Weekly Capsule (Jun 15 – Jun 19) and Impact Analysis

weekly cap 1 Weekly Capsule (Jun 15 – Jun 19) and Impact Analysis

News AnnouncementImpact Analysis
Reliance sells another 2.32% stake in Jio for $1.5 bn to PIF, Saudi ArabiaThis marks the eleventh deal for stake placement of Jio in the last 8 weeks since the Facebook deal
With this deal, Reliance has monetized 24.71% of its stake in Jio Platforms and raised Rs.115,700 crore from investors
Nestle MD, Suresh Narayanan, gets another 5 year term at the helmSuresh had taken charge of Nestle at the peak of the Maggi crisis in the middle of the year 2015
He not only revived Nestle from the crisis but the stock also became a 3-bagger in the last five years
HDFC plans to raise Rs.14,000 crore to shore up its capital baseThe funds are proposed to be raised either by equity issue or via debentures in the Indian or global markets
HDFC is looking to shore up its capital base and also to create a cash stash in the post COVID-19 economic scenario
Reliance market capitalization crosses $150 billion during the weekThe stock got a boost in the aftermath of the successful rights issue as well as the string of Jio monetization deals
With the sharp spurt in the stock price of Reliance, Mukesh Ambani enters the Forbes list of 10 richest in the world
RBI doubles the withdrawal limit to Rs.100,000 for PMC depositorsThe bank had come under the RBI control after its promoters had ended up with irrecoverable loans to HDIL group
It is estimated that with this latest change, nearly 85% of the depositors will be able to withdraw their entire deposit
RIL may just be a few steps from being zero net-debt by March 2021Post the rights issue and the Jio monetization, RIL is just short by Rs.31,000 crore to repay its net debt of Rs.161,000 crore
This gap can be filled up either by monetizing part of Aramco deal or finalizing the smaller Brookfield and BP deals
Axis Bank top honcho Pralay Mandal quits for greener pasturesPralay moves as the President for retail and SME lending at CSB Bank, which recently came out with its IPO
He has a rich history in retail banking across Standard Chartered Bank and Yes Bank; prior to Axis Bank
Air India offers 3-day working week to permanent staff at 60% payThis is a limited period offer to its employees to overcome the cash crunch created by the Coronavirus pandemic
Air India has been a top candidate for disinvestment but that has been delayed due to adverse market conditions
ICICI Bank sells 4% stake in ICICI Lombard for Rs.2250 croreThe bank will use the proceeds of the stake sale to shore up its cash reserves in the post COVID-19 scenario
Most holding companies have been monetizing their stakes in insurance units as valuations have been favourable
India’s forex reserves cross $508 billion in the week to 12 JuneApart from ranking India fifth in reserves globally, this also covers 14 months of average merchandise imports
The steady rise in reserves has been due to robust remittance flows and limited currency intervention by the RBI
Government has invited advisors to bid for LIC IPOLIC IPO was expected to contribute nearly Rs.90,000 crore in this fiscal towards the disinvestment program
The task for advisors will start with amending the LIC Act following by the timing, pricing and process of the issue
Bharti Airtel refuses to furnish any further bank guarantee for AGR duesBharti said that with Rs.18,000 crore paid up and Rs.10,000 crore guarantee, its commitment cannot be doubted
Bharti Airtel has asked the government for a 20-year time frame to pay up the total dues under the AGR
Vodafone Idea may struggle to pay up AGR upfront; says UBSUBS has pointed out that idea may find it hard to pay up AGR dues upfront or even in the foreseeable future
Vodafone Idea has paid up Rs.6000 crore and has cash reserves to the tune of Rs.6900 crore
Petrol and diesel prices hiked by nearly 10% in the last 13 daysWhile petrol was up by Rs.7.11 per litre, diesel was up by Rs.7.67 per litre since daily free pricing restarted
The consistent rise in oil prices is in sync with global crude prices more than doubling over the last 2 months
Galwan stand-off could hit Chinese exports to India by $17 billionIt is estimated that $17 billion of Indian imports from China may be curbed or shifted to local sources after the skirmish
For China, this may not be material overall, but it would pinch as India runs a massive trade deficit with China
Macquarie downplays retail loan NPA concerns post EMI moratoriumMacquarie report draws on experiences of players like HDFC where loans under moratorium have fallen sharply in June
However, the risk of defaults post the EMI moratorium on August 31 is still quite pronounced for smaller NBFCs
Reliance may make a bid for Future Retail and its group companiesFor Reliance the deal will allow them to nearly double their retail space and reach at a reasonable price
Future group gets a respite from the current solvency issues and also gives added advantage of Reliance’s digital front
Muthoot reports 51% growth in net profits as gold loans boomWhile April and May could have been a lean period for gold loans, the recovery could also be much quicker
Post COVID-19 as credit becomes tighter, markets expect gold loan companies to be the big beneficiaries
Final hearing on the interest on EMI case scheduled for first week of AugustWhile banks have denied any concessions on interest charged on moratorium, SC has only focused on interest on interest
The final hearing will come up in early August as the EMI moratorium period expires on August 31
HPCL reports a 99% fall in net profits in the March 2020 quarterThe sharp fall in net profits was largely driven by losses on inventory valuation due to a sharp fall in crude prices
Sales revenues were almost flat in Mar-20 quarter but the business could get hit in the June quarter due to lockdown
Indian oil majors asked to use more of Indian steel for capital investmentsOil companies will invest $160 billion in next 5 years creating demand for 50 million tonnes of steel in India
The domestic thrust would mean that Tata Steel, SAIL and JSW Steel could be the major beneficiaries of the shift

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