Weekly Capsule (Jun 29 – Jul 03)

weekly cap 1 Weekly Capsule (Jun 29 – Jul 03)

News Announcement

Impact Analysis

  • Intel Capital invests Rs.1895 crore in Jio Platforms for 0.39% stake
  • Intel Capital is part of the Intel Group and has been a major investor globally in innovative technologies and platforms
  • With this stake sale, Reliance has now sold 25.07% stake in Jio Platforms and have raised Rs.117,500 crore till date
  • Muthoot Finance likely to go for a stock split to make shares more affordable
  • While the impact on shareholder wealth will be neutral, it will bring the Rs.1000+ stock into a more popular trading range
  • In the last one year, Muthoot has been one of the top performers as it has tracked the price of gold
  • Moody’s rates Infosys, TCS and RIL one notch above sovereign grade
  • This is significant because Moody’s had pegged India’s sovereign ratings at just above speculative grade
  • This will ensure that the cost of funds for such companies is not constrained by the sovereign rating assigned to India
  • M&M and Ford enter into JV to manufacture cars in India
  • While M&M gets the design and technology of Ford, M&M also helps Ford outsource manufacturing for world markets
  • The focus will be in the mid-range SUV segment which is today dominated by Korean players like Hyundai and Kia
  • HDFC plans to raise Rs.125,000 crore from the bond markets this fiscal
  • This will be part of HDFC’s massive capitalization drive to leverage on opportunities in the post COVID scenario
  • In addition, HDFC also plans to build its war chest by selling further stake in HDFC Standard Life and HDFC ERGO
  • Bharat Biotech asked by ICMR to target COVID vaccine launch by 15 August
  • While the Covaxin has been approved post animal trials, the human trains have just about begun in right earnest
  • If this works, then Bharat Biotech could be first off the block to manufacture and market a vaccine for COVID-19
  • Government makes a special Rs.38,900 crore allocation for defence
  • India shall be fast tracking some purchases from Russia in the light of the recent incursions by China along the LAC
  • Out of the total allocation, nearly Rs.32,000 crore worth of orders will be generated for Indian defence companies
  • HDFC Life to replace Vedanta in the NSE Nifty Index
  • This was necessitated after Vedanta board approved the delisting of the stock from the Indian stock exchanges
  • This move will also give representation to insurance in the Nifty and also improve the earnings quality of the Nifty
  • Clermont of Singapore may infuse $150-200 million into LVB
  • This will be essential to keep the bank running till the time the merger with Clix Finance gets fully approved by the RBI
  • Earlier, LVB had gotten into a financial mess after its proposed merger with Indiabulls Housing was rejected by RBI
  • Start-ups see lower valuations from VCs and private equity funds
  • These lower valuations have been necessitated by the pressure created by COVID-19 in the last few months
  • Start-ups have a choice of delaying funding or accepting lower valuations and the latter is normally a better option
  • Vodafone Idea reported a full year loss of Rs.78,300 crore for FY20
  • The Q4 low was just about Rs.11,000 crore but most of the losses were booked after the AGR order in second quarter
  • Among the three telecom companies, Vodafone Idea remains the most vulnerable in terms of maintaining solvency
  • June auto sales gets a leg up from tractor sales as car sales lag
  • Both Escorts and Mahindra & Mahindra reported stellar positive growth in sales of tractors
  • This was largely driven by strong monsoon expectations and lower impact of COVID-19 on rural purchasing power
  • Tesla overtakes Toyota to become the world’s most valuable auto company
  • In fact, at $210 billion Tesla has a market that is more than twice that of Volkswagen
  • Tesla’s market cap is more than Ford, GM and Ferrari put together, despite having only a fraction of their sales
  • India bans 59 Chinese apps with immediate effect on security grounds
  • This was a reaction to the unprovoked incursions attempted by China along the Line of Actual Control (LAC)
  • In addition, Nitin Gadkari also announced that China would be banned from participating in any infrastructure projects
  • KKR takes a 54% stake in JB Chemicals for a consideration of Rs.3750 crore
  • This is the second big acquisition made by KKR in India, after it infused Rs.11,600 crore into Jio Platforms last month
  • Now KKR will also make an open offer to buy an additional 26% in JB Chemicals at the same price of Rs.745
  • Hindustan Unilever and Emami lock horns in a sharp legal battle
  • This started off after HUL decided to change the name of its Fair & Lovely Cream to Glow and Handsome
  • Emami already sells the popular Fair and Handsome cream and feels this could infringe on the property they created
  • India’s current account turned into a surplus after a gap of 13 years
  • The current account surplus was just about $0.60 billion which is just about 0.1% of the GDP of the current year
  • The current account surplus was largely driven by lower trade deficit, a spurt in software fees and better remittances
  • Temasek may chip in to invest in Zomato in place of Ant Financial
  • Ant Financial, part of Alibaba, has backed out of the funding due to FDI restrictions imposed on China by India
  • Temasek of Singapore will invest the $150 million which Ant Financial had committed to invest in Zomato
  • ONGC reported a net loss of Rs.3098 crore in the Mar-20 quarter
  • This huge loss was driven by Rs.4899 crore write-off taken by ONGC on account of inventory translation losses
  • However, with inventories already factoring sub-50 dollars of oil price, further downside risk may be limited for ONGC
  • Core sector output for May 2020 falls 23.4% led by steel and refining
  • The only standout sector was fertilizers that managed to grow output by 7.5% in the midst of a difficult month
  • Core sector assumes significance as it accounts for nearly 40.27% of the overall IIP growth in any month
  • India gold imports fell 86% to just 11 tonnes in the month of June 2020
  • This sharp fall was due to jewellers facing shutdown and also retail demand diminishing due to high gold prices
  • For the government this is positive as they don’t have to allocate precious foreign exchange for unproductive gold

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