Daily Market Highlights MAY 11

Untitled 5 Daily Market Highlights MAY 11

Previous Day Market

Sensex closed at 49,502.41 up by 295.94 points

Nifty closed at 14,942.35 up by 119.20 points

According to Fitch Ratings, the RBI COVID relief package would, at best, delay the stress for banks and NBFCs in India. Last week, the RBI had rolled out an Rs.50,000 crore special COVID package. This included a loan restructuring scheme to help lenders tide over mounting bad loans. Fitch believes this would only delay the recognition and resolution of the asset quality issues in lenders. However, Fitch also underlined that the economic shock of the COVID resurgence and impact on banks would be less severe than in 2020.

When it comes to automobiles, it is not just the production but the dealer registrations that give the real picture of the demand for cars at the grassroot level. For the month of April 2021, automobile registrations fell 32% YoY while the passenger vehicles category saw a 11% fall. This was disclosed by FADA. It also disclosed that the spread of COVID-19 to rural belts was instrumental in falling registrations across India. Even 3-wheeler registrations were down 56% while, 2-wheeler sales were down 35%, and CV sales down 34%.

Sun Pharma rallied by over 3.5% on 10 May to cross the Rs.700 mark after a long time after it inked a deal with Eli Lilly of the US for expanding access to the Baricitinib drug in India. Normally, Baricitinib is used in conjunction with Remdesevir for the treatment of suspected COVID-19 infections. This is recommended for patients requiring supplemental oxygen. Baricitinib is not approved in India for treating COVID-19, but has been authorized for emergency use by the US FDA. Sun Pharma stock has rallied sharply in the year 2021.

Hyderabad based Bharat Biotech has started direct supply of its COVID-19 vaccine, Covaxin, to 14 states. It has started direct supply to the states based on allocations received by the central government. Bharat Biotech is currently supplying vaccines directly to the states of AP, Assam, Chhattisgarh, Gujarat, J&K, Jharkhand, MP, Odisha, Tamil Nadu, Telangana, UP, and West Bengal. Late last month, Bharat Biotech also announced a price cut for Covaxin from Rs.600/dose to Rs.400/dose. Vaccination is now open to 18+ also.

Jindal Steel and Power has made a prepayment of Rs.2,462 crore to term lenders in order to make the company net debt-free. That means, the debt of the company after deducting the cash balance is zero. JSPL reduced its debt from a peak level of Rs.46,500 crore in FY17 to Rs.25,600 crore in FY21. This Rs.2,462 crore debt reduction is in addition to the annual debt reduction commitment. JSPL is yet to share time-lines to become entirely net debt-free. Very recently, JSPL also monetized its thermal power business.

Even as analysts scream about rich valuations in the market, 22 out of the Nifty-50 stocks are quoting at a discount to long-term averages. Nifty overall is more expensive than the 10-year average on P/E and P/BV. Consider that ONGC trades at 50% discount to 10-year average P/E, NTPC 49% discount, Tata Steel 44% discount, ITC 40% and Coal India 58%. Even Hero Moto and Eicher are below their 10-year averages as is HDFC. Most of the cement and consumer stocks and all the IT stocks are above their 10-year averages.

Blackstone Real Estate acquired Embassy Industrial Parks from Warburg Pincus and Embassy Group at an enterprise value of $700 million. This is one of the biggest transactions in the warehousing sector. In all, Blackstone will acquire 21.6 million SFT in two tranches. The Embassy Industrial Parks comprises Grade-A logistics and warehousing assets adjoining urban centers. For Blackstone, logistics is one of its top global conviction themes. Since 2010, Blackstone has acquired more than 1.2 billion SFT of logistics properties.

Deloitte has ranked Reliance Retail the second-fastest-growing retailer in the world in its 2021 ranking of global retail powerhouses. Needless to say, the list is topped by Wal-Mart which also is present in the Indian online eCommerce space through Flipkart. Reliance Retail is the only Indian company to feature in the global list of 250 retailers. RIL is also partnering with WhatsApp to accelerate its digital commerce franchise on the JioMart app. When the Future deal is approved, Reliance will double its retail outreach.

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%name Daily Market Highlights MAY 11

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