NEWSLETTER

Celebrating
100th Edition
 Issue
JANUARY, 2022
No. 100
NIVESH

NEWSLETTER

Market this week

Sensex: 57,200.23
Nifty: 17,101.95
Dollar: ₹75.00
Euro: ₹83.62
Gold (10g): ₹49,480.00
Brent crude ($/bbl): 88.88

STOCK OF THE WEEK- MARUTI SUZUKI INDIA LTD

Term of the week IN THIS ISSUE

Crown Jewel Defence

INDIA'S B2B SPENDING IS PREDICTED TO

RISE BY 10.3% IN 2022
The Crown Jewel Defence strategy in mergers
and acquisitions(M&A) is when the target AS BITCOIN FALLS 50% FROM HISTORIC
company of a hostile takeover sells its most LEVELS, INVESTORS ANTICIPATE A
valuable assets, to a friendly third party to 'CRYPTO WINTER'
reduce its attractiveness to the hostile bidder.
GOLD SET FOR BIGGEST WEEKLY FALL
The crown jewel defence is a last-resort
SINCE NOVEMBER ON FED'S HAWKISH
defence since the target company will be
STANCE
intentionally destroying part of its value, with
the hope that the acquirer drops its hostile bid.
RESERVE BANK OF INDIA IMPOSES
PENALTIES ON 8 COOPERATIVE BANKS

GLOBAL DASHBOARD
INDIA'S B2B SPENDING IS PREDICTED TO RISE BY 10.3% IN 2022
by Payal Nagpal

Business-to-business (B2B) expenditure in

India is predicted to rise by 10.3 % in 2022 as
per the report of India Business Spend
Indicator (IBSI). The report was released by
American Express and Invest India in
collaboration with the Centre for Business and
Economic Research (CEBR). According to the
report, Indian businesses saw their
expenditure increase three times quicker than
the expectations from their comparable
foreign counterparts. The report highlighted
that spending in India is increasing in nine
major B2B categories (as shown in the figure).
On a year-over-year basis, a total of B2B spend in India increased by 9.4% during Q3- October to
December 2021. With 74% of businesses expected to spend more on technology and 72% aiming to
make more capital investments in 2022, the survey implies optimism and increased confidence. The
report also uncovered other patterns, such as the fact that 59 % of B2B sellers believe the key benefit
of digital payments is the speed of payments and the ability to track spending.
"India saw the strongest B2B expenditure growth compared to projections of six other major
economies," said Manoj Adlakha, CEO of American Express Banking Corp. in India. “In comparison to
2021, India's overall B2B spend is predicted to increase by 10.3% this year”. Further,he added "this
demonstrates that the Indian economy is still recovering from the economic challenges brought on by
the pandemic crisis. Some of the trends that originated or accelerated during the pandemic, such as
payments automation and innovative approaches to supply chain management, are likely to persist,
according to the poll ".

AS BITCOIN FALLS 50% FROM HISTORIC LEVELS, INVESTORS

ANTICIPATE A 'CRYPTO WINTER'
By Chhaya Roy
A 'crypto winter' is a cyclical phase in the crypto
market defined as a period of price decline with
no signs of recovery for more than a year. The
crypto market, like the stock market cycles, can
slip into a downward spiral when negative
investor sentiment drives prices drastically lower
over an extended period. Cryptocurrencies have
had a tepid start to 2022, with frequent value
depreciation and markets plunging every other
day. Bitcoin fell below $33,000 on Monday, 24th
January, reaching its lowest level since July. It
has subsequently rebounded beyond $36,000, but
it is still down about 50% from a record high
in November. Over the previous three months, cryptocurrency has plummeted owing to regulatory
scrutiny and geopolitical upheaval that have wiped out nearly 30,000 Bitcoin billionaires, as the
volatile cryptocurrency has collapsed from $69,000 in November to nearly $36,000 now. The crypto
meltdown occurred when the US Federal Reserve hinted at raising interest rates as soon as March and
withdrawing market assistance. Because of these uncertainties, some crypto investors are now
speculating on the potential of a "crypto winter".
However, these figures are insignificant compared to the tremors that gripped the crypto market from
2017 to 2018 i.e., the latest "crypto winters", when cryptocurrencies sank 80% from their peak in
January 2018, making the 2018 cryptocurrency crash worse than the 78 per cent drop recorded during
the Dot-com bubble.
The latest crypto dip, according to Vijay Ayyar, vice president of business development and
international at crypto exchange Luno, is more of a "correction" than a persistent decline. He sees
$30,000 as a crucial threshold to watch for bitcoin in the future. He believes, if it closes below the
threshold level in a week or longer it will almost certainly be the outset of a bear market. Nonetheless,
investors are concerned about the possibility of more regulatory restrictions on the crypto business.

