BQuick On June 9: Top 10 Stories In Under 10 Minutes  

Here is a roundup of the day’s top stories in brief.

1. Adani Bags World’s Biggest Solar Deal

India handed a $6-billion solar tender to billionaire Gautam Adani’s group among contracts awarded to three firms as auctions gather momentum despite concerns about demand and costs.

• Adani Green Energy Ltd. won the bid from state-run Solar Energy Corporation of India Ltd. for 8 gigawatt of solar power and 2 GW of panel manufacturing, according to exchange filings by companies.
• The government also awarded contracts to Azure Power Global Ltd. and ReNew Power Pvt. Ltd.
• While Adani Green Energy, Adani Solar and Azure Power quoted Rs 2.92 a unit, ReNew Power bid Rs 2.9 a unit.
• India’s shift to competitive bidding had driven solar tariffs to a record low of about Rs 2.42 a unit.

Here’s why Adani’s winning bid could end up promoting manufacturing of solar cells in India.

2. JioMart: Temporary Setback

Reliance Retail Ltd.’s JioMart, launched in multiple cities last month, has temporarily suspended deliveries from neighbourhood stores, according to Jefferies India.

• It’s not able to serve customers through its network of local retailers for the past two weeks and one of the reasons could be Covid-19, the brokerage said citing its conversations with seven retailers in Mumbai who were part of the pilot.
• The shutdown is temporary and the company is supplying consumers from its own stores, the report said. Reliance Retail has yet to respond to BloombergQuint’s emailed queries.
• “The current environment may not be very conducive for an ambitious project of linking up traditional grocers, particularly when several areas in Mumbai (where the pilot was conducted) were facing Covid-19 crisis,” Jefferies India said.
• It appears that this is just a timing issue and JioMart would eventually link up the traditional channel to gain scale and efficiency as the potential remains immense, it said.

Mukesh Ambani launched JioMart last month amid the world’s strictest lockdown.

3. Indian, U.S. Stocks Drop

Indian stocks declined, with the main indices falling by the most in three weeks, as investors worried that prices have run too far, too fast.

• The S&P BSE Sensex dropped 1.2% to 33,956.7 after rising by as much as 1.3% earlier.
• The Sensex and the NSE Nifty 50 Index have climbed more than 30% from their lows in March to levels last seen before the coronavirus-related lockdown was imposed.
• The Sensex failed to climb above its 100-day moving average, seen as a key threshold for gauging whether a rally fueled by optimism over India’s economic re-opening can last.
• Among sectoral indices, the Nifty Media index ended as the top laggard with cuts of 3.5%.

Follow the day’s trading action here.

U.S. stocks slid on concern the blistering rally in risk assets overshot economic prospects.

• The S&P 500 halted a surge that drove the gauge higher for 2020, led by energy companies and banks.
• Treasury yields sank to as low as 0.81% and the dollar halted its longest losing run in almost a decade.
• Gold increased 1% to $1,722.30 an ounce.

Get your daily fix of global markets here.

4. ‘Buy The Pessimism, Sell The Optimism’

Recovery in Indian equities isn’t going to be a straight line and will see bouts of volatility and uncertainty, said Krishna Kumar Karwa, managing director of Emkay Global Financial Services, at a time when the nation’s indices have recovered by more than a third since their lows in March.

• The correct way to invest in such a market is to buy the pessimism and sell the optimism, he told BloombergQuint in an interview.
• “Currently as we talk, optimism is increasing so it’s not the correct time to buy stocks,” he said. “You have to be careful what you’re buying into.”

Investors should part with their money only if they feel the underlying valuation of the stock is worth it, Karwa says.

5. Developers’ Take On Why Prices Can’t Come Down

After Piyush Goyal’s advice to sell inventory at lower prices rather than going bankrupt, developers cited high ready-reckoner rates, or the minimum price to calculate taxes, for their inability to sell at a discount.

• Real estate developers are unlikely to sell their inventory at a discount in a hurry, said Niranjan Hiranandani, president of developers’ lobby Naredco, told BloombergQuint over the phone.
• The current regulations discourage them to sell a unit below the ready reckoner rate or circle rates, he said.
• These are the lowest perceived prices in an area regulated by the states for calculation of stamp duty and premiums or fee to acquire development rights. States are reluctant to reduce this base price as it’s a source of revenue.

