Daily Market Highlights JUN 21

morning main Daily Market Highlights JUN 21

Previous Day Market

Sensex closed at 52,344.45 up by 21.12 points

Nifty closed at 15,683.35 down by 8.05 points

In an asset attachment threat to the Indian government-owned companies issued by Cairn Energy PLC, Air India has time till mid-July to challenge the lawsuit. Based on an arbitral award, Cairn is seeking to recover $1.26 billion by taking over assets of Air India overseas. India had confiscated dividends and the shares in Cairn UK’s Demat account for non-payment of capital gains tax on the sale of Cairn to Vedanta. Against claimed dues of $1.72 billion, Cairn has now identified Indian assets worth $70 billion overseas.

In the Nifty index, 4 out of the 10 most valuable companies by market cap, jointly added Rs.68,459 crore last week. Hindustan Unilever and Infosys were among the big gainers. During the week, Hindustan Unilever added Rs.26,832 crore while Infosys added Rs.24,629 crore. Other notable value accretions included TCS Rs.9,359 and Reliance Industries Rs.7,639 crore. Among losers, SBI lost Rs.14,949 crore, HDFC Rs.12,796 crore, Kotak Bank Rs.6,909 crore, ICICI Bank Rs.3,645 crore and HDFC Bank Rs.3,504 crore.

Apart from the meltdown in Adani stocks, metals and industrial commodities also saw the unraveling of the long trade. Metal stocks have rallied 3-4 times in the last 6 months. In fact, the BSE Metal index lost close to 7% during the week as there was a global rush out of cyclical. Big commodity losers during the week included Coal India, Vedanta, JSW Steel, and SAIL. Two key reasons for the cooldown in metal stocks were the sudden strengthening of the USD and China’s attempts to sell metal reserves to cool metal inflation.

India Pesticides, a leading agrochemicals company, has fixed a price band of Rs.290-296 for its upcoming IPO opening for subscription on 23-Jun. The Rs.800 crore IPO will comprise Rs.100 crore by way of fresh issue and Rs.700 crore as an offer for sale. The anchor investments will be opened on 22-Jun. The company is an R&D-focused agrochemicals company with a product portfolio consisting of herbicides, insecticides, and fungicides; apart from APIs. It has a capacity of 19,500 MT for technicals and 6,500 MT for formulations.

Foreign portfolio investors or FPIs continued to be net buyers infusing Rs.13,667 crore in the first 3 weeks of Jun-21. The FPIs actually infused Rs.15,312 crore into equities in June to date even as they remained sellers in debt. There was a minor sell-off in debt to the tune of Rs.1,645 crore after the US Fed hinted that it would gradually hike rates by at least 50 bps by 2023. June does appear like a turnaround in FPI sentiments as they had pulled out Rs.2,666 crore in May-21 and Rs.9,435 crore in Apr-21 post-COVID 2.0.

It is reported in sections of the press that Aramco chairman, Yasir Al-Rumayyan, could be inducted on the board of Reliance Industries during the AGM on 24 Jun. This could be a precursor to the proposed $15 billion sales of RIL’s OTC business to Saudi Aramco, which has been in the works for a long time. This would top out a frenetic last 2 years when Jio Digital brought in partners like Google, Facebook, Microsoft, and Qualcomm on board. Aramco would top off an exciting 2 years of value creation at the Reliance Group.

SEBI asked PNB Housing Finance to halt its proposed share sale program. Carlyle had agreed to invest Rs.3,185 crore in PNB Housing via preferential offering. SEBI observed that the issue of shares by PNB Housing was ultra-vires the articles of association. The deal came under the lens after proxy advisor, SES, pointed that the deal hampered the interests of minority shareholders of PNB Housing. Ideally, the capital issue should have been done through a rights issue. The issue is currently awaiting regulatory clarity.

The MPC minutes published on 18 June, reiterated the RBI commitment to keep rates low despite rising inflation. However, the RBI minutes pertain to the MPC meeting which concluded on 04 June. Hence it does not factor in either the CPI inflation or the Fed minutes. Even the RBI governor was quick to underline the importance of maintaining a dovish stance till sustainable growth was not back. That was the broad theme of submissions made by all the members of the MPC. May-21 Inflation is above the RBI comfort limit of 6%.

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