ISSUE NO. 100 @lbsimnivesh @nivesh LBSIM nivesh_lbsim 02

GOLD SET FOR BIGGEST WEEKLY FALL SINCE NOVEMBER ON FED'S
HAWKISH STANCE
By Vineet Balwani

As markets absorbed the US Federal

Reserve's policy tightening policy plan,
which led to a jump in dollar and
Treasury yields, gold was flat on Friday
and poised for its sharpest weekly fall
since November. By 05:32 GMT, spot
gold was unchanged at $1,797.71 per
ounce. Gold futures in the United
States were up 0.2 per cent at
$1,798.80. According to Reuters
technical expert Wang Tao, it may
retest a support level of $1,792 per
ounce, with a break below that level
triggering a drop to $1,777. Spot silver went 0.2% to $22.79 an ounce. Platinum rose 0.6% to
$1,028.36, palladium fell 0.8% to $2,356.20, also metal fell about 2% for the week, its worst
fall since Nov.26.On Thursday, nearly a two-year peak was witnessed in the U.S. two-year
yield as it surged to 1.208%, which reflects interest rate expectations. The opportunity cost of
holding non-interest paying gold rises with higher interest rates and yields. The dollar index
climbed to highs last seen in July 2020 against other major currencies, after intimated by Fed
on Wednesday, faster and larger interest rate hikes in the months ahead are expected. As the
central bank's interest rates rise, gold prices will drift lower in 2022 and 2023. "Now the
expectation is of five rate hikes. In a sense, market expectations of monetary policy have
turned increasingly hawkish, which is unfavourable for gold because a lot of strength is seen in
the two-year yields and we've also seen that boosting the dollar index," said Harshal Barot, a
senior research consultant for South Asia at Metals Focus.

RESERVE BANK OF INDIA IMPOSES PENALTIES ON 8

COOPERATIVE BANKS
By Himanshu Bansal
The Reserve Bank of India (RBI) announced on
Monday (24/01/2022) that penalties have been
issued on eight cooperative banks for regulatory
compliance violations. The Associate Co-operative
Bank Ltd, Surat (Gujarat) has been fined Rs 4 lakh
for violating the Master Directions on 'Loans and
advances to directors, families, and firms/concerns
in which they are engaged,' as well as non-
compliance with the Master Directions on 'Know
Your Customer (KYC)'.
The Varachha Co-operative Bank Ltd, Surat, has
been fined Rs 1 lakh by the Reserve Bank of India
for violating the Depositor Education and Awareness
Fund Scheme, 2014. The Mumbai-based Mogaveera Co-operative Bank Ltd has been fined Rs 2 lakh for failing
to follow certain KYC guidelines. Vasai Janata Sahakari Bank, Palghar, has been fined Rs 2 lakh for violating
or failing to comply with RBI's 'Exposure Norms and Statutory/ Other Restrictions - UCBs' orders. In addition,
the RBI has fined Rajkot Peoples Co-operative Bank, Rajkot, Rs 1 lakh for violating RBI instructions on
'Loans and advances to directors, families, and firms/concerns in which they are interested. 'Bhadradri Co-
operative Urban Bank has been fined Rs 2 lakh for failing to follow RBI instructions on 'Exposure Norms and
Statutory/ Other Restrictions-UCBs' and 'Management of Advances-UCBs.'
The Jammu Central Co-operative Bank Ltd, Jammu, and the Jodhpur Nagrik Sahakari Bank, Jodhpur, have
each been fined Rs 1 lakh for breaking specific rules. The RBI, on the other hand, stated that the penalties are
based on regulatory compliance issues and are not meant to rule on the legitimacy of any transaction or
arrangement entered by banks with their customers.

ISSUE NO. 100 @lbsimnivesh @nivesh LBSIM nivesh_lbsim 03

 STOCK OF THE WEEK
MARUTI SUZUKI INDIA LTD.
by Sudhit Mahajan
About the company
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an Indian automobile
manufacturer, founded in 1981 and owned by the Government of India until 2003 when it was sold
to Suzuki Motor Corporation. As of July 2021, Maruti Suzuki was a 56 per cent subsidiary of Suzuki
Motor. And as of September 2021, Maruti Suzuki had a market share of 49 per cent in the Indian
passenger car market.

Source: Tradingview
Why Stock of the week
Maruti Suzuki has a market capitalization of 2.584T with a current market price of 8550.95 as of 28th
Jan 2022. It reported a 47.82% decline in consolidated net profit to Rs 1041.8 crore for the December
2021 quarter, due to an increase in price and semi-conductor shortage, but EBITDA exceeded by 16 due
to cost-cutting efforts. This week, when the market saw bearish momentum, Maruti Suzuki’s share price
grew by 10.04% i.e. by Rs804.50, till Thursday evening, but then declined by 3.05% on Friday, hence,
making it the Stock of the Week.

Technical Analysis:
Relative Strength Index (RSI) is currently at 64. MACD is bullish and the volumes reveal that the
buying momentum increased till Thursday, but sellers became active on Friday, 28th Jan 2022. OBV
DMI is also showing bullish momentum ahead.

Fundamental Analysis:
Stock P/E is 79.6, which is far lesser than the industry P/E. PEG ratio is -5.87 which shows there has
been a contraction in the earnings, but it is mostly due to the chip shortage problem and
pandemic.Debt/Equity ratio being 0.00. With ROE at 4.40% and ROCE at 5.20%, the company looks
pretty good on its fundamentals, but the ROE and ROCE has declined as compared to the previous years.
Even the Altman Z-Score for the company is 14.0, which means that the company is financially stable.
The Company has also been maintaining a healthy dividend payout ratio of 31.49%. The company has
also done CAPEX mostly on Plant and Machinery since 2020 which shows that the company is ready to
increase its production by a significant amount in the near future.

ISSUE NO. 100 @lbsimnivesh @nivesh LBSIM nivesh_lbsim 04

 GLOBAL DASHBOARD
by Bhumika Saxena & Daksh Kapoor

ISSUE NO. 100 @lbsimnivesh @nivesh LBSIM nivesh_lbsim 05