Weekly Capsule (May 24 – May 28)

weekly 7 Weekly Capsule (May 24 – May 28)

News AnnouncementImpact Analysis
·        GST Council puts off tax relief for COVID-19 related supplies till 08-Jun·        This was one of the major demands from the GST Council so as to reduce the cost payable by the final consumer

·        However, the decision has been put off, purely on account of the budgetary constraints at this point of time

·        Gold gets closer to $1900/oz, after a long correction over last 9 months·        The rally in gold prices has been largely led by rising inflation in the US and a sense of uncertainty due to COVID 2.0

·        Gold had peaked in middle of last year and has been in down mode since, but the COVID resurgence has helped gold

·        Government fixes price of third tranche of SGBs at Rs.4,889/gram·        The third tranche of gold bonds for the first half of FY21, will open on May 31 and will be open for subscription for a week

·        Sovereign gold bond demand in FY21 has been more than all the previous years’ cumulative and trend is likely to continue

·        Rating agencies project India’s GDP growth for Q4 at 2% annualized·        That is slightly better than expected as last quarter was expected to be flat and now full year GDP could be at -7.5%

·        The fourth quarter and the full year GDP for FY21 is expected to be announced on Monday 31 May and is keenly awaited

·        Centre to borrow additional Rs.158,000 crore to compensate states for GST·        There is an apprehension that this borrowing could be used to first clear the dues of the previous financial year to states

·        Borrowing to pay states’ share is never a good idea and it is likely to push the fiscal deficit for this year to beyond 6.8%

·        RBI has put a penalty on HDFC Bank for the violations in auto loans business·        The problem started when the bank was accused of fitting tracking systems in the car without buyer’s consent

·        This is against the RBI rules and was based on a complaint by a whistle-blower about violations in the auto lending vertical

·        Banks likely to sell shares of Mallya in UBL worth Rs.5,500 crore against loans·        The shares will be sold by SBI via SBI Caps and the permission of the PMLA is awaited on this issue

·        The ED has made tangible progress in getting Vijay Mallya deported back to India to face legal consequences here

·        Jefferies has projected 59% upside in Reliance from current price levels·        Jefferies believes that outperformance of petchem vertical makes an early sale of O2C business a distinct possibility

·        More so, this is due to the fact that RIL has underperformed the Nifty pack by nearly 40% in the recent months

·        Roll over data appears to suggest a bullish outlook for the Nifty index·        The rollover in this F&O expiry has been as high as 80% compared to around 65% in recent months

·        However, it does look like traders are not taking chances long rolling metals after the recent volatility cues from China

·        Tata Digital buys a majority stake in Big Basket for a sum of $1.31 billion·        The acquisition of 64.3% stake by Tata Digital in Big Basket had been approved by the Competition Commission

·        This move is in sync with Tata’s integrated digital plan for all their businesses to take up the digital competition head on

·        Government may tweak FDI policy to facilitate sale of stake in BPCL·        The rules need to be changed to allow FDI investment in oil, which is considered a nationally critical sector

·        The government is looking to sell its 52.98% stake in BPCL entirely  and domestic interest has been fairly limited

·        RBI dividend of Rs.100,000 crore to government driven by forex gains·        There has been a sharp spike of 60% yoy in forex market operations of the RBI, resulting in huge gains

·        In addition, the RBI has also changed the methodology of accounting for forex gains, which also helped along the way

·        Paytm may be planning largest IPO worth Rs.21,800 crore by year end·        The $3 billion IPO will be a mix of fresh issue of shares as well as an offer for sale for partial exit to early investors

·        The largest IPO till date was the Coal India IPO at Rs.15,000 crore more than 10 years ago; but LIC IPO details are awaited

·        Eicher Motors reported stellar profits for the Mar-21 quarter at Rs.526 crore·        This was largely driven by a sharp spike in demand for Royal Enfield motorcycles and for commercial vehicles

·        Its VECV joint venture also gave a boost to profits during the fourth quarter of FY21 recording 56% volume growth

·        Cadila ties up with TLC of Taiwan for drug to cure Black Fungus·        Under the deal, Cadila will market Liposomal Amphotericin drug in India to cure the Black Fungus affliction

·        This is likely to address the acute shortage of Amphotericin in India, especially with the rise in Black Fungus cases

·        Credit Suisse downgrades metal stocks from overweight to underweight·        Credit Suisse believes that the extreme inventory squeeze story in metals may have now come to an end

·        Also, P/BV premium was at a 10-year high and aluminium to steel ratio was also at an unsustainable 20-year low

·        BPCL reported stellar profits of Rs.10,301 crore for Mar-21 quarter·        This surge in profits was on the back of higher GRMs and higher crude prices applied for inventory translation

·        However, the big boost came from Rs.6700cr exceptional gain from the sale of stake in Numaligarh Refinery in Assam

·        Asian Paints and Berger Paints rally sharply by 15% in one month·        There are hopes of strong volume growth in paint stocks in the coming quarters on heavy pent-up demand for paints

·        Both companies are also benefiting from the rapid shifting of the paint industry to the organized sector in India

·        Natco Pharma rallies after FDA approval for multiple myeloma drug·        Natco has got USFDA approval for the generic version of Celgene‘s multiple myeloma drug in the US

·        In addition, the rally was also driven by Natco testing safety of Molnupiravir capsules for mild COVID-19 patients

·        Spice Jet gets a breather from UK courts despite lease cost defaults·        The Judge refused to recommend any action due to the current situation and fears that it could bankrupt Spice Jet

·        However, this does raise a question about the hell or high water clause that is embedded in all aircraft lease contracts

·        India gets record FDI flows in the financial year 2020-21 at $81.7 bn·        This is higher by 10% on a yoy basis and includes the dividends reinvested in India by these FDI companies

·        Saudi Arabia emerged as a major FDI investo0rs but IT and hardware continued to corner 44% of the total FDI flows

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