BQuick On Aug. 7: Top 10 Stories In Under 10 Minutes
Top news, must-read stories and columns—all served up in less than 10 minutes.
This is a roundup of the day’s top stories in brief.
1. Reliance Retail’s Bumper Valuation
The retail business of Reliance Industries Ltd. is valued higher in the over-the-counter market than brokerage estimates as the shares have surged amid talks of a stake sale in the unit.
Reliance Retail shares are currently trading at Rs 1,200-1,250 apiece in the OTC market, according to Harshvardhan Roongta, founder of Roongta Securities.
Given its equity of 499.06 crore shares, the valuation works out to Rs 5.98-6.23 lakh crore—or $79.9-83.3 billion. That compares with $70 billion estimated by CLSA.
Shares of the retail unit command a premium in the OTC market because of the scarcity of these shares.
They have also surged on the parent's plan to sell a stake in the unit.
2. Bidders Not Too Hot For Jet Airways
Offers submitted by two bidders for the insolvent Jet Airways (India) Ltd. are being seen as low by lenders, who are currently engaged in negotiations with the interested parties, three people with direct knowledge of the matter said.
The offers made by the consortium of Kalrock Capital and Murari Lal Jalan and another consortium of Imperial Capital, Flight Simulation Technique Centre and Big Charter Pvt., would result in large haircuts for the financial creditors, two of the three people cited earlier said on the condition of anonymity.
The Kalrock Capital consortium has offered to pay up to Rs 1,200 crore to the financial creditors over ten years by issuing zero-coupon bonds, the two people cited earlier said.
The second consortium led by Imperial Capital has offered to pay Rs 60 crore to the financial creditors over the first two years of operations, Rs 60 crore to operational creditors and invest Rs 480-500 crore into the airline, the people said.
That is significantly lower than the total dues of over Rs 15,000 crore that the airline has. Find out more.
3. Nifty Rangebound; U.S. Stocks Drop Despite Jobs Beat
Indian equity markets had a rangebound session but managed to register gains for the week.
The S&P BSE Sensex ended little changed at 38,040 while the NSE Nifty 50 index ended 0.1% higher at 11,214.
Asian Paints Ltd. emerged as the top gainer on the Nifty 50 index, ending with gains of 4.6% while The Titan Co. was the top Nifty laggard, ending 2.5% lower.
Mindspace Business Parks REIT, backed by the Blackstone Group and real estate developer K Raheja, closed 10.5% higher than its issue price on its stock market debut.
Follow the day’s trading action here.
U.S. equities dipped amid growing speculation that lawmakers won’t be able to agree on a new round of economic stimulus and as the White House steps up its confrontation with China.
The S&P 500 Index was poised to snap a five-day winning streak.
While a better-than-forecast payrolls report provided some support, there was also concern it could reduce pressure on officials to reach a deal on economic aid.
Traders also kept a wary eye on President Donald Trump’s latest attack on Chinese tech companies and a plan to sanction Hong Kong’s chief executive.
The dollar strengthened on haven demand as China tensions increased, while gold retreated for the first time in six days.
Get your daily fix of global markets.
4. How M&M And Cipla Fared In Q1
Mahindra & Mahindra Ltd. saw its quarterly profit nearly wipe out as the Covid-19 pandemic hit the supply chain.
Net profit fell 97% year-on-year to Rs 68 crore.
Revenue fell 56.4% to Rs 5,589 crore.
While passenger vehicle sales were a washout, tractor sales absorbed some of the impact.
Cipla Ltd.’s quarterly profit rose more than expected after the drugmaker reported strong sales in India and other emerging markets.
Net profit rose 21% year-on-year to Rs 578 crore.
Revenue rose 9% to Rs 4,346 crore.
Growth for Cipla in India was mainly led by the trade generics business.
5. Forex Reserves Surge
India’s foreign exchange reserves rose to a record high in the last week of the previous month.
Data released by the Reserve Bank of India on Friday showed that forex reserves rose $11.9 billion in the week ended July 31, taking total reserves to $534 billion.
India has seen a huge build up of reserves in the last few months as foreign investors pumped in money into Indian equities.
One-off inflows from corporate fundraising deals has also helped push up reserves.
