Daily Market News – Aug 4th

unnamed Daily Market News   Aug 4th


Wockhardt has struck a deal to supply millions of doses of COVID-19 vaccines to the United Kingdom. This will also include the vaccine developed jointly by AstraZeneca and Oxford. UK has gone aggressively to secure vaccine supplies. The UK government has also reserved 1 fill-and-finish production line at Wockhardt subsidiary in Wales for this purpose. Wockhardt will supply AstraZeneca with 30 million fill-and-finish doses over the next few months. Out of the 150 vaccines that are currently being developed for COVID-19, nearly 26 vaccines are already in the human trial stage.

Bandhan Bank saw huge block deals on Monday as the promoter sold stake to meet the RBI’s promoter ownership norms. Bandhan Financial Holdings sold 33.73 crore shares in a single day representing 20.95% of its holdings in the bank. This will bring down the promoter stake directly to 40% of the paid up capital. The deal worth Rs.10,600 crore was spread across 27 large deals and the deal was struck at a discount of 9.3% to the market price. In late 2018, the RBI had put restrictions on Bandhan Bank including a freeze on top management pay as the shareholding was way above the RBI stipulation.

The Sensex crashed by 600 points on Monday led lower by Reliance and other heavyweight financial stocks. Even as Coronavirus cases were on the rise, the markets were also worried that the RBI may have second thoughts on the rate cut due to inflation concerns. Reliance dropped by 2.83% and that had its impact on the markets overall. RIL has been under pressure after a number of large brokers downgraded the stock. Financial stocks also corrected on the fear that the EMI moratorium may be extended considering the slow recovery. The VIX shot up above the 25 mark on Monday.

Non food credit growth fell to 5.83% for the July 17 fortnight, the lowest level in the last 3 years. Clearly, the EMI moratorium has crunched banks for liquidity and they are struggling to give fresh credit to industry. While the banking system is flush with liquidity, the banks have been wary of lending due to the RBI FSR already expressing fears that the gross NPAs could rise from 8.5% to 12.5% by March 2021. Bank of America, in its report, pointed out that the slowing credit was a clear hint of a struggling economy. BOFA noted that high real lending rates were a stumbling block for credit growth.

A recent report by the Asian Development Bank or ADB has reported that the unprecedented recession could depress global remittances by nearly $109 billion. Clearly, Asia is likely to be the big loser from this trend. The ADB report noted that the migrant workers were the worst hit around the world and this pandemic had created a double whammy of falling income levels and job insecurity. In most cases, the migrant workers have also been forced to take wage cuts while many others have been forced to give up jobs to protect local jobs. The remittances in Asia alone are expected to fall by $54 billion during the year or half of the fall in remittances. These Asian remittances largely come from the Middle East and that is likely to be badly affected due to a combination of weak oil prices and also poor growth.

Bajaj Auto sales for the month of July 2020 fell by 8% sequentially and by 33% on a YOY basis. It is more surprising that the output was lower in July than in June. There was a 23% fall in domestic sales, but the bigger hit came from a 45% fall in export sales, which constitutes a significant portion of the total sales of Bajaj Auto. For the June quarter, Bajaj Auto had reported 53% fall in net profits and 60% fall in total revenues due to the pandemic conditions. While two wheelers demand is seeing a revival, it is the three wheeler demand that is deep in the negative. Plants are yet to start operating at full capacity.

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