Daily Market Update Dec 14

unnamed Daily Market Update Dec 14

The Burger King IPO will officially list on the bourses on 14 December. The Rs.810 crore IPO from Burger King had received a tremendous response and had been oversubscribed nearly 157 times. It was the major QSR IPO coming a long time after Jubilant Foods. The IPO had consisted of fresh issue of Rs.450 crore and an offer for sale of Rs.360 crore. The allotment price has been set at the upper end of the band at Rs.60 and the GMP is at 70% premium to the issue price. Interestingly, on 15 Dec, the IPO of Mrs Bectors Foods opens and it is the largest supplier of bakery products to Burger King.

With Brent crude price crossing the $50/bbl mark in the previous week, it has opened up two risks for India at a macro level. One is the probability of a widening trade deficit on the merchandise account. The second big risk is the chances of depreciation of the Indian rupee, which normally tends to be very sensitive to the price of oil since India relies on imports to meet 85% of daily oil needs. However, the rupee also got some support from the FIIs infusing Rs.16,000 crore during the previous week into the Indian markets. That sharp inflows has not only lifted markets but has also enhanced the forex reserves of the RBI and given support to the rupee value. The problem is that the Indian government used every dip in crude prices to enhance excise and increase its revenues. That leaves little room for manoeuvre.

Despite the selling in the March 2020, FPIs may end up infusing over Rs.150,000 crore into Indian equities this year. This has been supported by surplus liquidity, cheap valuations and dollar weakness. Indian equity markets have already seen record inflows of Rs.140,000 crore in 2020. However, the year also saw record selling in debt market instruments by FPIs with Rs.107,000 crore flowing out of debt on real return concerns. The last time India saw such FPI flows was in 2002. This is fifth time FPI flows have been above Rs.100,000 crore. Earlier occasions were in 2002, 2010, 2012, 2013 and 2019.

In the last week ended 11 Dec, 8 out of the 10 most valuable Nifty companies added Rs.153,041 crore in market capitalization. The biggest gainers were Hindustan Unilever and Reliance Industries. For example; HUVR added Rs.43,596 crore during the week while RIL added Rs.37,434 crore to its market cap. Among other market cap accretions; TCS added Rs.21,558 crore, Kotak Bank added Rs.14,799 crore while Infosys added Rs.12,097 crore to its market with ICICI Bank, HDFC and Bharti Airtel also contributing to a lesser extent. HDFC Bank and Bajaj Finance were the value losers during the week.

RBI Positive Pay system will go live shortly. Under the new rule re-confirmation of key details will be required for payments above Rs.50,000, effective 01 Jan 2021. This is expected to lower the incidence of fraud in cheque payments. Positive requires the account holder to upload all details of the cheque like cheque number, date, payee name, account number etc online, which will be verified before clearing the cheque. It is at the discretion of the account holder, but RBI may make it mandatory of value above Rs.50,000. Under Positive Pay, if the bank finds discrepancies, it will reconfirm with the account holder.

As COVID-19 enters the next step, the big challenge is to effectively distribute the one product that billions across the world will want. For investors, that opens up some interesting investment options. The effectiveness of the vaccine would be enhanced with a proper network of airlines to makers of freezers, vials and disposable needles. They could offer real investment opportunities in the market. The first challenge is cold storage as the Pfizer shot has to be stored at minus 70 degrees Celsius. That has made refrigeration stocks hot bets across Asia and India has been no exception. Similarly, companies that provide dry ice thermal containers are also in vogue. Last mile distribution is another challenge with couriers and rural distribution franchises being leveraged. All these could see value accretion.

 

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