Midnight News – Jul 20th 2020

unnamed Midnight News – Jul 20th 2020

 

As banks have been under pressure and the IT companies have played the safe-haven game, the weight of the IT sector has touched a 5-year high of 15% in the Nifty. Since the beginning of 2020, the IT index is up by 6.5% as against a 6.7% correction in the Nifty index overall. Stocks like TCS, Infosys and Wipro have turned out to be classic defensive plays. At the same time most of the private banks and PSBs have come under pressure as have the financials. IT had a weightage of just 12.3% in December 2019. The technology companies have a combined market cap of Rs.15,90,000 crore led by TCS and Infosys.

With COVID-19 taking its toll on demand and gold prices at all-time high, gold imports for the quarter ended Jun-20 dropped 94% to $688 million. The corresponding figure for gold imports for the quarter ending Jun-19 was $11.50 billion. Even silver imports were lower by 45% due to elevated prices. As a result of this sharp fall in gold imports, the trade deficit for the Jun-20 quarter is down to almost of a fifth of the previous figure at $9.12 billion. Normally, India imports 800 to 900 tonnes of gold annually and is the largest importer of gold. This is good news as the current account could again be in surplus.

Currently, a total of seven pharma companies in India are in the race to develop a vaccine for Coronavirus. Bharat Biologicals, Serum Institute, Zydus Cadila, Panacea Biotech, India Immunologicals, Mynvax and Biological E are among the domestic pharma companies in the race. Bharat Biotech has already secured approval from DCGI to conduct Phase 1 and Phase 2 trials on humans and that has already started. Serum Institute hopes to develop the vaccine by end of 2020. Serum is working on the AstraZeneca Oxford vaccine, under Phase 3 clinical trials. Cadila will complete trials in 7 months.

Foreign Portfolio Investors have pulled out Rs.9015 crore in the month of July 2020, so far. According to data provided by NSDL and CDSL, FPIs withdrew Rs.6058 crore from equities and Rs.2957 crore from debt. The month of June had seen net inflows of Rs.24,053 crore from FPIs after consistent FPI selling between January and May 2020. Most emerging market witnessed outflows during the third week with South Korea being the only market to attract FPI flows. The volatile situation pertaining to the COVID-19 and the lockdown impact could keep FPI flows volatile for the rest of the year, according to experts.

It was a week skewed in favour of market declines but 3 out of the 10 most valuable companies managed to add value to the tune of Rs.98,623 crore to the market cap. Infosys, Reliance Industries and Hindustan Unilever were the gainers for the week but Infosys was the clear star after its first quarter results bettered street expectations. Infosys gained Rs.52,047 crore in market cap during the week. Hindustan Unilever added Rs.25,751 crore during the week while Reliance Industries added another Rs.20,825 crore of value during the week. During the week, HDFC lost Rs.13,920 crore while TCS lost Rs.7617 crore. ICICI Bank, Kotak Bank, Bharti Airtel and HDFC Bank were among the other significant losers during the week. With the latest rally, Infosys has entered the Top-5 list in market cap terms.

After posting a record Rs.2245 loss in FY20, Edelweiss plans to turn asset-light in fiscal 2021. Edelweiss will be completely exiting the wholesale credit business by FY22 and will focus solely on retail credit combined with AMC and wealth business. Edelweiss has already compressed its wholesale asset book by 43% since the IL&FS crisis in 2018. In FY20, Edelweiss also saw its top line shrinking by 20% due to scaling down of its wholesale credit book. Edelweiss is also into the asset reconstruction business, where it is already the largest player with Rs.800 crore annual billing. Its ARC AUM stands at Rs.43,188 crore.

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