Govt plans stake sale in Coal India, ONGC drags as brokerages maintained ‘reduce’ rating

Indian Markets:

• Domestic equity benchmarks experienced a correction on Wednesday, following a four-day winning streak, as profit selling took place.
• Weak global cues added to investor concerns, with worries about the approval of raising the US debt ceiling and the economic outlook for China.
• The Nifty50 index opened near the 18,600 level but dropped to a low of 18,483.85 during early afternoon trade. However, it managed to recover some of the losses by the end of the day.
• Investors favored realty, healthcare, and consumer durables stocks, while oil & gas, metals, and financial shares faced reduced demand.
• The National Statistical Office (NSO) is set to release the GDP numbers for the fourth quarter of FY23 and the full fiscal year today. In the previous quarter (Q3 FY23), the GDP growth rate was 4.4%, while it stood at 4% in Q4 FY22.

Global Markets:

• Markets in Europe and Asia declined across the board on Wednesday due to concerns about the Chinas economic slowdown and the U.S. debt ceiling.
• US stocks ended mixed on Tuesday as Wall Street considered the likelihood of Congress passing a tentative deal on raising the U.S. debt ceiling amid growing opposition within the GOP.
• The U.S. debt ceiling remained in focus with markets hoping an agreement President Joe Biden struck with the top congressional Republican to suspend the United States borrowing limit can pass through Congress in coming days.
• The plan cleared a House committee overnight and is set for debate and passage on Wednesday, which would send it to the Senate where debate could stretch to the weekend.

Stocks in Spotlight:

• ONGC declined 2 percent, remaining as the top losers on the Nifty50 index. This downward trend can be attributed to weak financial results impacted by significant provisions. Broking house Nomura, reflecting this outlook, maintained a ‘reduce’ rating on ONGC’s stock and set a target price of Rs 130 per share.
• Arvind Fashions’ shares experienced a noteworthy surge of over 4.5 percent as the company successfully achieved growth in both its revenue and profit figures during the fourth quarter, even amidst a period of sluggish demand following the festive season. The textile player demonstrated remarkable performance, with a 32 percent increase in net profit, reaching Rs 29.5 crore for the quarter ending in March 2023. 
• The government announced on May 31 its proposal to offload a 3 percent stake in Coal India Limited through an offer-for-sale (OFS). The offer comes at a discount of 6.7 percent to the last closing price of the stock. The estimated size of the OFS is approximately Rs 4,000 crore. This strategic decision aligns with an earlier Bloomberg report from November, which indicated the government’s intention to sell stakes ranging from 5 to 10 percent in Coal India, Hindustan Zinc, and Rashtriya Chemicals and Fertilizers (RCF) during the final quarter of the financial year.

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