ETMarkets Morning Podcast: Lucrative deal! Lock in 8.2% yield on your deposit

· Brokerages gung ho on ICICI Bank stock
· Indian market P/E premium to EM peers shrinks
· Govt seeks to break up ONGC into smaller units
· India Grid NCD offers chance to lock in deposit at 8.2%

Hi there. Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh.

Let’s start with a quick glance on the state of the markets.

Dalal Street look set to make a strong opening with Nifty futures on Singapore Exchange trading some 200 points higher eary in the monring. However, stocks in the rest of Asia drifted at the open, as investors looked for clues on the economic recovery and awaited the outcome of a US Fed meeting later this week. US stocks rallied on Friday, driving the S&P 500 to a near-record closing high, after factory data and new home sales underscored a booming economy. US Treasuries traded steady. The dollar maintained losses against major peers in early trade. Bitcoin fell to the lowest in seven weeks on Monday as it struggle with the $50,000 level and nearby technicals. Oil prices were little changed, as were those of gold.

That said, here’s what else is making news.

The recent surge in Covid cases has shrunk India’s valuation premium to its emerging market (EM) peers, perhaps giving an entry opportunity for those on the sidelines. The P/E premium of MSCI India — an index tracked by global fund managers to measure local stock values — dropped below its five-year average to 38%. The MSCI India index is trading at 20.2 times its one-year forward projected earnings. Asia’s fourth-biggest market by value historically trades at a premium of 45-50% on the long-term basis to its EM peers.

Brokerages have maintained bullish views on private sector lender ICICI Bank and some have even raised the target price on the stock after it reported 260.5% growth in standalone profit to Rs 4,402.61 crore from a year ago. CLSA, Dolat Capital, Edelweiss Wealth, Emkay Global and Motilal Oswal have maintained a buy rating. CLSA has raised the target price on ICICI Bank to Rs 825 from Rs 800 and Dolat Capital has raised it to Rs 700 from Rs 640. Shares of ICICI Bank ended 1.6% lower at Rs 570 on Friday.

Investors will have a good opportunity to lock money at higher interest rates when the NCD of India Grid Trust opens for subscription on April 28. The NCDs rated the highest ‘AAA’ will be issued on a first come, first served basis. The NCD is offering interest rates as much as 8.2%, way higher than the long-term deposits of any top-rated company. Financial planners are advising clients to put up to 10% of their fixed income portfolio into this security. The issue closes on May 7.

Overseas investors have slashed their bullish derivative bets on India’s main benchmark Nifty as the second wave of Covid-19 across the country has forced them to turn cautious about the country’s near-term prospects. Their net bullish positions in index futures, including the Nifty, have lightened to Rs 2,250 crore from Rs 9,500 crore on January 8, according to IIFL Securities. Analysts say foreigners are cutting their short-term trading bets with the outlook for the economy turning uncertain after the virus spreading rapidly and causing record deaths.

AND LASTLY, in a move that will turn ONGC into a lame duck, the oil ministry has drawn up plans to carve up the country’s largest explorer into smaller entities, sell stake in its major producing and upcoming fields to private companies and privatise smaller discoveries. The action plan centres around hiving off in-house operations — drilling, well services, logging, workover services and data processing — into separate entities. It identifies Ratna-R and Pana-Mukta offshore fields as well as Gandhar onland in Gujarat for inducting private partners in the western region.

NOW Before I go, here is a look at some of the stocks buzzing this morning…

HCL Technologies has offered a skill-based allowance of 25-30% of their CTC to about 16,000 employees.

M&M Financial Services plans to carve out a special business unit for its fintech vertical, which will be run like a “separate independent company”, said MD Ramesh Iyer.

The Srei Group said it received an expression of interest for capital infusion from New York-based private investment firm Cerberus Global Investments B.V.

Karnataka Bank on Saturday said it is targeting to grow its business at 12 per cent to over Rs 1.42 lakh crore in the current fiscal year and will gradually increase the share of retail loan in its portfolio.

Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.

That’s it for now. Stay put with us for all the market news through the day. Happy investing!