Midnight News Update – Jul 06th 2020

unnamed Midnight News Update – Jul 06th 2020

Even as the fight against the Coronavirus gathers steam, experts have opined that the deadly of August 15 given by the ICMR to Bharat Biotech to ready the vaccine for COVID-19 may be largely impractical. This is despite the fact that India normally combines Phase 1 and Phase 2 of the trials. The COVAXIN was approved post animal trials and the next step that starts on July 07 is the human trials. A total of 1125 persons will be administered the COVAXIN of which 375 would be administered in Phase 1. After both the phases, the DGCI will take a call to introduce the drug on compassionate grounds.

The Edelweiss group has booked a massive loss of Rs.2245 crore in the Mar-20 quarter due to high upfront provisioning for COVID-19 as well as for credit lending for losses across the credit lending and the asset reconstruction verticals. The total losses provided for the in quarter were to the tune of Rs.2549 crore including Rs.900 crore in additional provisioning for COVID-19. Even the full year income of Edelweiss fell sharply from Rs.11,161 crore last year to just Rs.9053 crore this year. However, Rashesh Shah has clarified that these are only provisions and not actual losses booked.

The 10 most valuable companies in India added nearly Rs.137,000 crore in terms of market as the Nifty closed above the 10,600 mark. TCS was the big gainer adding Rs.31,285 crore during the week while Reliance added another Rs.28,464 crore to its market cap. HDFC, ITC and Bharti Airtel were among the other major gainers adding nearly Rs.46,000 crore between them. All the top 10 stocks added value during the week with ICICI Bank and Kotak Bank being the lowest value adders for the week. The markets will now await further news on growth impulses and the progress of COVID-19 casualties.

Goldman Sachs has lowered the growth rate for calendar year 2020 and has now projected GDP to contract by (-4.6%) for the full year. They expect the pain of grown to remain constant till September but expect a sharp turnaround after that. The economists are expecting a 25% growth in the third quarter on a QOQ basis. However, economists at Goldman continued to be optimistic about 2021 and expect GDP growth to resume at 5.8% with unemployment at 9%. These estimates are slightly worse than the 4.2% contraction that Goldman had predicted in the US economy for the year 2020.

Promoters of stressed companies may find it a lot easier to raise funds in the market in the light of the recent amendments made by SEBI. This will be better for the promoter group than getting completely dispossessed by the IBC, which eventually hands over the company to another entity. Many promoters had suggested that IBC should be voluntary and a promoter who was willing to run the business should be given another chance. The new guidelines will allow the promoters to get new investors on board without diluting stake. SEBI has already relaxed guidelines for pricing and open offer requirements to enable easier fund raising through preferential allotment in the case of stressed companies. This special restructuring window will be available as one last option to promoters before going to IBC.

Mutual funds have made a net investment of Rs.39,500 crore into equity funds in the first six months of the year. This is nearly four times the amount of flow into equity funds in the first six months of 2019. What is notable is that these flows have come at a time when the stock markets have been through bouts of volatility and massive price correction. This can be largely attributed to the regular stream of flows from SIPs which sustained at above Rs.8200 crore on a monthly basis on an average. Debt investments have been a lot more volatile with credit funds bearing the brunt of the sell-off.

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