Market Movers: A major Saurabh Mukherjea bet is going sour quickly

MUMBAI: , a significant bet in the portfolio of Saurabh Mukherjea-led Marcellus Investment Manager, is undergoing some of its toughest days since listing.

The stock today tanked 13 per cent after sinking 5 per cent on Friday after a media report said that the head of Internal Audit at the bank’s Jaipur head office Sumit Dhir has resigned. Dhir was being touted as the natural replacement for Chief Audit Officer Nitin Gupta, who left the lender back in March.

Dhir’s resignation is the third high profile departure from the lender in 2021 after Chief Risk Officer Alok Gupta also resigned in July citing “personal reasons”. The high-profile departures are raising questions among investors over the asset quality practices at the lender, which came out of the second wave of the pandemic with very limited damage compared to its peers.

Given AU Small Finance Bank’s hefty valuations, the list of questions for the bank’s management is growing longer. Existing investors will hope that the lender will be able to provide clarity on the resignations and its asset quality during the release of its September quarter earnings. Till then, anxiety will reign supreme for investors.

Aluminium is stealing steel’s thunder

Just as investors have started to question the sustainability of surging global steel prices, aluminium is fast emerging as the next big bet in the commodity space.

Price of the base metal soared to a decade-high of $2,725 per tonne on the London Metal Exchange as supply shortage and burgeoning demand created a very tight market that Kotak Equities expects will sustain for the rest of the year.

That is great news for the likes of

, who are a major player in the global aluminium industry. Higher prices will boost the company and its arm Novelis’ operating performance as well as pump the balance sheet with cash. No wonder investors were chirpy today as the stock jumped 5 per cent on the NSE.

Worrisome VIX

While much of the market would have rejoiced at the sharp rally in benchmark indices for the second consecutive day, some keen observers had their eye on another index that largely goes under the radar during bull markets.

The India VIX index, an indicator of investors’ perception of volatility in the future, soared 9 per cent today, marking its biggest one-day rise in nearly two months. A sharp rise such as this for the volatility index on a day when the market was painted in green does raise a few curious eyebrows.

Santosh Meena, head of research at Swastika Investmart believes the bounce in the India VIX is likely a function of the aggressive covering of call options by call writers and some buying of put options of the Nifty50 index by institutional investors as protection, given the lofty heights of the index.

Perhaps, the market is not as calm as its headline index suggests.

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