Previous Day’s Market Update
Nifty closed at 15098.40 up by 142.2 points
Sensex closed at 51,025.48 up by 584.41 points
According to an India Outlook Report by CRISIL, capital outlay in industrial sectors could rise 45-55% in FY22, largely driven by the Productivity Linked Incentive or PLI scheme. The report also pegs GDP growth at above 11% in FY22, after an 8% contraction in FY21. Specifically, capex is expected to rise in sectors like pharma, chemicals, textiles, cement, auto, metals, auto ancillaries and hydrocarbons. Capex is likely to contract 35% in FY21. The report has also spoken about the downstream benefits like saving billions of dollars in import bills, especially in the case of imports of chemicals and IT hardware inputs from China.
The OECD expects India to be among the fastest growth stories in CY22 among the large economies with annual GDP of over $2 trillion. The recent US stimulus package and the rapid vaccine roll out are likely to be major positives for the revival in growth in India. World GDP is expected to grow by 5.6% in CY21 and by 4% in CY22. In addition, OECD has forecast India’s GDP to grow at 12.6% in FY22. This is likely to mark a sharp turnaround from 7.4% contraction in FY21. OECD also sees the global economy reverting to pre-pandemic levels of GDP by middle of 2021. The OECD has also sharply hiked its estimates for US GDP growth and raised the estimates to 6.5% in CY21 and 4% in CY22. However, the OECD has sounded a note of caution that the Indian recovery would depend on no major relapses and a rapid vaccination drive.
Cairn Energy has apparently identified Indian sovereign assets which it can seize if the Indian government fails to return $1.7 billion as per the order of the arbitration tribunal. Already, courts in the US and UK have ratified the arbitrary order, giving them legal sanction with respect to attachment of sovereign assets located in select countries. The tribunal ruled that India had breached the Indo-UK bilateral treaty and asked India to immediately return $1.7 billion to Cairn. However, considering that such attachment will also have diplomatic implications, Cairn is also pursuing track-2 talks. India is going to challenge the ruling.
Paras Defence and Space Technologies filed preliminary papers with SEBI for its proposed IPO in the Indian markets. The proposed IPO will comprise of a fresh issue worth Rs.120 crore and an offer for sale wherein 17.245 lakh shares will be offered. The company is also planning a pre-IPO placement of Rs.35 crore ahead of the IPO. Paras specializes in design, development, manufacture and testing of a range of defence and space engineering products and solutions. Paras Defence proposes to use the fresh issue component to fund its proposed capital expenditure and to repay loans. It largely relies on government clientele.
Edelweiss Wealth Management will launch the third series of its Crossover Opportunities Fund targeting a corpus of Rs.5,000 crore. Crossover III will focus on late-stage Private Equity and Pre-IPO investments. Edelweiss had raised Rs.2,200 crore via Crossover I & II put together. The fund will give access to private investments that are normally not available to investors. Here the fund team will also closely engage with the company management to add bandwidth. According to Edelweiss, the phase of 2-3 years pre-IPO and 2-3 years post IPO are the best phases of growth and offer an attractive deep value investment strategy.
In a recent data release, the RBI has disclosed that scheduled commercial banks wrote off loans worth Rs.115,038 crore in the first 3 quarters of FY21. The banks had written off over Rs.235,000 crore per year in the previous 2 fiscal years. This data was disclosed by Anurag Thakur in the Lok Sabha. However, he has clarified that those borrowers whose loans were written-off, continued to be liable for repayment. Today, banks do have a number of recovery mechanisms like the DRT, SARFAESI Act 2002 and the NCLT 2016. What is gratifying is that in the last 3 fiscal years, these banks managed to recover Rs.368,636 crore, including Rs.68,219 crore from written off loan accounts. Thakur also pointed out that as of Dec-20, the total NPAs of the banks had fallen by 27% to Rs.756,560 crore. This excludes the pandemic moratorium.
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