Daily Market Highlights AUG 20

Previous Day Market Update 

Sensex closed at 55629 down by 162 points

Nifty closed at 16568 down by 45 points

India’s largest oil extractor, ONGC, is looking for partners to enhance production at its oil fields. This is in line with its goal of maximising recovery from its producing fields, especially the marginal fields nominally allotted to ONGC. Currently, a total of 11 on-land contract areas consisting of 43 oil and gas fields with oil equivalent gas volume of 160 million tonnes of oil equivalent or MTOE were on offer. These are across the states of Gujarat, Assam, Tamil Nadu and Andhra Pradesh. India import 85% of crude requirement.

After a frenetic rally to beyond $75/bbl, oil prices have been consistently pressured by weak demand and a strong dollar. In fact, on 19 August, oil was down for the sixth trading session in succession. This comes in the midst of oil producers planning huge supply hikes and capital investments. Brent Crude fell 3.6% on Thursday to $65.82/bbl while the WTI crude fell 3.9% to $62.67 a barrel. The dollar had hit a 9-month high after Fed minutes hinted at tapering as early as end of this year.US gasoline inventories surged last week.

The volumes in ethanol blending by sugar companies have been picking up at a rapid pace. If you look at the last two sugar cycles, a sugar cycle lasts from October to September, a total of 3.37 lakh MT and 9.26 lakh MT of sugar respectively had been diverted to ethanol. In the current season ending in Sep-21, it is estimated that nearly 20 lakh MT of sugar have been diverted to ethanol blending. This is likely to grow to 35 lakh MT next year and 60 lakh MT by 2024-25. Additional ethanol capacities are expected by 2024.

A special Mumbai court allowed release of properties worth Rs.440 crore of Nirav Modi confiscated by the Enforcement Directorate, towards default by Nirav Modi to PNB. Nirav Modi and his uncle Mehul Choksi of Gitanjali Gems defrauded PNB to the tune of Rs.14,000 crore via fraudulent credit facilities. The court ruled that the quantifiable loss of the claimants had been recognized by the Debt Recovery Tribunal, which had passed judgments in their favour. Nirav Modi is currently in UK jail fighting extradition to India.

Jet Airways employees have moved the NCLAT seeking to quash the NCLT approval for the Kalrock-Jalan resolution plan. They cited concerns over continuity of business and unpaid salary dues. The Kalrock-Jalan resolution plan had been approved by NCLT in June but the net recoveries for creditors and operational creditors was extremely low. While the NCLT had only admitted a fraction of the claims filed by the airline employees and the operational creditors, the final payment by Kalrock-Jalan was likely to be much lower.

The board of Aarti Industries approved the demerger of Aarti Pharmalabs, that will house its pharma business and specialty chemicals business related to pharma sector. The ideas was to allow both companies to achieve operating efficiencies. Under the demerger deal, shareholders of Aarti Industries will get 1 share of Aarti Pharmalabs for every 4 shares held. While the record data is yet to be announced, this demerger will position Aarti in 2 high-growth segments viz. pharmaceuticals and specialty chemicals.

VLCC Health Care filed DRHP with SEBI for its proposed IPO. The IPO will comprise of a fresh issue of shares of Rs.300 crore and an offer for sale or OFS of 89.22 lakh shares by promoters and existing shareholders. VLCC will use the fresh IPO proceeds to establish VLCC Wellness Clinics in India and GCC Region, apart from refurbishing existing VLCC Wellness Clinics. It will also use the funds to defray part of its debt. Apart from running beauty and wellness clinics, VLCC also sells a range of branded VLCC personal care products.

CarTrade will list on BSE and the NSE on Friday 20 August, along with Nuvoco Vistas. The other two IPOs of Chemplast Sanmar and Aptus Value Housing will debut on bourses on Monday. As per the GMP trends, CarTrade commands a premium of Rs.135, a modest 8% gain over the IPO price. Its GMP has fallen from a high of Rs.600 in the previous week, before a spate of tepid listings dampened sentiments. The Rs.2,999 crore CarTrade IPO was entirely an OFS. While retail was tepid, QIB and HNI demand had been robust.

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