also improved sentiment, resulting in further liquidation of bearish bets, though analysts said they must see more evidence to conclude if the newfound strength is here to stay. The NSE Nifty rose 314.65 points, or 1.3%, to close at 24,221.9. The BSE Sensex rose 992.74 points, or 1.25%, to end at 80,109.85. Both indices have rebounded nearly 4% in the previous two trading sessions, with the Sensex closing above 80,000 for the first time in 11 sessions.Five of 11 Adani stocks closed down on Monday, with Adani Green Energy, cited in the US Department of Justice indictment, falling 9.2%, hitting its 52-week intraday low. The stock has declined 31.4% since the Adani corruption indictment became public last week. 115675504 FPIs Pump in ₹9,947.5 cr Adani Energy Solutions declined 4.15%. Flagship Adani Enterprises, up 1.67% on Monday, was among six group stocks that gained 1-3%. Analysts said the Nifty must close decisively above a crucial resistance zone of 24,400-24,500 for the rally to continue. "Overcoming this hurdle remains a daunting task and only a decisive breach of these levels could pave the way for an extended up move," said Rajesh Bhosale, technical analyst at brokerage Angel One.Foreign portfolio investors (FPIs) pumped ₹9,947.55 crore into shares on Monday, after net buying to the tune of ₹1,073 crore on Friday, largely on account of the rejig in MSCI indices. The global index provider's rebalancing of its standard indices took effect on Monday, triggering over $2 billion in global passive fund flows into various Indian stocks, such as HDFC Bank, BSE and JSW Energy, among others.Foreigners have been buyers in only five trading sessions since September 27, as they dumped shares worth over a record ₹1 lakh crore in October and ₹11,169 crore so far in November, causing the sharpest dip in the market for 2024.The sell-off has, however, resulted in the markets being oversold. The combination of an oversold market and BJP's strong performance in Maharashtra after its disappointing show in the Lok Sabha elections aided the market recovery."Markets have risen as they have factored in policy continuity after the recent state election results," said George Thomas, fund manager, equity, at Quantum Asset Management. "We also think there was a softness in second-quarter earnings as the festival season had shifted by a few days. The next quarter results could give a clearer sign on demand in India and it may not be as worse as perceived by the street."Public sector units, oil and gas, and industrials were the top gainers in the surge on Monday. ONGC jumped 5.5%, L&T rose 4.3% and State Bank of India gained 3.6%.Some technical indicators suggest the worst might be over. "With the gap-up opening (on Monday), Nifty has crossed its 20 DEMA (day exponential moving average), currently placed at 24,050 for the first time since October 3, which adds to the bullishness," said Sudeep Shah, head of technical and derivatives research at SBI Cap Securities. He said 24,020-24,050 would act as an important support zone.Nifty's India Volatility Index or VIX-the market's fear gauge-fell 4.93% to 15.3, suggesting traders are less worried about near-term risks in the market. The Nifty Midcap 150 gained 1.53% and the Nifty Small-cap 250 rose 2.11%.Of the 4,214 stocks traded on the BSE, 2,675 advanced and 1,389 declined on Monday. Elsewhere in Asia, China remained flat, Hong Kong fell 0.4%, Japan was up 1.3%, South Korea gained 1.3% and Taiwan rose 0.2%. The pan-Europe index Stoxx 600 was flat at the time of going to print.