Weekly Capsule – 20th November 2020

weekly cap 1 1 Weekly Capsule   20th November 2020

News Announcement

Impact Analysis

  • Competition Commission of India (CCI) approves RRVL – FEL merger
  • The CCI has approved the deal notwithstanding the SAIC arbitration order that Amazon had got against the deal
  • The 24,700 crore deal was signed in Aug-20 to sell the retail, wholesale and supply chain business of FEL on slump basis
  • RBI identifies DBS India as the partner to take over Lakshmi Vilas Bank
  • LVB had been in financial trouble ever since the proposed merger deal with Indiabulls Finance was rejected by RBI
  • With the capital eroding further, RBI placed LVB on a 1-month moratorium restricting withdrawals to Rs.25,000 per account
  • SEBI is likely to tighten the delisting rules for exchange traded companies
  • Delisting intimation to stock exchanges must be accompanied by merchant banker due diligence and audit report
  • This proposed change has been apparently triggered by the fiasco surrounding the failed delisting of Vedanta Ltd.
  • RBI has initiated a special audit into the books of SREI group companies
  • The RBI has been worried that the SREI group’s infrastructure exposures had considerably worsened in last few months
  • Like IL&FS, the SREI group also has a larger systemic role to play and has been crunched by the infrastructure slowdown
  • Indian pharma stocks may take a hit on WHO’s negative note on Remdesivir
  • The problem arose after the WHO dissuaded doctors from administering Gilead’s Remdesivir in severe COVID cases
  • Gilead had licensed a number of Indian companies like Cipla, Hetero Drugs and Jubilant Life to manufacture Remdesivir
  • Gland Pharma gets a 21% premium close on first day of listing
  • After listing at Rs.1,710 against the IPO price of Rs.1,500, the rally continued and the stock closed Day-1 at Rs.1,828
  • Gland Pharma based out of Hyderabad is majority owned by Fosun of China and was just subscribed 2.06 times
  • RBI may allow large NBFCs to convert into banks as a special case
  • This had been proposed in the past but now it has also been ratified by the high power group appointed by the RBI
  • The idea was to convert any NBFC with asset book above Rs.50,000 crore, into a bank for better and sounder regulation
  • RBI Working group may also allow business houses in banking
  • This has been a grey area where RBI had discouraged banks from a banking license to avoid conflict of interest
  • The RBI feels that allowing large groups to get into banking would bring in more competition into the banking sector
  • Brent Crude rises for the third week to scale $45/bbl on Friday
  • The big trigger for a spike in crude oil price was the news that a COVID vaccine may reach finality in the next few months
  • In addition, oil markets are also betting on a revival in GDP growth, lower supply and an anti-shale policy by Biden
  • SEBI asks Subrata Roy to pay Rs.62,600 crore to stay out of prison
  • This is the total value of the deposits collected illegally by Sahara Group including the value of interest at 15%
  • Sahara group’s contention is that most of the monies had bene refunded in cash, and documented with receipts
  • Reliance Retail closes its funding program having raised Rs.47,200 crore
  • RRVL had raised this money by placing a 10.1% stake to marquee names like ADIA, TPG, Mubadala, PIF, GICS etc
  • In the last one year, Reliance has monetized much more than what it required to bring its net debt to zero levels
  • P-Note investments surge to 14-month high level of Rs.78,686 crore in Nov-20
  • The P-note route is used by global investors who do not want the stringent disclosure requirements of the FPI route
  • After the SEBI had tightened disclosure norms and upfront fees, the P-Note volumes had fallen sharply in last 2 years
  • Tata versus Mistry case is expected to finally come for hearing in December
  • The next step, after deciding to part ways, is for the Tatas to work out an amicable and workable exit option for Mistry
  • The hearing over the removal of Mistry from Tata Sons and the share pledge will be heard together in December
  • Pallonji group may look to sell out of Eureka Forbes to raise liquidity
  • The group is looking at an outright sale to a competitor or even a strategic sale to PE funds to raise liquidity
  • The company had been under pressure as its predominant construction business had suffered during COVID-19
  • Vedanta emerges as a potential bidder for BPCL to expand its oil franchise
  • For Vedanta, BPCL will diversify its commodity franchise and the cash rich BPCL will also address their group debt woes
  • However, the government may be a tad wary of selling PSUs to Vedanta after the recent fiasco over the delisting issue
  • Over 4 million Mutual Fund SIPs closed since the onset of the pandemic
  • This has largely been driven by the financial uncertainty and also the poor performance of active mutual funds
  • Nearly 80% of the active funds in the last 2 years have ended up underperforming the Nifty due to the Kurtosis effect
  • The COVID vaccine race now closes in on Pfizer, AstraZeneca and Moderna
  • Both Moderna and Pfizer have now claimed 94-95% success rate in their respective COVID vaccine candidates
  • While all these players are in the Phase-3 stage, it is unlikely that the actual vaccine will be released before mid-2021
  • In good tidings for commercial realty, Fidelity renewed contract at 2X rent
  • The doubled rent for 30,000 SFT space in Bengaluru is an indication that commercial property market is still robust
  • We have seen similar mega deals by Amazon and Standard Chartered across pockets in Mumbai in Chennai too
  • Titan reports 15% growth in core jewellery business in festive season
  • That is a sharp shift from the previous quarter, when the company had warned about top line stress
  • Apart from the jewellery segment, Titan saw good growth in the watches and the wearable eyewear segments too
  • Flipkart acquires Scapic for its 3D and augmented reality or AR skills
  • Flipkart is the first indication that ecommerce portals are now going beyond utility and laying accent on user interface
  • Scapic is an important stepping stone for Flipkart as it moves to becoming a cloud-based user experience driven company
  • Navneet Munoth quits as CIO of SBI Mutual to take over as CEO HDFC MF
  • It is an interesting move for Munoth from the largest fund to the second largest fund in a much bigger role
  • While Munoth will replace Milind Barve, the future plans of Prashant Jain at HDFC MF are not too clear

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