Daily Market Highlights – MAY 6

Untitled 5 Daily Market Highlights   MAY 6

Previous Day Market

Sensex closed at 48,677.55 up by 424.04 points

Nifty closed at 14,617.85 up by 121.35 points

Bajaj Finance has secured RBI approval to launch a digital wallet. It can now issue and operate a semi-closed prepaid payment instruments or PPI with perpetual validity. The launch of the digital wallet fits into the company’s larger strategy to eventually diversify into the payments segment. The Bharat Bill Pay system is already live on Bajaj Finance and a complete UPI interface also goes live in May. The digital wallet will be an addition to these offerings. Wallet customers can store Rs.2 lakhs and withdraw cash too.

In a special address at 10 am on 05 May, RBI governor announced a slew of measures to soothe the impact of COVID resurgence. He announced a COVID funding package of Rs.50,000 crore as well as an extension of moratorium for loans to individuals and to businesses. In addition, such loans would also classify as priority sector lending for banks. Nifty and Sensex gave thumbs-up to these announcements even as the Nifty Pharma index rallied 4% and Bank Index rallied 1.6%. MFIs and SFBs were among the major gainers.

The rally in oil prices sustained for the third day in succession as Brent Crude once again inched closer to $70/bbl. Easing of lockdowns in the US and Europe promised to boost oil demand during the summer even as India and Japan are facing a resurgence of COVID cases. As Brent touched $69.79/bbl, WTI also scaled to $66.51/bbl. The crude rally was also supported by the American Petroleum Institute reporting a 7.7% fall in crude stockpiles for the week ended April 30. India saw a sharp drop in fuel demand in April.

Indian government has instructed PSU banks to protect their dollar deposits after threats from Cairn Energy PLC that they would seize India’s offshore assets after it got a favourable verdict in an international arbitral court on the retrospective tax dispute. Technically, Cairn can push authorities to impound Indian assets if India refuses to honour the arbitration ruling of $1.2 billion. Cairn can either negotiate, or it can enforce by impounding assets or it can monetize the arbitral award to a third party. It is yet to take a call.

S&P Global Ratings has cut India’s GDP growth forecast for FY22 to 9.8% due to the likely impact of COVID resurgence. This is likely to derail the economic recovery as well as credit flows. This contrasts with its original estimate of 11% GDP growth for India in FY22. However, S&P refused to comment anything on the status of India’s current “BBB-“ rating guidance. Economists have warned that an amalgam of weak growth, unstable currency, high inflation and unsustainable fiscal deficit were a recipe for a downgrade.

Specialty chemicals company, Aarti Industries hit a new high and touched Rs.1787 on 05 May after it announced plans for a bonus issue. Earlier in 2019, Aarti Industries had issued bonus shares in the ratio of 1:1. The bonus decision will be taken at the 11 May board meeting. The Mar-21 quarter is expected to be another bumper quarter for most specialty chemicals companies, including Aarti. It is one of the largest producers of Benzene-based basic and intermediate chemicals. Profits are expected to grow at 15% CAGR.

The CBDT has granted tax exemption to 4 pension funds for their earnings from infrastructure investments in India, a likely move to propel growth via the infrastructure route. This tax break will be applicable for investments made up to Mar-24 and will fund nearly 7,000 projects as part of the National Infrastructure pipeline. Such investments will have a mandatory lock-in of 3 years. In these cases, the investors get full tax exemption on income earned from interest, dividend and LTCG from specific investments in India.

Adani Enterprises reported 282% spike in net profits at Rs.234 crore for the Mar-21 quarter. The total revenues of Adani Enterprises on a consolidated basis was flat at Rs.13,689 crore. Adani Enterprises is the incubating arm of the group and holds marquee assets like solar energy, wind energy, mining and airports franchise of the Adani group. The yoy profit growth could have been still better had it not been for the Rs.179 crore exceptional cost in the quarter as provision for de-recognition of certain expenses claimed.


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