BQuick On May 26: Top 10 Stories In Under 10 Minutes

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

1. Mukesh Ambani Eyes Overseas IPO

Reliance Industries Ltd. is working with banks on early preparations for an overseas listing of its digital and wireless business, people with knowledge of the matter told Bloomberg News.

• The conglomerate backed by Mukesh Ambani, Asia’s richest man, is preparing Jio Platforms Ltd. for an initial public offering outside of India, the people said.
• The offering could happen in the next 12 to 24 months and the company hasn’t decided on a listing venue, one of the people said.
• There’s also no final decision on timeline and size, according to the people, who asked not to be identified as the discussions are private.

Jio Platforms has attracted more than $10 billion of investment in a month.

2. Bharti Telecom Sells 2.75% Stake In Airtel

Bharti Telecom Ltd. has sold 2.75% stake in Bharti Airtel Ltd. to institutional investors in the secondary market, raising over Rs 8,433 crore, the company said on Tuesday.

• The promoter entity will use the proceeds of the stake sale to pare debt and become a “debt-free company”, it said.
• Bharti Group and Singapore Telecommunications Ltd. will continue to hold a majority stake in Bharti Airtel at 56.23% after the transaction.
• Bharti Telecom said the issue was subscribed multiple times over with a healthy mix of all categories of investors, long-only and hedge fund investors across geographies in India, Asia, Europe and the U.S.

Bharti Airtel's credit profile will also be augmented. Here’s why.

3. Kotak Mahindra Bank Launches QIP

Kotak Mahindra Bank Ltd. launched its over Rs 7,000-crore qualified institutional placement of shares.

• The bank's board approved a floor price of Rs 1,147.75 per share for the sale as against Tuesday's close of Rs 1,152.45 apiece as per the laid out formula, according to regulatory filings.
• The share sale through the QIP route will help the bank's promoter group led by Uday Kotak decrease their stake in the bank by 3.4%, and help comply with the Reserve Bank of India's order to have the holding down to 26% by August this year, as against 29.92% as of March.
• In the notification, the bank said it can consider offering a discount of not more than 5% on the floor price so calculated for the issue and the same will be decided by the board's issuance committee on Friday.
• After applying the 5% discount, and assuming it sells all the 6.5 crore shares as announced on April 22, the total issue size will come at Rs 7,087 crore.

4. Sensex, Nifty Fluctuate; U.S. Stocks Rally

Indian stocks swung between gains and losses as investors weighed the nation’s effort to gradually ease lockdown rules to restart business activities, including some local flights.

• The S&P BSE Sensex closed 0.2% down at 30,609.30, while the NSE Nifty 50 Index slipped 0.1%.
• The indexes advanced as much as 1.4% earlier in the session.
• The yield on India’s 10-year benchmark bond was little changed at 5.75%, while the rupee appreciated 0.4% to 75.66 per U.S. dollar, among the top gainers in Asia on Tuesday.

Follow the day’s trading action here.

U.S. stocks surged to the highest since March 5 as investors speculated the worst of the pandemic’s damage to the global economy has passed after countries moved to ease lockdowns.

• The S&P 500 jumped almost 2% following a three-day holiday weekend, propelling it past 3,000 for the first time since early March. The index is now up 35% since its March low.
• The small-cap Russell 2000 Index rallied 3.5%, with investors pouring into some of the most beaten-down areas of the market. Energy and financial shares led the latest charge.
• West Texas Intermediate crude gained 2.9% to $34.23 a barrel.
• A dollar gauge fell by the most in almost two months.

Get your daily fix of global markets here.

5. IIFL Think Tank On Markets, Investments And More

Clients are currently looking at their investment portfolio as an instrument of wealth preservation rather than wealth creation, according to Karan Bhagat, managing director at IIFL Wealth & Asset Management Ltd.

• “It means ensuring your capital is intact, plus protecting for inflation as well as small consumption needs,” he said, adding the targeted return is usually between 9 and 12%.
• The company is trying to ensure that clients earn consistently in the medium to long term, without a large draw down in their portfolio.
• “60-65% is fixed income, 30-35% is equity and 5% is real estate,” he said in an interview with BloombergQuint.
• “Gold would be less than 1%,” said Bhagat—who was accompanied by Nirmal Jain, founder and chairman of the IIFL Group, and R Venkataraman, managing director of IIFL Securities.
• According to Jain, exposure to equity will increase as volatility and risk reduces and earnings outlook improves.

Here are the key Nifty levels to watch out.

