19th April 2024 – 26th April 2024 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 5,099.66 | 15,927.90 | 15.03 | 38,239.66 | 2,793.47 | 17,763.27 |
| 2.67% | 4.23% | -19.67% | 0.67% | 2.66% | 1.74% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 22,419 | $2,349.60 | $27.23 | $88.06 | 83.40 | 89.18 |
| 1.23% | -2.37% | -5.29% | 0.77% | -0.08% | 0.24% |
Source: MarketWatch
Hello Saturday,
This week, Personal Consumption Expenditure data for March rose 2.7% compared to a year earlier signalling that inflationary pressures remain firm, TotalEnergies to buy back $2 billion shares after net profit growth and Swiggy confidentially files draft IPO papers for $1.25 billion listing.
- PCE data for March, the preferred inflation gauge for the Federal Reserve rose 2.7% in March, a little higher than economists’ expectations. Stock markets and bonds absorbed the new data without any major changes.
- French oil-and-gas companies TotalEnergies, which reported a net profit of $5.72 billion in the latest quarter is pushing ahead with its buyback programme.
- Microsoft registers a leap in revenues on the back of AI offerings
- Shriram Finance drivers stellar numbers for the last quarter of FY24
- Swiggy files confidential draft IPO for a $1.25 billion public listing
Taking stock | Data discoveries | Total domination | AI booster | Shriram Finance hits it out of the park! | Swiggy comes knocking! | Invest wisely | Another week in the markets
Taking stock
Stubborn inflation, notwithstanding, the three major indices logged weekly advances. Bolstered by the rise in the Magnificent Seven stocks, the Nasdaq Composite recorded a 2% gain, while the S&P 500 jumped 1%. The Dow Jones rose 0.4%
Data discoveries
The Federal Reserve’s preferred inflation gauge —the Personal Consumption Expenditure data —- rose 2.7% in March compared to a year earlier. The core PCE index, which strips away food and inflation data, rose by 2.8%.
Both the PCE data and the core PCE data exceeded economists’ expectations. PCE data, as per economists’ expectations, was pegged at 2.6% in March and the core PCE was projected to rise by 2.7%. On a month-on-month basis, both the PCE and the core PCE data rose by 0.3%.
Real GDP rose by 1.6% in the first quarter of 2024, as per economic data released on Thursday. The GDP growth rate lagged considerably when compared to the 2.4% growth rate estimated by economists polled by The Wall Street Journal.
PCE data for the first quarter delivered along with the GDP data on Thursday indicated that the index rose by 3.4%. Core PCE prices, which exclude food and energy prices, rose by 3.7% for the first quarter compared to 2% growth in the same quarter of the previous year.
Despite the firmer-than-anticipated inflation figures, stocks and bonds remained largely undisturbed. The equity markets, which were shook after the release of the Thursday GDP figures, took relief from the fact that the hotter-than-expected inflation data for the first quarter of FY24 was on account of an upward revision in January’s inflation reading, and not March.
The PCE index figure for January was revised from 0.38% to 0.42% and the core PCE index for February was revised from 0.26% to 0.34%.
Nevertheless, hot inflation figures for three months in a row throw a spanner in the works for the Federal Reserve’s lofty goal of a soft landing. As per the CME group, investors are now baking in a 17% chance that the Federal Reserve will keep interest rates steady this year.
Total domination
TotalEnergies, the French oil and gas company announced its plans of buying back $2 billion of its shares after net profits rose in the latest quarter, outperforming market analysts’ expectations.
The company reported a net profit of $5.72 billion in the first quarter of FY24 compared to $5.56 reported in the same quarter in FY23. Analysts were expecting the company to deliver a net profit of $4.88 billion. The company also said it will hike its first interim dividend by 7% to 0.79 euros per share or $0.85 for 2024.
Sales in the first quarter of FY24 plunged to $56.28 billion from $62.60 billion as hydrocarbon production declined 2% on an annual basis to about 2.46 million barrels a day. The company also stated that it expects hydrocarbon production to stay between 2.4 and 2.45 million barrels a day in the second quarter. TotalEnergies management also said that it would be expanding it natural gas holdings in Malaysia while adding that the company had benefitted from growth in natural gas production and recently kicked off operations from Brazil and Nigeria.
