Daily Market Update – Sep 29th

unnamed Daily Market Update   Sep 29th


In a rather unprecedented move, the RBI deferred the forthcoming meeting of the MPC scheduled on September 29, 30, and October 1. The monetary policy, therefore, will not be presented on October 01. While there has been no reason give, apparently it is because 3 members of the MPC demitted office on September 22. The three external members were Chetan Ghate, Ravindra Dholakia and Pami Dua. The impact would be limited as the MPC was expected to anyways hold repo rates at 4% due to inflation above 6%. The MPC had kept the monetary stance of the last policy as accommodative.

Tata Group is in talks with potential investors to buy a stake in its new digital platform. This is part of the Tata’s grand plan to modernize and digitize its consumer businesses on the lines of Amazon, Flipkart and Reliance Digital. The new entity will consist of the digital assets of all the group companies of the Tata group. Ambani had recently managed to substantially enhance the value of the overall Reliance business by successfully monetizing its digital and retail properties. The Tatas may use this strategy to give greater visibility to the group and also to use the funds to reduce the debt. It is estimated that the debt of Tata Motors and Tata Steel combined stood at $21 billion. This could encompass retail properties like Tanishq and Titan showrooms, Star Bazaar, Taj Hotels, and Starbucks. It is also launching all-in-one app.

ICRA revised its forecast for GDP contraction in FY21 from its original estimate of 9.5% to 11%. Fresh Covid-19 infections remained elevated and that was likely to slow the recovery. ICRA has retained its Q2 forecast of -12.4% growth but has revised its Q3 projection to -5.4% from -2.3%. Even the Q4 GDP growth has been downsized from 1.3% to 2.5%. It may be recollected that India GDP had shrunk by -23.9% in the Jun-20 quarter. According to ICRA, it was constrained to lower its estimates of growth for Q3 and Q4 after data for MSME and less formal sectors showed more stress than anticipated.

It was the second consecutive day of robustness in the stock markets. The BSE Sensex jumped 593 points or 1.59% and got within kissing distance of the 39,000 mark. In fact, 27 out of the Sensex 30 stocks closed in the positive. The Sensex has gained over 1400 points or 50% of its previous week’s loss in just 2 days. The good news was that the India VIX dropped 5% to 19.57 levels. Even the mid cap and small cap indices rallied by over 2.5% on Monday. Even as oil prices came under pressure on demand concerns, global markets across Asia, Europe and the US rallied. That should favour the 3 IPOs this week.

Indoco Remedies shot up by 9% to Rs.284 on Monday after it announced the launch of Favipiravir 400 mg tablets in India under the brand, Fevindo. It may be recollected that the generic Favipiravir is an antiviral drug which is effective against the influenza virus. The drug has already been approved by the DCGI for treating mild symptoms of COVID-19. Fevindo-400 by Indoco will be made available at all government approved COVID-19 care centres as well as via selected medical practitioners across India. However, Indoco has confirmed that Fevindo 400 would only be sold against medical prescription.

The Union Law Minister has assured the farmers of India that they would become self-sufficient with the passage of the Farm Bill 2020. The new Farm Bill envisaged allowing alternate channels for sale of agri produce, apart from the APMC. Government would intervene only where required to stabilize the forces of demand and supply. The Bill has become law as the president has already given his assent to the bill. Ravi Shankar Prasad sought to assure farmers that the MSP would continue as was evident from the enhanced MSP announced by the government. He also assured that the APMC mechanism would still continue and the alternate market would only be an added feature. The real test of the new Farm Bill will be known only when the actual Kharif output comes into the mandis in October 2020.

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