Weekly Capsule (Jan 18 – Jan 22)

%name Weekly Capsule (Jan 18 – Jan 22)

 

Weekly Capsule (Jan 18 – Jan 22) and Impact Analysis

 

News AnnouncementImpact Analysis
  
Ø  Sensex corrects sharply after scaling the 50,000 mark on ThursdayØ  There was heavy profit booking seen across the board as traders lightened positions ahead of a truncated week

Ø  The Sensex corrected nearly 1500 points from the peak in a span of less than 2 day as positions got unwound

 

Ø  Joe Biden assumes office s the President of the United StatesØ  One of the first priorities for Biden is to get on top of the pandemic and implement the vaccination program

Ø  To begin with, Biden has decided to get the US back into the Paris Climate Accord and also into the WHO

 

Ø  RBI has proposed scale based regulation for NBFCs and HFCsØ  The idea is to focus only on the large and critical NBFCs that can create a systemic risk in the event of default

Ø  Such NBFCs will be subject to reserve requirements, capital adequacy and NPA recognition norms like banks

 

Ø  Reliance reports fall in revenues but profits grow by 25%Ø  While the oil and retail operations were under pressure, it was the digital business that saved the day for Reliance

Ø  Jio Platforms saw an increase in ARPUs to Rs.151 even as digital alone contributed to 33% of the overall EBITDA

 

Ø  SBI Life Insurance sees a sharp fall in net profits by 40% in Dec-20 quarterØ  This was despite SBI Life growing its private insurance market share to a record 24% and growing revenues sharply

Ø  The fall in profits was largely on account of a sharp spike in actuarial liability valuation due to sharply higher uncertainty

 

Ø  Grasim, of the Aditya Birla group, is set to foray into the paints businessØ  The diversified group will add paints considering the recent growth and plans to invest Rs.5000 crore in the business

Ø  While its core businesses are pure commodity businesses, paints being an FMCG product will enhance market value

 

Ø  Indigo Paints IPO gets subscribed 117 times on the last day of the issueØ  Indigo Paints had hit the market with a Rs.1170 crore IPO consisting of a fresh issue and an offer for sale

Ø  There was heavy demand coming from the retail, HNI and the QIB segment as it has been a high growth play on paints

 

Ø  JSW net profits spiked 14 times to Rs.2660 crore in the Dec-20 quarterØ  While volumes were flat to tepid for JSW Steel, the Q3 performance benefited immensely from better pricing

Ø  The company is also planning to commission multiple projects during the fourth quarter of this fiscal year

 

Ø  Farm Bill discussions fall through as farmers reject 18-month suspensionØ  Farmers have made it clear that they would settle for nothing short of a total withdrawal of the 3 Farm Bills

Ø  Farmers refused to accept a committee with members from both sides appointed by the Supreme Court of India

 

Ø  Barclays warns overall fiscal deficit could touch 14% of GDP in FY21Ø  Barclays was referring to the consolidated fiscal deficit, which includes the state deficits, but it is still very high

Ø  The fiscal deficit is expected to overshoot this fiscal year due to weak revenues and a surge in fiscal outlays post COVID

  
Ø  Major fire at Serum Institute plant leaves 5 dead and many injuredØ  Serum is the licensed manufacturer of the anti-COVID vaccine, Covishield, designed by AstraZeneca and Oxford Research

Ø  Serum has assured the government that the fire was in the BCG vaccine plant and COVID deliveries would be unaffected

 

Ø  SEBI approves the merger deal between RRIL and Future GroupØ  SEBI has however insisted that the pending legal issue with Amazon be disclosed to shareholders and to the NCLT

Ø  The Rs.24,713 crore deal was hanging fire after Amazon filed a court case against the deal for not being given right of refusal

 

Ø  Bajaj Auto flatters the street with strong growth on top line and profitsØ  The sharp spike in the demand for motorcycles was evident in the performance of Bajaj Auto in the Dec-20 quarter

Ø  Nearly 55% of the total revenues of Bajaj Auto came from exports and the export growth was a lot more robust

 

Ø  Bajaj Finance plans to venture into the Fintech spaceØ  Bajaj Finance, the largest consumer lender in India, plans to make a big splash in the payments space

Ø  Apart from better revenue traction, Bajaj will be able to own the customer experience from end to end

 

Ø  Government looks to exit its 26.12% stake in Tata CommunicationsØ  This stake was vested in the government after it had sold its stake in VSNL to Tata Communications in 2002

Ø  At current valuations, the government will raise Rs.8,400 crore through the stake sale

 

Ø  Total of France is likely to pick up a 20% stake in Adani Green EnergyØ  Total will pay $2.5 billion for a 20% stake in Adani Energy valuing the company at an EV of $12.5 billion

Ø  This deal is the likely future template as traditional oil and gas assets will look to make forays into green energy

 

Ø  India’s sugar output spurts sharply in the first 100 days of the sugar cycleØ  India’s sugar output in the first 3.5 months from Oct-20 to Jan-21 was up 31% at 14.27 million tons

Ø  It now looks very likely that the government would again have to give export subsidies to reduce the domestic sugar stocks

 

Ø  China reports 2.3% growth in GDP for the full calendar year 2020Ø  This is the lowest full year growth for the Chinese economy in the last 40 years but it has been growing for 3 quarters

Ø  At 2.3%, China will still be among the best performing large economies as all the others are likely to contract sharply

 

Ø  Government likely to consider import duty hikes of 5-10% in the BudgetØ  This duty hike could be more pronounced on products where the government wants to focus its Atma Nirbhar program

Ø  This would also be a quick way of enhancing revenues in a year that is likely to be marked by revenue shortfalls.

 

Ø  Franklin Templeton unit holders vote in favour of winding up the 6 schemesØ  The vote to wind up the scheme was supported by 91% of the investors  and court will lay out the modus operandi

Ø  While final figures are yet to come out, unit holders may have to take haircuts in the range of 60-70% on their capital

 

Ø  IL&FS manages to resolve nearly 32% of its outstanding debtØ  As of December 2020, IL&FS has managed to resolve Rs.32,000 crore out of its Rs.1 trillion outstanding debt

Ø  This has been largely achieved through monetization of its assets locked up in various infrastructure projects

 

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