6. The Probity Of Delisting In A Downturn

The likely wave of delisting generated by the present economic environment is bound to test the decision-making and price discovery processes under the SEBI regime, writes Umakanth Varottil.

• The issue is not so much about whether these companies ought to be delisted.
• Rather it is about whether the choice of timing by the promoters will lead to short-changing the minority shareholders.
• This is an opportunity to recalibrate the regime to balance the interests of the company, management, promoters, and public shareholders.

7. ICICI Bank-Maruti Suzuki Offer ‘Teaser’ Car Loans

Amid a deep slump in auto sales, India’s largest passenger car company and its second largest private lender are attempting to draw in customers using financing schemes, which, in the past, have drawn the ire of regulators.

Maruti Suzuki India Ltd. and ICICI Bank Ltd. said they would offer a set of car loan schemes, which include lower upfront equated monthly instalments, which rise over the tenure of the scheme.

Together, the two are offering three schemes:

1. Flexi EMI scheme: Customers can choose to repay a smaller monthly instalment for the first three months of the loan and then repay higher amounts later.
2. Balloon EMI scheme: The scheme allows customers to repay a small amount as EMI for the entire five-year duration of a car loan, except the last instalment. The repayment is structured in a way that the last instalment would work out to a fourth of the sanctioned amount.
3. Step up EMI scheme: Customers will be allowed to structure their repayments in a way that their EMIs increase by 10% every year for the five-year duration of the car loan.

Do ‘teaser’ loans make sense for customers?

8. Supreme Court Takes Suo Motu Cognizance Of Migrants Issue...

Days after declining to interfere with the Government’s handling of the migrant crisis, the Supreme Court of India today agreed to suo motu take up the issues faced by the poor as many have set off for their homes on foot amid the Covid-19 pandemic.

• A three-judge bench of the Supreme Court headed by Justice Ashok Bhushan directed all the governments to make immediate free of cost arrangements for transport, food and shelter for those stranded because of the lockdown.
• “In the present situation of lockdown in the entire country, this section of the society needs succour and help by the concerned governments,” the top court said in its order.
• “…especially steps need to be taken by the Government of India, State Governments/Union Territories in this difficult situation to extend helping hand to these migrant labourers.”

The court issued notice to the central and the state governments.

...As Covid-19 Cases Near 1.5 Lakh

The total number of confirmed coronavirus cases in India crossed the 1.45-lakh mark on Monday at a time the country resumed domestic flights after two months of complete lockdown.

• Total number of cases now stand at 1,45,380, including 60,490 who have recovered and 4,167 deaths. The number of active cases is now at 80,722.
• Authorities reported 6,535 new confirmed Covid-19 cases in 24 hours, according to the Health Ministry’s update at 8 a.m.
• While the number of recoveries stood at 2,770 in the last 24 hours, deaths were at 146.
• Indian states' coronavirus testing rates are lower than similarly populated countries, according to an IndiaSpend study.

Get all the updates from the coronavirus outbreak in India here.

9. India’s Worst Recession?

The Indian economy is headed for its fourth recession since independence, which may also prove to be its worst. That’s according to a forecast put out by Crisil Research on Tuesday.

• Crisil expects real gross domestic product to contract by 5% in FY21, in line with forecasts put out by economists at Goldman Sachs, Nomura, Kotak Institutional Equities and others.
• The first quarter will suffer a staggering 25% contraction, Crisil said.
• In addition, Crisil forecasts a 10% “permanent loss of GDP” as, over the next three years, India is unlikely to move back up to the levels of GDP that would have been achieved under pre-Covid growth scenarios.

India has faced a recession only thrice in the past 69 years—in fiscals 1958, 1966 and 1980.

10. For Liquor Companies, Home Delivery Isn’t Enough

Stocks of Indian distillers have recovered some losses after the worst plunge in more than a decade as investors bet on reopening stores and home delivery of alcohol.

• Yet, that’s not enough as consumption, slowing even before the pandemic, may take longer to recover and revenue-starved states increase taxes on liquor.
• Sales resumed partially more than a month later when the second phase of the lockdown ended on May 3.
• Not only have the makers of whisky to beer lost revenue, the Covid-19 stress is likely to stretch receivable cycle or the number of days it takes to receive payments from distributors, squeezing cash flow, according to brokerages, including Motilal Oswal Financial Services Ltd. and Edelweiss Securities Ltd.

Hotels and restaurants that contribute 20% of the liquor demand are still closed.