Still, this can’t be the only reason why property prices can’t come down because in most of the areas.

6. Why Do Companies Delist?

There is evidence that companies delist for reasons such as leverage that, in fact, increases further after delisting and for the need to plough back profits, writes Suranjali Tandon.

• On average, companies were either making higher losses or reporting lower profits before their delisting and report better financials after delisting.
• Preliminary evidence suggests that companies report much higher leverage after being delisted.

Companies that were paying dividends prior to delisting cut these by more than half after delisting.

7. Iron Ore Prices Set To Rebound

Domestic iron ore prices are likely to rebound as steel mills ramp up production after the lockdown curbs were eased and the world’s biggest producer of the steel-making ingredient shut operations at a mine.

• NMDC Ltd.—India’s largest iron ore miner—had cut prices of lumps and fines for two straight months to the lowest in a year on weak demand amid the new coronavirus outbreak. But analysts suggest that prices may improve.
• According to JP Morgan, increase in output by steelmakers, iron ore exports from Odisha becoming profitable at current spot prices and higher sales by NMDC are expected to lift prices of the key raw material.
• Rakesh Arora, managing partner at Go India Advisors, said steel output is recovering in India, and mills had stocked up raw material till March in view of a disruption to 30% of iron ore production.

Now, he said, balance is starting to restore.

8. Godrej Consumer: Change Of Guard

Godrej Consumer Products Ltd. said on Tuesday that Vivek Gambhir, its managing director and chief executive officer, would step down on June 30 and would be replaced by Executive Director Nisaba Godrej a day later.

• Gambhir, who joined the company in 2009 as chief strategy officer, will remain on the board as whole-time director till Sept. 30, the company said in an exchange filing.
• “For the past many years, I have been living away from my family and seeing them only on weekends. Recently, I had some health problems that made me think more deeply about my lifestyle,” Gambhir was quoted as saying in the statement.

Here’s what the new CEO had to say.

9. Covid-19: Mumbai Crosses 50,000; Kejriwal Tests Negative

Covid-19 infections in India crossed the 2.6-lakh mark on Tuesday, a day after the country started ending its two-month lockdown.

• India added 9,987 fresh cases in the 24 hours preceding the Health Ministry’s 8 a.m. update on June 9, taking the total tally to 2,66,598.
• This includes 7,466 deaths and 1,29,215 patients who have recovered.
• Authorities reported 266 deaths and 4,785 recoveries during the same 24 hours.
• More than 50,000 people have been infected by the Covid-19 virus in Mumbai. Of these 22,032 have recovered, 1,702 have died and 26,345 remain as active cases, the statement said.
• India’s Disinvestment Secretary Tuhin Kanta Pandey has tested positive for Covid-19 and is under home quarantine, according to PTI sources.
• BJP leader Jyotiraditya Scindia, too, has tested positive, according to a PTI source.
• Delhi Chief Minister Arvind Kejriwal, who had developed some symptoms, has tested negative for Covid-19.
• Delhi has predicted that it will have 5.5 lakh cases by the end of July.

Track news and developments around the Covid-19 outbreak here.

Globally, cases crossed 71 lakh with deaths exceeding 4.06 lakh.

• The head of the World Health Organization warned that the coronavirus pandemic is worsening globally, even as the situation in Europe is improving.
• The number of daily new cases in Iran remained above 2,000 for the 14th straight day.
• Deaths involving coronavirus in England and Wales fell to the lowest in eight weeks, even as the U.K. became the first in Europe with more than 51,000 mortalities linked to the virus.

Follow the global spread of the virus here.

10.Migrant Issue: Supreme Court’s 15-Day Deadline

The Supreme Court directed the government to identify, register and transport all migrant workers who wish to return to their homes within 15 days.

• The central government must provide Shramik trains within 24 hours of such request being made by states, the top court ruled.
• The bench headed by Justice Ashok Bhushan also ordered withdrawal of all cases registered against migrant workers for violation of lockdown in their attempt to go back to their homes.
• Once the workers are back home, the state governments must ensure that they are informed about all available schemes to avail work opportunities, and a skill mapping exercise for all the workers is carried out, the top court said in its order.

The court will now take up the case for hearing on July 8, when it will take stock of the progress made as per its order.