Previous Day Market Update
Sensex closed at 55949.10 up by 4.89 points
Nifty closed at 16636.90 up by 2.20 points
HDFC Bank has listed its 3.7% AT1 bonds at the IFSC in GIFT City, Gujarat. This is special for India as the AT1 bonds were dollar denominated and had raised $1 billion for HDFC Bank to boost its Tier-1 Capital. Since its establishment in 2018, the India INX platform has over $55 billion of medium term notes established and $28 billion of bond listings. HDFC had raised these fund at 3.7%, substantially lower than the initial guidance of 4.125%. The IFSC provides the issuers a seamless issuance and listing process flow.
Global oil giants are preparing to bid for the government stake in BPCL as part of the strategic sale of PSUs proposed by the government. The government plans to sell its entire 52.98% stake in BPCL. Vedanta, Apollo Global and I-Squared Capital are in the fray for the stake. The bidding process now allows other interested parties to form a consortium with any of these three bidders. Large oil companies like BP, Exxon and Shell had not submitted their EOI in November last year. However, Rosneft is interested in the stake.
It appears that the Buffett ratio is finally throwing up some area of concern for the Indian equity markets. Buffett ratio measures the ratio of market capitalization of the stock exchanges with the GDP of that country. In the case of India, the Buffett ratio currently stands at 104%, against the historical average of 79%. While the GDP is expected to recover sharply post the pandemic, the market cap accretion has risen more than proportionately. MSCI India is trading at 20X P/E against historical average of 15X P/E ratio.
A recent consumer survey conducted by Accenture has thrown up some interesting consumer insights. The survey was across 25,000 consumer spread across 22 countries, including 2,000 consumers from India. Most consumers are in the processing of reassessing their priorities and future consumer buying patterns are likely to be substantially impacted by this shift. Only 7% of the Indian consumers admitted that the pandemic had not made any difference to their behaviour pattern. For 93%, it has mattered.
According to a recent report by CARE Ratings, Indian pharma industry is expected to grow by 11% over next 2 year to touch $60 billion. Some of the positives identified by the report for Indian pharma include patent expiry pipeline, global de-risking of China dependency, PE investments and a revival in demand for generics in the aftermath of COVID-19. The size of the Indian pharma market is currently at $45 billion and while it ranks third in volumes, it ranks thirteenth on value. That is largely due to generic dominance.
SpiceJet has agreed to a settlement with aircraft lessor, Avolon. This paves the way for the 737 Max Jets to return to service. SpiceJet expects the 737 Max Jets to play a key role in playing the recovery post the pandemic. This approval of 737 max jets matters to SpiceJet as it has one of the largest fleets of Boeing 737 Max aircraft. SpiceJet also operates an air cargo service under the brand name SpiceXpress offering efficient and seamless cargo connectivity. This had been a major boon for transporting COVID vaccines.
The NCLAT has now given a time frame of 2 weeks to the Kalrock-Jalan consortium to respond to the plethora of claims and allegations made by the Jet Airways Employee Associations. The association had flagged major concerns over pending salaries and retirement benefits under the resolution plans which had been approved by the NCLT. Jet Airways has been grounded since 2019 due to a cash crunch. The consortium needs to address the workmen grievances quickly if it has to resume operations by year-end.
The US economy is estimated to have grown at a faster pace than originally anticipated, which would finally lift the GDP to above the pre-pandemic levels. This is supported by heft growth in corporate profits for the June quarter. For the June quarter, the GDP is estimated to have grown by 6.7%, albeit on a low base. The original estimate was 6.5%. The GDP had grown by 6.3% in the Mar-21 quarter. For the US, the good news is that the level of GDP was 0.8% higher than at its peak level in the fourth quarter of 2019.