Midnight News – Jun 29th 2020

unnamed Midnight News  – Jun 29th 2020

Coronavirus cases continued to pile up on Sunday. In one single day, the number of fresh Coronavirus cases jumped by 190,000 cases globally. Of this, nearly 20,000 cases were added from India alone making it one of the worst days for India in terms of accretion in numbers. More unlocking across sectors and more aggressive testing by Indian labs has resulted in the spurt in numbers. It remains to be seen whether the government prefers to go for an aggressive Unlock 2.0 or instead chooses to continue restrictions in most of the key states with focus on the containment zones.

Vedanta Resources has confirmed that it is in the process of arranging the requisite finance for the delisting exercise. Vedanta Resources owns nearly half the shares of Vedanta Ltd. and will have to buy out the other half. The parent company proposes to do the deal with a mix of internal and external resources. It may be recollected that Vedanta Ltd board had approved the delisting of the company although the original delisting price of Rs.87.50 is nearly 30% lower than the current market price. This may have to be revised. Getting approval of minority shareholders will be another challenge.

Government has extended the deadline for submission of bids for Air India by another two months till August 31, 2020. The original deadline was supposed to be expiring on June 30, but that was impractical considering that large swathes of the global economy are still struggling to recover from the pandemic. For now, investment plans are on hold for most companies. The strategic divestment of Air India has been sweetened by the government by transferring a chunk of its debt to a SPV. This divestment is a key component of the government’s aggressive Rs.2.20 trillion divestment target for fiscal 2020-21.

Even as Punjab National Bank is working hard to shore up its capital base to provide a capital cushion, it has confirmed that any major strategic monetization of its subsidiary holdings may not be likely at this point of time. PNB has a number of associates like PNB Housing Finance, PNB Gilts, PNB Met Life etc and it has a significant stake in all these associate companies. However, PNB feels that the market timing may not be appropriate to get a good value for these financial services group companies. Instead, PNB proposes to sell some of its parcels from the land bank for immediate monetization and liquidity.

In an ironic twist to economic trade relations, China emerged as the top buyer of Indian steel during the lockdown period. In fact, Indian export of steel to China grew by a whopping 76% and during the lockdown period China accounted for nearly 48% of all steel exported by India. Export of finished steel to China stood at 440,000 tonnes while that of semis stood at 1 million tonnes. While India’s volume of finished steel products to Vietnam was larger, it was China that dominated the Indian export of steel semis. China imports of steel from India used to be negligible in the past. The export of steel came as a face saver to most Indian companies after domestic steel demand crashed. For China it is more economical to directly import steel rather than import iron ore and coal at the current prices.

During the previous week, the top 10 companies by market cap on the NSE saw their market cap appreciate by Rs.92,310 crore. TCS was the top gainer during the week with Rs.25,723 crore of market cap addition. Infosys also added another Rs.18,105 crore to its market cap during the week. Other market cap gainers include stocks like Hindustan Unilever, Kotak Bank and HDFC Bank. Among the market cap losers for the week, there were stocks like Reliance Industries, HDFC, Bharti Airtel and ICICI Bank. In the absence of macro cues, the stock moves during the week were more stock specific.

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