Last year, TotalEnergies purchased three gas-fired power plants in Texas for $635 million. The three plants put together have a total capacity of 1.5 gigawatts. The company also disclosed its plans to invest $5 billion in the business segment, which aligns with its larger goal of making investments running into $17 to $18 billion in the current year.
AI booster
Microsoft’s partnership with ChatGPT maker OpenAI is yielding massive dividends for the former. Its revenue has registered strong growth in the quarter ending March, vaulting to over $61.9 billion, while its net income grew by 20% to over $21.9 billion.
The company has been able to deliver stellar numbers thanks to surging demand for AI capabilities in its software and cloud computing domains. The burgeoning demand has prodded the company to step up on infrastructural expansion, which will be required to meet its newly set AI goals. Several ChatGPT offerings have been integrated with Microsoft’s array of products called Copilot, which is essentially AI capabilities that assist customers while they are using the Microsoft 365 suite.
Furthermore, AI is also boosting demand for cloud services. During the quarter, Microsoft reported that its services revenue rose by 31%. The company also said that demand for its AI services powered 7% revenue growth for its Azure services. Market analysts are expecting the Copilot service offerings to contribute billions to the company’s top line, adding that it will be a major revenue booster in the coming years. Customers have also been lauding Copilot’s capabilities, which span transcribing meetings, creating spreadsheets and writing emails.
In a conference call, the company said that it had incurred $14 billion in capex in the latest quarter, a marked increase from the $11.5 billion incurred in the prior quarter. The Chief Financial Officer Amy Hood said in the latest conference call that the demand for AI services is over and above what Microsoft can currently provide, which is prompting the company to channel more funds into building AI infrastructure.
Shriram Finance hits it out of the park!
Non-banking Finance Company Shriram Finance reported a 49% rise in its standalone quarterly net profit to ₹1,946 crore compared to ₹1,308 crore reported in the same quarter in FY23. The NBFC’s net interest income or NII shot up by 20% to a stellar ₹5,336 crore as against ₹4,446 crore in Q4FY23.
Net Interest Margins or NIMs were up sequentially from 8.99% in Q3 to 9.02% in Q4. Provisions were up by 1% to ₹1,261 crore. The company has also announced a dividend of ₹15 per share which will be paid to eligible shareholders before August 28. The total AUM of Shriram Finance as of March-end ramped up by 21.1% quarterly to ₹2,24,861.98 crore.
Swiggy comes knocking!
After Zomato, Swiggy is eyeing a public listing. The food delivery app has confidentially filed documents with the SEBI for a $1.25 billion or ₹10,400 crore public issue.
A Draft Red Herring Prospectus filed confidentially is not required to be released in the public domain. Swiggy shareholders have approved an IPO plan in which the food delivery company will offer ₹3,750 crore of fresh shares and an Offer For Sale worth ₹6,664 crore by existing shareholders. The IPO will also include a pre-IPO placement of shares worth ₹750 crore to anchor investors.
Prosus, which has a stake of 33% in the company and SoftBank are expected to sell a part of their stake in the Offer For Sale in the IPO. At ₹10,400 crores, Swiggy’s proposed IPO will be one of the biggest IPOs of new-age companies after the fintech firm Paytm’s IPO of ₹16,600 crore hit the market in 2021. Swiggy’s rival Zomato, which was listed in 2021 as well, had a ₹9,375 crore IPO.
In the run-up to the IPO, the company has been trying to cut back on its cash burn, which has led to the company shutting down several new experiments and pilot projects. The company has also laid off many employees in the past few months.
Invest wisely
Creating wealth requires one to stay invested for the long term. Recurrently churning one’s portfolio based on rumours, suggestions, “hot market tips” and unsolicited advice from friends and family is a sure-shot method of killing one’s returns and throwing good money after bad. To make the most of your investments, one must research deeply, exhaustively and without prejudice. This is where the Appreciate app can help you multiply your wealth and prosperity. With our rich research prowess and deep data troves, we can help you navigate the complexities of the US stock market with conviction, clarity and confidence.
Warm regards,
Another week
in the markets
