Previous Day Market Update
Sensex closed at 55958 up up by 403 points
Nifty closed at 16624.60 up by 128.15 points
REITs and INVITs will now be included in the Nifty index effective from 30-Sep. This is part of the new criteria as well as the changes in index composition announced by the NSE. This is likely to encourage institutional participation in REITs, especially by passive funds and ETFs. REITs comprise commercial real estate assets, while INVITs are infrastructure assets like highways, power transmission assets. Currently, a total of 6 INVITs and 3 REITs are listed on stock exchanges with net assets of Rs.164,000 crore as AUM.
Rakesh Jhunjhunwala picked up a 1.59% stake in Canara Bank worth Rs.431 crore as part of the QIP placement. Jhunjhunwala picked up a total of 288.50 lakh shares of Canara Bank, and this constitutes 1.59% of the capital of the bank. The QIP had been open from 17-Aug to 23-Aug. Overall, the bank has allotted a total of 16.74 crore equity shares to eligible QIPs at an issue price of Rs.149.35 aggregating Rs.2,500 crore. Other key subscribers were LIC, Morgan Stanley, Volrado, BNP, SocGen and ICICI Pru Life.
Government is likely to allow FDI in LIC, to help overseas investors to directly participate in the initial public offer. This will be a specific approval for LIC. However, DIPAM has indicated that the proposal was still only under consideration. Currently, FDI up to 74% is permitted in insurance through automatic route, but this does not apply to LIC since it is governed by a separate Act. The success of the LIC IPO is critical if the government has to get close to its disinvestment target of Rs.175,000 crore for fiscal year 2021-22.
There is good news on the GDP front, albeit due to the base effect. GDP for the June quarter, which will be announced on the last working day of August, is expected at a robust 18.5% and economists are not ruling out even higher levels. This was indicated by SBI in its latest issue of Ecowrap. RBI had actually estimated GDP growth at 21.4% FOR the quarter. SBI considers a total of 41 high frequency indicators in its proprietary estimation model. For the June quarter, SBI Research expects the GVA to grow at 15%.
Bajaj Finserv secured in-principle approval from SEBI to sponsor a mutual fund. Post this news, the stock touched an all-time high. Bajaj Finserv, is the holding company for the consumer finance and the insurance business of the Bajaj group, both of which are among the leaders in the industry. The stock is up 42% in the last 3 months and its market cap has already crossed Rs.250,000 crore. The Indian mutual fund space is already crowded with over 40 players, but Bajaj will be able to leverage its vast retail customer network.
Supreme Court has instructed the government not to encash bank guarantees of Bharti Airtel over the AGR dues of Videocon, which was acquired by Bharti. DOT had demanded Rs.1,376 crore from Airtel on behalf of Videocon, failing which they would encash bank guarantees. Airtel had then appealed to the Supreme Court with the contention that as per the agreement, Videocon was responsible for settling all such prior dues. Supreme Court has asked DOT not to invoke the bank guarantees for a period of 3 weeks.
India’s PSU power major, NTPC Ltd, is in discussions with SAIL to sell its stake in NTPC-SAIL Power, the 50:50 joint venture to the steel maker. However, the companies are yet to confirm. NTPC has made a big shift towards green energy and is trying to reduce the fossil fuel assets in its portfolio. NTPC-SAIL JV was formed in 2001 and supplies power to Chhattisgarh and to Union Territories like Dadra, Daman and Diu. The JV was formed by acquiring captive power units of SAIL’s steel plants at Durgapur, Rourkela and Bhilai.
This seems to be the boom time for Fintech start-ups to raise money and Khatabook is also in the fray. The Kirana-tech start-up raised $100 million as part of Series C funding led by Tribe Capital and Moore Strategic Ventures. This deal has assigned a valuation $600 million to the company, still short of becoming a Unicorn. Khatabook will use the funds to accelerate hiring across engineering, product, design, analytics and data science functions. It will also launch financial services offerings for its merchant partners.