Weekly Capsule (Jan 04 – Jan 08)

weekly Weekly Capsule (Jan 04 – Jan 08)

News Announcement

Impact Analysis

·         Nifty closed the week above the 14,350 mark and continues to defy gravity·         The Nifty gained 210 points on Friday while the Sensex gained 690 points on the back of frontline buying

·         The  has seen aggressive buying on hopes that most large IT companies could surprise positively on profit growth

·         First GDP advance estimate pegs FY21 GDP contraction at -7.7%·         The upgrade in GDP is a positive signal, although the service sector and manufacturing needs to show more traction

·         Agriculture and public utilities are the only two segments that are likely to show positive growth in FY21 as per MOSPI

·         Equity funds see outflows for the sixth straight month in December 2020·         Debt funds managed to see inflows but the overall AUM of the MF industry crossed Rs.31 trillion as of end December 2020

·         Most equity segments saw outflows except sector funds which got a prop from the plethora of NFOs during the month

·         Both Georgia seats go to the Democrats giving them majority in both houses·         The two seats puts the Democrats at par with Republicans with Vice President Kamala Harris having deciding vote

·         There were some concerns that majority in the Senate and the HOR would result in rollback of Trump’s corporate tax cuts

·         BSE market cap inches closer to Rs.196 trillion as indices touch new highs·         That gives the Indian market a dollar market capitalization of $2.72 trillion, well ahead of the GDP number

·         The good news is that in the last one year a lot of market cap has also been contributed by IPOs hitting the market

·         Mahindra & Mahindra touches yearly high after price hikes across the board·         The average price hike was 1.9% across models with actual price hikes ranging from Rs.4,500 to Rs.40,000 per model

·         Most automobile players have been hit by a surge in input costs as key inputs like metals have seen a spurt in price

·         Biocon stock gains after Abu Dhabi based ADQ invests in Biologics unit·         ADQ picked up 1.8% in Biocon Biologics at $75 million valuing the biologics unit at an enterprise value of $4.2 billion

·         This move was expected and is likely to be a booster for the Biologics unit as it plans its mega IPO soon

·         Joe Biden likely to follow Trump model on issue of H1-B visas·         US Immigration will modify the H1-B visa selection process to prioritize wage levels to protect local American interests

·         The new rules propose to issue H1-B visas only in cases of foreign workers with very high level of skills

·         Economists expect retail CPI inflation for Dec-20 lower at 5.28%·         The sharp fall in CPI inflation is likely to be led by a sharp fall in food inflation, which has been the cause of steep prices

·         This would be a big advantage as it will bring overall inflation well within the comfort zone of the RBI

·         TCS reports 5.4% growth in revenues and 7.2% growth in net profits in Q3·         Even as the attrition in IT services fell to an all-time low of 7.6%, the OPM improved to 26.62% in the Dec-20 quarter

·         TCS managed to show growth across all the business verticals as well as across all the major geographies, including the US

·         Brent Crude oil touched an 11-month high at $54.5/bbl on Friday·         The sharp spike in crude prices came after Saudi Arabia agreed to cut its daily supply by another 100,000 barrels per day

·         In addition, there was also a sharp drawdown in US oil reserves indicating a revival in oil demand

·         Government estimates fiscal deficit at 6.1%-7% of GDP for FY21·         The higher fiscal deficit during the year has been triggered more by lower revenues than by sharply higher spending

·         That does mean almost a 100% divergence from the FRBM targets so the Budget 2021 will be interesting

·         Elon Musk surpasses Jeff Bezos as the world’s richest person·         With the valuation of Tesla soaring to $700 billion, the personal wealth of Musk swelled to $188 billion

·         Musk’s wealth was $27 billion at the start of the year, so his wealth has grown 7-fold in just the last calendar year

·         India saw 1600 new tech start-ups during 2020 as per NASSCOM·         According to the report, India also added 12 unicorns during the year; referring to tech start-ups with $1 billion valuation

·         Digital acceleration and SAAS based adoption were some of the key triggers that gave a boost to the start-up scenario

·         NALCO plans to invest Rs.30,000 crore in its business by the year 2027·         The funds will be allocated in a phased manner towards expansion of capacity and for diversification

·         Nalco is already the largest producer of bauxite and alumina in India and it wants to now expand aluminium capacity too

·         DOT announces next round of spectrum auctions on March 01 this year·         DOT has fixed 05-Feb as the last date to participate in auctions which will allocate spectrum worth Rs.392,000 crore

·         The airwaves will be sold across the 22 circles and the advance money will be useful in partially bridging the budget deficit

·         PMI Manufacturing flat for Dec-20 but PMI Services disappoints·         The PMI services saw a sharp fall, although it remained in expansion mode at above the 50 mark in Dec-20

·         However, in PMI Manufacturing and in PMI Services, there was a clear indication that businesses were cutting on labour

·         ITC stock comes under pressure as government plans new curbs·         Government plans to raise minimum age for smoking to 21 years, ban sale of loose sticks and smoking in public places

·         This is negative for stocks like ITC which still relies on its cigarettes business for generating 85% of annual profits

·         Saudi Aramco plans to revive their deal with Reliance for the O2C business·         The deal to sell 20% in the RIL O2C business to Aramco for $15 billion may be on, although valuation issues are still open

·         The deal was agreed upon in late 2019, but COVID changed the fortunes of oil and RIL relied on digital monetization

·         Budget session to commence on 29-Jan and budget to be presented on 01-Feb·         The Parliament Budget session will be conducted in two phases stretching all the way to the 08th of April

·         Nirmala Sitharaman has also promised a “Never Before” budget which is likely to be a real tightrope walk for the FM

·         Vedanta likely to purchase Videocon assets for Rs.3,000 crore·         With total debt of Rs.46,000 crore; it means the banks will have to take a huge haircut in this case

·         The COC is agreeable to this offer as it is still slightly better than the net liquidation value of Rs.2600 crore

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rocket%20buttona Weekly Capsule (Jan 04 – Jan 08)

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