Weekly Capsule (Feb 15 – Feb 19)

weekly 3 Weekly Capsule (Feb 15 – Feb 19)

News AnnouncementImpact Analysis
·         Oil rally in Brent Crude market takes a brief breather at $65/bbl·         The oil shortage was created by Arctic blasts that had left Texas freezing, putting 4 million bpd of oil at risk

·         With the OPEC unwilling to relent on supply infusion, oil prices have rallied over 80% in a span of less than 3 months

·         Trade deficit for January 2020 comes in at $14.5 billion, lower than Dec-20·         The export growth in January was better than the previous months even as import growth retreated

·         However, the overall trade balance, including services, has slipped into a deficit for the first time in fiscal year 2021

·         Petrol prices crossed Rs.90/litre in Delhi, above Rs.100 in most states·         This is historically the highest prices of petrol and diesel that Delhi and most of the other states have seen

·         While global crude prices are up, the government has also taken out most of the price fall via excise duties

·         Ikea of Sweden to invest Rs.5,500 crore in shopping mall in Noida·         The mall will be constructed on 48,000 square metres of land, which has already been acquired by Ikea in Noida

·         The mall is being developed in association with DLF and it will take about 2 to 3 years to develop the complete mall

·         Reddy Labs starts process for emergency authorization of Sputnik·         Reddy Labs is the Indian manufacturer and distributor for the Russian Sputnik vaccine candidate for COVID-19

·         The success of the vaccine will be critical for India to achieve scale in inoculation, which is slow due to tepid supplies

·         Jubilant to expand its Domino’s franchise beyond Indian shores·         After perfecting and fine-tuning the QSR model in India, Jubilant plans to take the model to the Eurasian region

·         Jubilant will buy 32.8% in Domino’s Pizza Eurasia, the master franchise for Turkey, Russia, Azerbaijan, and Georgia

·         Nifty closed the week below the crucial 15,000 mark on the NSE·         The Nifty has retreated from above 15,300 levels to below the 15,000 levels on consistent profit taking by traders

·         The correction has been largely driven by banking and auto stocks and these are showing the sharpest correction

·         IPOs of Nureca and RailTel received tremendous response in the market·         Both the issues were oversubscribed across the three segments of retail, HNI and qualified institutional buyers

·         While Nureca closed for subscription on Wednesday, RailTel closed on Thursday and both will be listed on 26 February

·         Muthoot Finance to raise Rs.6,000 crore via issue of bonds·         The bonds will be issued as redeemable non-convertible debentures in multiple tranches via private placement

·         It will boost the Tier-2 capital of Muthoot Finance and help them to expand the loan book aggressively

·         Oil India will lead a consortium to bid for BPCL’s Numaligarh Refinery·         The government had clarified that the Numaligarh Refinery would not be part of the BPCL stake sale

·         For Oil India, the refinery purchase gives them the perfect forward integration to achieve a broader grasp on margins

·         Reliance Industries close to hiving off its oil-to-chemicals O2C business·         This was the deal that was to have fructified with Aramco in 2019 but could not take off due to oil price crash

·         However, now Aramco is interested and RIL may also look at multiple partners to take a stake in the O2C business

·         Piramal Enterprises gets RBI approval for DHFL acquisition·         The Committee of Creditors or COC had decided on PEL considering they offered the highest cash upfront

·         The decision on the acquirer was taken based on the cash offered, payment schedule and plan for insurance vertical

·         Government commits to invest Rs.7.5 trillion in oil and gas infrastructure·         This investment will be phased over 5 years and will be a mix of public and private participation in infrastructure building

·         The focus will be on drilling, transport, and city gas infra with a view to increasing the share of gas in the overall fuel mix

·         General Insurance stocks rallied during the week on early privatization hopes·         The two listed general insurers, GIC Re and New India Assurance were locked in upper circuit on Thursday

·         Union Budget 2021 had promised a mix of minority stake sale and full-scale privatization of ownership of general insurers

·         Bharti Airtel buys back its DTH business from Warburg Pincus for Rs.3126 crore·         This would effectively be a reversal of the transaction of 2017 and Warburg Pincus will get Bharti Airtel shares in exchange

·         Bharti sees more value now in owning the entire digital ecosystem including voice, data, content, and media

·         Government to give out Rs.12,195 crore for telecom equipment PLI·         These product linked incentives are meant to reduce imports and to encourage local manufacture and job creation

·         It is expected that this strategy will create local output worth Rs.2.44 trillion, exports of Rs.1.95 trillion and 40,000 jobs

·         SEBI moots changes to the IPO process to facilitate the LIC IPO next fiscal year·         Companies with post issue market cap of over Rs.1 trillion will be allowed to divest just 5%, instead of mandatory 10%

·         Such companies will also get a time frame of 5 years to bring public holding to 25% as against the current 3-year limit

·         SBI MF goes aggressive buying PSU stocks in the month of January 2021·         As a value buying strategy, SBI MF has been adding stocks like SAIL, NHPC, NTPC, IOCL and Bank of Baroda to their portfolio

·         SBI MF has been betting on the return of value investing as well as bigger dividend pay outs by PSUs in coming fiscal

·         Cairn Energy to file case in US District Court on retrospective tax issue·         Cairn Energy is trying to recover $1.2 billion that the Indian government has held up towards taxes on the Vedanta deal

·         The International Tribunal had ruled against India on the grounds that the tax was against the Indo-UK treaty

·         Tatas officially buy 68% in Big Basket for a consideration of Rs.9500 crore·         This deal values Big Basket, the fresh foods online supplier, at $2 billion considering its niche positioning in perishables

·         It also syncs with the overall strategy of the Tatas to create a digital super app for all consumer facing businesses of Tatas

·         Banks get jittery over outstanding dues of Future group companies·         With the Amazon imbroglio dragging on, banks have started insisting on part payment or even a restructuring deal

·         Clearly banks are worried that if Reliance runs out of patience, then there could be little hope of recovering their monies

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