Daily Market Highlights AUG 06

1 Daily Market Highlights AUG 06

Previous Day Market Update

Sensex reached 54,492.84 up by 123.07 points

Nifty reached 16,294.60 up by  35.80 points

In a significant move by the Indian government , the government introduced a Bill in Parliament to nullify the provision of retrospective taxation in the Income Tax Act. This brings an end to a long period of regulatory uncertainty for foreign investors like Cairn and Vodafone. The total amount the government will have to repay is around Rs.8,100 crore, which will be paid without interest. It remains to be seen if this is a precursor to the government taking over Vodafone India, a day after KM Birla opted to exit.

The US trade deficit surged to record high in Jun-21 on the back of a surge in imports of industrial supplies. On the positive side, this could be a signal that global supply chains are getting back to normal. The trade gap widened by $4.6 billion to $75.7 billion, 7% higher than May-21. Most of the rise in imports of goods was accounted for by industrial materials such as iron, steel and chemicals, apart from non-monetary gold. Exports were also higher by gained just $1.2 billion over May. Travel and tourism was also buoyant.

Cipla reported 24% higher net profits at Rs.715 crore in the Jun-21 quarter, helped by strong revenue in its India business. Overall revenues from operations were up 27% at Rs.5,504 crore while EBITDA was up 28% at Rs.1,346 crore. The EBITDA margins also scaled up to 24.5%. The highlight was the 68% growth in India business led by chronic therapies and COVID-19 portfolio. Branded prescriptions and trade generics also reported steady order flows. API business grew 69% yoy in dollar terms but profits were under stress.

Panacea Biotech has signed a licensing agreement to manufacture 25 million doses of Sputnik-V, the Russian COVID-19 vaccine. Apart from Panacea and RDIF, Generium and Dr. Reddy Labs are the other signatories to this agreement. Panacea will Sputnik-V vaccine using “the ready to Generium drug substance and will supply the entire quantity to Reddy Labs for distribution in India. It may be recollected that Sputnik-V discovered by Gamaleya Institute of Russia, was the third vaccine granted EUA in India.

Industry captains are hoping that the government would intervene to protect Vodafone India and prevent an all-out bankruptcy. This view was echoed, among other, by IDFC Bank CEO, V Vaidyanathan. IDFC Bank has one of the highest relative exposures to Vodafone and has already provided Rs.487 crores towards Vodafone Idea account against its total group exposure of Rs.2,000 crores apart from spectrum acquisition guarantee of Rs,1,244 crores. Both Birla and Vodafone UK are willing to cede their stake to government.

GAIL reported a 6-fold increase in net profits at Rs.1,530 crore, albeit lower than the March quarter. The increase in profits is on account of performance in natural gas marketing and transmission, improved margins in gas marketing and better price realisation in petrochemicals. COVID 2.0 impacted gas sales and demand for petrochemicals in the Jun-21 quarter. However, natural gas transmission volume were up by 19% yoy while profits from gas transported through GAIL pipelines grew 27% Rs.915 crore in Jun-21 Q1.

Adani Group was permitted a 3-month extension to take over Thiruvananthapuram, Jaipur and Guwahati airports. Adani group had made this request to the AAI on account of the disruption caused by COVID 2.0. However, the AAI confirmed that the airports of Mangalore, Ahmedabad and Lucknow had already been handed over to the Adani Group last year. Recently, Adani became the largest airport operator in India with the acquisition of MIAL. ICRA has estimated airport sector to incur net loss of Rs.5,400 crore in FY22.

In the midst of the controversy surrounding the Carlyle deal with PNB Housing, the Rs.4,000 crore stake sale to Carlyle Group and Salisbury Investments was approved by the Competition Commission of India. However, the onus is on the Securities Appellate Tribunal which needs to take the final call on the SEBI order asking PNB Housing to put the deal on hold. Aditya Puri will be actively involved in the new set-up once it is taken over by Carlyle. The dispute is now whether PNB Housing needs an independent valuation.

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