Most of the gain this week is revaluation effect on foreign currency assets and gold revaluation.
6. Which Set Of Borrowers Are Restructuring Candidates?
The Reserve Bank of India has permitted banks to restructure loans of borrowers impacted by Covid-19, without tagging these accounts as non-performing. The provision this time has come with more oversight and increased disclosures.
Rajiv Anand, executive director for wholesale banking at Axis Bank Ltd., said that borrowers who took the moratorium in the first round and continued to avail the relief in the second round are the most likely candidates for restructuring.
Such borrowers are fairly widespread across sectors, Anand told BloombergQuint.
Anand also said increased checks, disclosures and already elevated provisioning may prevent a return to the past when lenders used restructuring to hide stressed loans.
I think in general it is fair to say that the era of restructuring without taking the hit is over.Rajiv Anand, ED-Wholesale Banking, Axis Bank
Anand also said interest rates may be close to bottoming out in India.
7. How Local Economies Are Hit By The Virus
The number of Covid-19 cases in India continue to rise, leaving behind disrupted economic activity and weak consumer sentiment. While activity has rebounded from the lows of April and May, the pick-up remains uneven across different states based on the spread of the virus, show state-level concurrent economic indicators.
The top five states by GDP still account for over two-thirds of all Covid-19 cases in the country. These are Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Uttar Pradesh. Together, these states contribute about 40% to India’s GDP.
In four of these five states, high frequency indicators such as electricity demand and mobility remained well below the national average.
Uttar Pradesh has been an outlier with indicators improving more quickly than the national trend.
Going ahead, while controlling the spread of the virus will be the biggest determinant, the urban-rural ratio of infections will also be important.
8. What Indians Have Been Spending Their Cash On
Months of lockdown have altered the habits of Indian consumers: Their spending patterns reveal just how deeply concerned they are with protecting their health and fortifying their store-cupboards, warding off boredom and keeping their homes (and themselves) neat and tidy. And where new routines look likely to stick, some companies stand to gain a lot.
Consumers around the world are looking to boost their immunity. It's no different in India where Ayurveda product sales have risen.
Sales of packaged foods from instant noodles to breakfast cereals have also spiked.
Indians have also been spending more on digital services from online learning to streaming platforms.
Here are other products that have seen growth in sales during the pandemic.
9. Covid-19: India Tally Tops 20 Lakh, ASHA Workers Go On Strike
India's Covid-19 tally jumped by more than 62,000 in a biggest-single day spike to cross the 20-lakh-mark as the world’s second-most populous nation inches closer to become the epicentre of the outbreak of the deadly virus.
India added 62,538 new cases in the last 24 hours, taking the total count to 20,27,074, according to the Health Ministry’s update at 8 a.m.
This includes 13,78,105 recoveries and 41,585 people who have succumbed.
In the last 24 hours, 49,769 patients recovered and 886 died.
The number of active cases in India stood at 6,07,384.
India took 170 days to reach the 10-lakh mark and only 21 says to double it to 20 lakh.
They helped eradicate polio in India and reduced the number of women dying during child birth. But India’s catastrophic coronavirus outbreak, now the third-largest in the world, has pushed its all-female army of contact-tracing health workers to breaking point.
After months of harassment, underpayment and lack of protection from infection, about 600,000 of the country’s one million Accredited Social Health Activists -- or ASHAs, which also means hope in Hindi -- are going on strike for two days starting Aug.7 to draw attention to their plight.
Union leaders expect more may join as the word spreads.
Losing the ASHAs would not only threaten India’s virus-containment effort, but also impact the other essential health services.
10. Delhi Rolls Out Sops For EVs
Delhi, one of the world's most polluted cities, will offer tax incentives on electric vehicles as it targets five lakh battery-powered vehicles on the road in the next five years to make air cleaner and generate employment.
The state targets 25% of all new registrations to be for electric vehicles by 2024, Chief Minister Arvind Kejriwal said while launching Delhi's EV policy for three years.
That contribution, he said, now stands at 0.2%.
Delhi plans to waive registration fee and road tax, and provide financial incentives to buyers of EVs.
The state under the new policy, he said, is the first in India to offer incentives to those who want to scrap their old vehicles.