Weekly Capsule (Jan 11 – Jan 15)

weekly 3 Weekly Capsule (Jan 11 – Jan 15)

News Announcement

Impact Analysis

·         WhatsApp puts off plans to introduce new business features on its platform·         This sets to rest most of the controversy on privacy and should stem WhatsApp losing customers to Signal

·         For Facebook, which acquired WhatsApp in 2014 for $19 bn, this would mean a clear delay in its monetization plans

·         India’s trade deficit for the month of Dec-20 touches $15.4 billion·         This is the highest trade deficit seen in the last one year and represents a more than 50% rise month-on-month

·         The exports were up at over $27 billion in Dec-20 but the sharp surge in imports was due to crude oil

·         CPI inflation comes in sharply lower at 4.59% for the month of Dec-20·         The sharp fall in inflation was largely led by food inflation falling to 3.5% as vegetables slipped into negative zone

·         However, one concern is that core inflation continues to remain fairly sticky at above 5.65% for the month

·         IIP for November 2020 contracts by -1.9% as base effect kicks in·         While mining slipping deeper into negative growth, it was manufacturing that slipped from positive to negative growth

·         IIP had been positive for September and October , with the Oct-20 IIP growing at a healthy 4.19% on YOY basis

·         IRFC raises Rs.1390 crore from anchor investors ahead of the IPO·         The Indian Railway Finance Corporation (IRFC) IPO opens next week and the total issue size is slated at Rs.4600 crore

·         The strong demand from the anchor investors should help the IPO get priced at the upper band of the range for the IPO

·         HCL Tech reports 31% growth in net profit on yoy basis for Dec-20 quarter·         The growth in top line and bottom line was supported by robust growth in digital and cloud businesses

·         Like the Infosys and Wipro; HCL Tech also witnessed expansion of operating margins during the Dec-20 quarter

·         Piramal Enterprises finally wins the bid for bankrupt Dewan  Housing·         There was an acrimonious battle for the company as PEL and Oaktree tried to establish why their bids were superior

·         Piramal secured 94% votes of the Committee of Creditors or COC while Oaktree got 45% and Adani got 18%

·         SAIL OFS garnered over 5 times over-subscription during the week·         The government had planned a 5% divestment with green-shoe option to take it up to 10%

·         Considering the robust response for the OFS at Rs.64/share, the government will now divest full 10% at Rs.2664 crore

·         Tesla finally confirms that it has set up full-fledged operations in India·         The world’s most valuable auto company has set up an R&D centre in Bengaluru, which was finalized after a careful study

·         Tesla is also expected to shortly announce plans to produce and sell its Tesla brand of cars in India and as an export hub

·         Airline passenger traffic falls by 56% in 2020 compared to 2019·         The total number of passengers came down to 6.3 crore in 2020 due to flight cancellations and social distancing norms

·         For the month of Dec-20, the load factor improved to 65%-78%, but remains at a grossly unviable level

·         Indo-China frictions reduces trade deficit to five year lows·         India’s merchandise trade deficit with China fell to $45.8 billion due to lower economic activity and restrictions

·         However, despite this shift, China continues to report record trade surplus while India’s deficit expanded sharply in Dec-20

·         Amazon urges SEBI to suspend review of Future-Reliance Retail deal·         The $3.14 billion deal has been hanging fire after Amazon objected to not being given the right of first refusal

·         Amazon has urged SEBI to also instruct BSE and NSE not to review the deal till a final decision by Delhi High Court

·         SEBI relaxes norms for mutual fund exposure to commodity derivatives·         SEBI has confirmed that hedged or offsetting positions will not be included in the calculation of gross exposure

·         The regulator has been trying to expand institutional role in commodity derivatives to deepen and broaden the market

·         Tenth issue of Sovereign Gold Bonds closed in the previous week·         The price of the SGB issue was fixed at Rs.5104 per gram with a discount of Rs.50 for digital applications

·         The eleventh tranche of SGBs will open on 01-Feb and investors will hope for a lower price on the bond issue

·         GAIL announced buyback of shares to the tune of 6.97 crore shares·         The buyback will be at a price of Rs.150 taking the total size of the buyback to Rs.1046 crore

·         The government has been using buyback as a tool to make PSUs return capital to support its divestment initiative

·         Biden unlikely to change Trump’s policy on China and on H1-B visas·         It is becoming increasingly clear that Biden will not usher any major change on immigration and China compared to Trump

·         Trump has already asked US investors to divest from 44 companies that are linked to the Chinese government

·         Bharti Airtel soared sharply on hopes of higher weightage in MSCI index·         With Bharti getting permission to increase its foreign investors stake, it is automatically eligible for bigger FPI pie

·         MSCI has already indicated that it would take up Bharti Airtel for higher weightage in its next review in Feb-21

·         Dixon Technologies to meet in first week of Feb-21 for stock split·         Dixon has rallied 850% since the IPO and at Rs.14,900 the stock is increasingly getting too pricey for retail investors

·         While stock splits do not create value, they help to bring stock prices into a more popular range for small investors

·         Indigo Paints IPO to be open from 20-Jan to 22-Jan·         The IPO will be priced at Rs.1488-1490 and will look to raise Rs.1170 crore through fresh issue and offer for sale

·         Indigo is in the business of decorative paints and has Sequoia Capital among its early investors in the business

·         RBI to form special committee to closely regulate digital lending·         RBI has been expressing concerns over usurious rates, wrong practices and strong arm tactics used by digital lenders

·         The regulation will cover RBI monitoring as well as a self-regulation code to ensure orderly growth of the business

·         HDFC Bank again replaces RIL as stock with highest weight in Nifty·         While RIL still has the highest market cap, in the last 2 months RIL has corrected while HDFC Bank has rallied sharply

·         HDFC Bank has a free float advantage over RIL as 50% of the Reliance shares are held by the Ambani family

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rocket%20buttona Weekly Capsule (Jan 11 – Jan 15)

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