Weekly Capsule and Impact Analysis

weekly cap 1 Weekly Capsule and Impact Analysis

                                 News Announcement                                       Impact Analysis
MPC minutes hint at a clear bias towards post-pandemic recoveryMPC members were unanimous about an accommodative stance as well as the need to cut repo rates
Five members were in favour of 40 bps rate cut, with one vote for 25 bps rate cut to keep policy options open
Reliance Jio completes placing 20% shares with foreign investorsWhile 10% of Jio Platforms was placed with Facebook, the other 10% was placed with a clutch of PE funds
During the week, an additional 2.5% stake was sold to Abu Dhabi sovereign fund, Mubadala, and to Silver Lakes PE Fund
Gujarat High Court stays Templeton from conducting unit holder e-voteThe vote was proposed to be conducted for liquidation of assets of the 6 debt schemes that were wound up
Gujarat HC was of the view that the proper protocol was not adhered by Templeton ahead of winding up the funds
India now ranks sixth in terms of number of COVID-19 afflictionsWith 2.40 lakh cases, India ranks very high in afflictions, though the casualties have been much lower in India
The worst affected by the pandemic have been the states of Maharashtra, Tamil Nadu, Delhi, Gujarat, MP and Rajasthan
Tata Sons rules out the need to monetize assets of the groupN Chandrasekharan confirmed that the Tata group had sufficient cash flows to tide over the COVID-19 crisis
There were reports that Tata Sons may monetize some of its holdings but it has been denied by the holding company
US equity markets surged over the week end on positive jobs dataIn what could be an indication of a likely recovery in 2021, the spike in job losses halted in the US after nearly 8 weeks
In addition, the strength in oil prices also helped the US markets as the OPEC lobbied for longer supply cuts
Hexaware could be the next big delisting candidate on the boursesThis announcement came a few weeks after Vedanta and Adani Power announced plans to get themselves delisted
Hexaware promoters hold close to 65% of the paid up equity and will need to buy out 35% via reverse book building
SBI reports 327% spike in net profits to Rs.3581 crore for Mar-20 quarterThe profit spike was largely driven by a one-time profit from the sale of its 4% stake in SBI Cards through the IPO
Even as revenue growth was almost flat, the provisions for bad debts was up by nearly 50% in the quarter
Sovereign Gold Bonds (SGB) June Series to open for subscription on June 08The latest bond issue will be open for five days and the issue will be priced at Rs.4677 per gram of gold
The gold bonds will carry a rate of interest of 2.5% and will have an investment lock-in of 8 years
FPI flows in June 2020 set a record for the year in the first week itselfFIIs infused Rs.20,814 crore into equity in the first week but debt flows are still under pressure
The surge in equity inflows was driven by the RIL rights issue and block placements of Kotak Bank and HDFC Life
RBI puts Hinduja Brothers’ plans to hike stake in IndusInd Bank on holdThis is in response to an application made by the Hindujas to increase their stake in IndusInd from 15% to 26%
The IndusInd Bank stock has lost more than 70% of its value in the last one year making the stock extremely cheap
Debt of Power Discoms to touch an all-time high of Rs.450,000 croreThis is likely to worsen the credit profile of the Discoms and also turn out to be credit negative for banks
The government has announced a Rs.90,000 crore package for the Discoms but the real need could be structural reforms
Atlas Cycles shuts down its last operating plant in HaryanaThis comes after Atlas shut down its two other plants including the iconic Sonepat plant in 2018
While COVID-19 created a cash crunch, the real reason was the sharp fall in demand for bicycles as a mode of transport
Reliance market cap crossed Rs.10 trillion again during the weekRIL regained its Rs.10 trillion market cap on the back of a successful rights issue and Jio monetization
It now leads TCS in terms of market value by nearly 25% with HDFC Bank, HUL and Bharti still a far way behind
UBS warns of outlook downgrade of India by S&P and FitchThis downgrade risk was pointed by UBS after Moody’s lowered India’s sovereign rating and outlook to negative
This could expose India to a huge risk of an eventual downgrade to Junk Status leading to a weaker rupee
Amazon may pick up a 5% stake in Bharti Airtel for $2 billionThis would approximately correspond with the current valuation of Bharti Airtel at $42 billion
With Jio aggressively monetizing its digital business, Bharti is also exploring similar opportunities to expand its war chest
CII President, Uday Kotak, argues against interest waiverThis came in response to the Supreme Court asking RBI why EMI moratorium cannot be converted into interest waiver.
Kotak pointed out that such a move would favour borrowers at the cost of the interest of depositors
Reliance Rights issue got over-subscribed by 1.6 timesAgainst the rights issue size of Rs.53,100 crore, RIL received rights bids to the tune of Rs.84,500 crore
The phenomenal interest in RIL rights was due to the huge discount to spot, which was reflected in RE trades
Mobile trading has seen a share jump in May on a YOY basisThe share of mobile trading in May 2020 jumped to 23% from just 11% in May last year due to COVID-19 related lockdown
In terms of number of traders, the share of mobile trading has jumped from 24% to 45% in the last one year
Uday Kotak reduces his stake in Kotak Bank from 28.9% to 26%This is as per the stipulation of the RBI to cut promoter stake in Kotak Bank to 26% by August 2020
The end of promoter stake uncertainty resulted in a sharp spike in the stock price as FIIs and MFs lapped up the shares
Moody’s downgrades sovereign ratings to Baa3; just above speculative gradeThis marks the lowest level in terms of investment grade and was driven by growth concerns and weak fiscal position
In addition, Moody’s also downgraded a slew of banks, oil companies and IT companies on growth concerns

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