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Weekly Wrap: RIL’s Second-Worst Drop Of 2019, RBI Steps Up Purchases, Divestment Target Miss

Here’s what happened in the business world and across the globe between Dec. 23 and Dec. 27.

A trader reacts as he looks at financial data on computer screens on the trading floor. Photographer: Luke MacGregor/Bloomberg
A trader reacts as he looks at financial data on computer screens on the trading floor. Photographer: Luke MacGregor/Bloomberg

India’s most-valued firm logged its second-worst weekly decline of the year. The Reserve Bank of India announced a second round of bond buying and selling. And the government has mopped up less than a fifth of the divestment target for the ongoing financial year.

Here’s what happened in the business world and across the globe between Dec. 23 and Dec. 27:

RIL’s Second-Worst Week Of 2019

Shares of Reliance Industries Ltd. fell nearly 4 percent this week, making it the worst-performer on the Sensex and second-worst on the Nifty 50 Index. The fall was also the oil-to-telecom conglomerate’s worst weekly decline this year after an 11.2 percent slump in May.

That came after the Economic Times reported that the Delhi High Court had asked RIL and British Gas to disclose their assets when the government sought to restrain them from disposing assets, including the Mukesh Ambani-owned company’s plan to sell 20 percent stake to Saudi Arabian Oil Co.

RIL, however, mounted a strong counter to the government’s petition, saying it’s an “abuse of process” as no arbitration award has fixed any final liability of dues on the company, PTI reported.

Here are other RIL news that was reported this week:

  • Reliance Jio unveils ‘2020 Happy New Year Offer’
  • NCLAT dismisses Income Tax Department plea against Reliance Jio demerger plan
  • An exit plan for Reliance Retail Employees values the company at a discount.

RBI’s ‘Operation Twist’: 2.0

The Reserve Bank of India will conduct the second round of government bond purchases and sales as part of its open market operations at the end of this month to boost liquidity and ease borrowing conditions.

  • On Dec. 30, RBI will buy Rs 10,000 crore worth of 6.45 percent government securities maturing in 2029.
  • The first round of auction was conducted on Dec. 23 with the RBI receiving Rs 20,826 crore worth of bids for the 10-year government bonds.
  • Since Dec. 23, the yield on the 10-year note fell nearly seven basis points to close the week at 6.5 percent.

India Scurries To Meet Divestment Target

With just three months to go, India has mopped up less than a fifth of its divestment target for the ongoing financial year even as the government struggles to narrow the fiscal deficit.

  • And it could miss the estimates by a wide margin as Bloomberg quoted an unnamed official as saying that the sale of Bharat Petroleum Corporation Ltd. and Air India are unlikely to be completed this financial year.
  • The government has raised just Rs 17,364 crore so far by selling its stake in state-run companies, according to data on the website of the Department of Investment and Public Asset Management.
  • That’s nearly 16.6 percent of the targeted Rs 1,05,000 crore.

How Markets Fared This Week

Indian equity benchmarks halted a two-week gaining streak. The benchmark indices, which had declined over 1 percent between Monday and Thursday, erased most of weekly losses with Friday’s rally.

The S&P BSE Sensex fell 0.26 percent this week to close at 41,575.14 and the NSE Nifty 50 fell 0.21 percent during the period to end at 12,245.80.

Eight out of 11 sectoral gauges compiled by National Stock Exchange ended higher this week, led by the NSE Nifty Metal Index’s 1.95 percent advance. On the flipside, the NSE Nifty FMCG Index was the top sectoral loser, down 0.69 percent.

How The Broader Markets Fared

The broader markets represented by the NSE Nifty 500 Index ended little changed as the rally in ICICI Securities Ltd. and Indian Overseas Bank were offset by losses in Dishman Carbogen Amcis Ltd. and Vodafone Idea Ltd.

How The Currencies Fared

That Indian rupee was the worst Asian performer this week. The home currency depreciated nearly 0.33 percent to end at 71.33 against the greenback.

Other Big Talking Points Of The Week

  • Jharkhand Assembly Election Results: BJP concedes defeat with JMM-Congress alliance set for majority.
  • What goes in Maruti Suzuki’s favour as auto shares rebound.
  • CBI books former Maruti Udyog MD Jagdish Khattar in bank loan fraud case.
  • Allahabad Bank gets fresh capital of Rs 2,153 crore from government.
  • Fundraising via IPOs falls 60% in 2019 as Indian economy sputters.
  • Stressed assets rise again in first half of FY20, shows RBI report.
  • Bad loans under Mudra scheme rose to over Rs 17,000 crore in FY19.

Key Events/Data To Watch Next Week

  • Dec. 31: India to release fiscal deficit data for November.
  • Dec. 31: India to release eight infrastructure industries data for November.
  • Jan. 1: Automakers to release December sales data.
  • Jan. 2: Market India manufacturing PMI data to be released.