Daily Market Update – Aug 26th

unnamed Daily Market Update   Aug 26th


Doses of the potential Coronavirus vaccine developed by the Oxford University have begun to arrive at the Bharatiya Vidyapeeth Medical College for Phase 2 clinical human trials. The trials are expected to commence on 26 August. The hospital will target around 350 respondents to begin with. The human trials are being handled in India by the Serum Institute which has the mandate to manufacture these vaccines once they are approved after human trials. The potential vaccine developed by Oxford Research will be jointly manufactured by Serum in association with AstraZeneca PLC of UK.

SEBI has clarified those portfolio managers handling money on behalf of clients under the current PMS rules cannot impose a lock in clause. Of course, the portfolio manager will be allowed to charge an exit load in the event of early exit but any type of locking in will not be permitted. In addition, the portfolio manager will also be required to document the total fees payable by the client towards the PMS Service along with a detailed break-up of the specific charges. There had been issues in the past about unwarranted lock-ins imposed by PMS players as well as opaque charges on the client.

The RBI has warned that the Indian economy was likely to shrink substantially even in the second quarter ending Sep-20. The actual GDP numbers for the first quarter ending Jun-20 are expected to be announced towards the end of August, where the first signs of strain will be visible due to the impact of the pandemic lockdown. RBI has also pointed that some of the momentum showed by the economic charts in May and June had lost momentum in July as the restrictions continued in large parts of India. RBI has hinted that the contraction in actual percentage terms could be unprecedented.

Tata Motors has been on a debt restructuring spree for some time and now it has set a clear cut time line of the next 3 years to pare its total debt of nearly $6.4 billion or close to Rs.50,000 crore. As part of its efforts to cut costs and improve profitability, the company is also on a major debt reduction spree. The company also plans to achieve free cash flows by the year 2021 and substantially reduce debt by 2022. In the last few months, the company has also been badly hit by the pandemic with the global JLR sales taking a huge hit on account of the pandemic and the global production lockdown imposed.

IT was a day of contrasts for SBI. On a day when Goldman Sachs upped the target of SBI by 54%, Moody’s actually downgraded the baseline credit assessment of SBI to ba2 from ba1. The logic for this lowering of baseline assessment was that the rating agency expected the profitability and its asset quality to be severely impacted in the coming months. Moody’s also reaffirmed the foreign currency deposit ratings of SBI at Baa3, which is at par with the sovereign ratings of India. In the case of SBI, Moody’s has also cautioned that a slowdown in output and jobs could put stress on retail and MSME loan portfolio of SBI. Also, the post moratorium period is expected to be fairly critical for the bank. This could materially worsen the progress in metrics achieved by SBI in the last couple of years.

The JSW group has decided to combine the distribution and supply of its steel and cement business under the banner of JSW One. In fact, JSW One has already commenced operations in Eastern India and is expected to soon expand on a pan-India basis over the next couple of years. Parth Jindal, MD of JSW One, pointed out that it could provide access to a complete array of home needs ranging from TMT rebars, cement, steel roofing and even paint through its outlets. The trend in the last few years has been to own the customer experience and improve ROI by transforming into a solutions provider.

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