30th August 2024 – 06th September 2024 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 5,408.42 | 16,690.83 | 22.38 | 40,345.41 | 2,950.08 | 18,663.14 |
| -4.25% | -5.77% | 43.92% | -2.93% | -4.30% | -3.26% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 24,852.15 | $2,526.20 | $28.24 | $71.49 | 83.99 | 93.12 |
| -1.52% | -1.11% | -3.44% | -7.23% | 0.14% | 0.48% |
Source: MarketWatch
Hello Saturday,
This week, the August jobs report turns out to be a mixed bag, CEO Jensen Huang sold Nvidia shares worth $633 million since June and Tata Sons Chairman’s remuneration bounced 20% to ₹135.3 crore in FY24.
- The US economy added 142,000 jobs in August. Unemployment figures ticked down to 4.2%. However, downward revisions in June and July jobs data triggered labour market concerns.
- CEO Jensen Huang sold off 5.3 million Nvidia shares worth $633 million between June 13 and September 5.
- Beleaguered airline SpiceJet eyes fundraising of ₹3,200 crore
- Tata Son’s Chairman N Chandrasekaran’s compensation shoots up 20% to ₹135.3 crore
Taking stock | Jobs jolt | Cashing out | Limping on the runway | A handsome raise | Invest wisely | Another week in the markets
Taking stock
Economic uncertainty loomed large over the three indices as a weaker-than-expected August jobs report wore down bullish sentiment, and presented a gloomy picture of the economy. Tech-heavy Nasdaq ended the week down by 5.8%, its worst performance since January 2022. The S&P 500 tumbled 4.2% while the Dow Jones ended 2.9% lower.
Jobs jolt!
The August jobs report turned out to be a mixed bag showing a slight uptick from the July figures, which, on their release, clouded the market outlook with recessionary fears. Compared to the 3-year high unemployment rate of 4.3% seen in July, the August unemployment rate aligned with economists’ projections and ticked down marginally to 4.2%.
A total of 142,000 jobs were added in August. However, the silver lining in the August jobs report was more than offset by the downward revision in June and July jobs report by a combined 86,000. All in all, economic uncertainty and inconclusive data soured market sentiment, and nudged markets into a massive fall.
The August report was highly awaited given that the data release is setting the stage for the upcoming rate cut. While the markets are, by and large, counting on a traditional 25 bps rate cut, there were murmurs that an outsized and larger-than-anticipated unemployment figure would force the Federal Reserve’s hand in pushing out a 50 bps rate cut.
All three indices gave a cold shoulder to the news of August’s unemployment rate slipping to 4.2%. At the same time, market gloom was further amplified by the downward revisions in the June and July data. Frequent downward revisions undermine the reliability of the August figure, prodding the market to look at the current data with a sceptical lens.
Two Federal Reserve officials who spoke after the release of the jobs data hinted that the economy wasn’t plunging in a manner that would call for a larger half-point rate cut. Having said that, they did not explicitly dismiss the chance of a bigger cut either.
Speaking to The Wall Street Journal, Fed Governor Christopher Waller said, “The data that we have received in the past three days indicates to me that the labour market is continuing to soften but not deteriorate, and this judgment is important to our upcoming decision,”
New York Fed President John Williams, on the other hand, said that he did not have a view on the quantum of the upcoming rate cut by the Federal Reserve.
Cashing out!
CEO Jensen Huang was busy selling Nvidia shares amounting to a little over $633 million between June 13 and September 5.
Huang sold over 5.3 million shares in tranches of 120,000 as per the Security and Exchange Commission filings. As per FactSet, CEO Huang is the largest shareholder in the chip manufacturer, holding a 3.5% stake in the company.
Key to the share sale by Huang is the fact that the trading plan was devised way back on March 14 under the Rule 10b5-1 trading plan. The plan facilitates the automatic execution of stock trades when price and volume conditions are fulfilled. These plans aim to weed out any insider information advantage available or accessible to top company officials.
On September 5, Nvidia suffered a record loss of $279 billion, which eroded a whopping 9.5% of the total market capitalisation. It didn’t help that the sell-off came in the wake of Nvidia’s third-quarter revenue expectations of $32.5 billion. While the forecast is above the expectations chalked out by the average analyst expectation of $31.9 billion, it falls short of the lofty market expectation of $37.9 billion.
One can hardly fault the markets and analysts demanding consistently exaggerated performance from the chip manufacturer. In the last three quarters alone, Nvidia has reported revenue growth that exceeds 200%. However, the results for the second quarter turned out to be a mild disappointment for the markets as the revenue of $30 billion jumped by 15% only. This, said analysts, was the smallest outperformance reported by Nvidia in the last six quarters.
Limping on the runway!
Cash Strapped airline SpiceJet is eyeing a fundraising of ₹3,200 crore via Qualified Institutional Placements, warrants and capital infusion by none other than the promoter.
In a presentation, the beleaguered domestic carrier said that the funds raised would be used in fleet ungrounding, settlement of liabilities, induction of new fleet and other general administrative purposes.
SpiceJet will be raising ₹2,500 crore via QIP, and ₹736 crore through previous warrants and promoter infusion. Earlier in January, the airline raised ₹1,060 crore preferential issues against the ₹2,250 crore funding target announced a month earlier.
SpiceJet’s journey has been marked with heavy turbulences and jarring shakedowns in the last couple of years. Since FY19, its operational fleet has plunged from 24 aircraft to 28 planes in 2024. 36 of its aircraft remain grounded due to a funding crunch.
Source: Google Finance
A handsome raise!
Tata Sons Chairman N Chandrasekaran bagged a 19.8% remuneration hike in FY24 taking his total payout to ₹135.3 crore. The rise was due to a surge in commission on the profit of the unlisted, holding company of the group.
As per the annual report, the remuneration of all the Tata Sons directors shot up 16% as the company paid ₹200 crore to the big wigs compared to ₹172.5 crore paid in FY23.
Contrasted with the directors, the salary and remuneration of Tata Sons’ employees inched up by a measly 2.5% to ₹441 crore in the period.
Data compiled by the Business Standard Research Bureau indicates that executive compensation has tempered down in FY24, after experiencing two years of strong growth. Combined remuneration of the Key Managerial Personnel of BSE 200 companies in FY24 moved marginally by 3.9% YoY to ₹8,304 crore compared to ₹7,990 crore earlier.
Last year, the RBI slotted Tata Sons as an upper-layer non-banking financial company, effectively making it mandatory to list its shares. However, the company paid off its debt of ₹21,813 crore to seek an exemption from listing as sought by the RBI.
The company, currently, registered as a Core Investment Company with the RBI has filed an application seeking a voluntary surrender of its registration. The company has also requested that it should be allowed to operate as an unregistered CIC.
Invest wisely
A critical part of investing is to buy stocks at a cheap valuation, when the market is riddled with overwhelming fear and panic, and to sell them when the markets are saturated with irrational exuberance. Learning to read the signs and signals of the market is truly important. This is where the Appreciate app can be of great help to diligent investors. With our deep research capabilities and macroeconomic indicators, you will always be ahead of the market in decoding the market signals, and ensure that you stay one step ahead of the curve.
Warm regards,
Another week
in the markets
