BQuick On May 27: Top 10 Stories In Under 10 Minutes  

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

1. Sensex Rises 1,000 Points; Crude Slips

The penultimate day of the May series futures and options expiry turned out to be a strong one for the Indian equity markets.

• The S&P BSE Sensex ended 3.25 percent higher at 31,605 while the NSE Nifty 50 index managed to close above the 9,300-mark, up 3.2 percent.
• Among sectoral indices, the Nifty Bank was the best performer, ending with gains of over 7%.
• Other sectoral gainers included Nifty IT (up 3%), Nifty Metal (up 2.6%) and the Nifty PSU Bank index (up 3.4%)

Follow the day’s trading action here.

The question of ‘to invest or not to invest’ differs with each investors’ risk and capital capacity, and should be answered by themselves once they gauge their asset allocation, according to Hiren Ved of Alchemy Capital.

Ved warns that anyone who is investing in today’s climate needs to be prepared to face further uncertainty and downside.

U.S. stocks were mixed amid signs the global economy is on the rebound from the pandemic hit, with investors shying away from high-flying tech shares in favor of equities most beaten down by the virus.

• The S&P 500 clung rose past 3,000 and its average price for the past 200 days, technical levels considered key by chart watchers, as two stocks gained for every one that fell. It failed to hold those levels into the close on Tuesday.
• The tech-heavy Nasdaq 100 Index retreated as investors sold stocks that dragged equities off their lows throughout April and much of May. Rising tensions with China also weighed on chipmakers.
• WTI crude oil slumped to about $33 a barrel in New York.
• Gold weakened 1.2% to $1,708.20 an ounce.

Get your daily fix of global markets here.

2. Ramdev’s Patanjali Plans Maiden Bond Sale

Yoga guru Ramdev’s Patanjali Ayurved Ltd. is planning its first rupee bond issuance, seeking to benefit from the lowest borrowing costs since 2004.

• The manufacturer of ayurveda-based skincare and food products will seek bids Thursday for as much as Rs 250 crore of notes maturing in three years, a person familiar with the matter told Bloomberg News.
• The debt, rated AA- by Brickwork, carries a semi-annualized coupon of 10.1%, the person said, asking not to be identified as the details aren’t public.
• The interest payable is higher than the 6.85% on AA rated debt with similar maturity.

Patanjali’s liquidity has been constrained.

3. Suzlon Seeks Easier Terms On Debt Deal

Just months after coming to terms with its lenders on a debt recast, India’s largest wind turbine maker Suzlon Energy Ltd. is seeking to loosen some conditions.

• The Pune-based company is asking its lenders to accept new convertible debt in place of interest payments due this quarter on its restructured loans, people familiar with the matter told Bloomberg News, asking not to be identified, because the matter is private.
• In its recent request to loosen terms, the company has asked to convert interest payments of about Rs 250 crore due on the restructured loans into convertible debt due in 20 years, the people said.

Suzlon approved a restructuring proposal in February that involved issuing shares or equity-linked instruments if needed.

4. How Sun Pharma And Dabur Fared In Q4

Drugmaker Sun Pharmaceutical Industries Ltd.’s quarterly profit fell as a one-time litigation cost offset the sales benefit from new launches.

• Net profit fell 42% year-on-year to Rs 400 crore in the quarter ended March.
• The drugmaker reported an exceptional cost of Rs 261 crore during the quarter as it agreed to settle an antitrust litigation relating to one of its products.
• Revenue rose 14% to Rs 8,185 crore—higher than the estimated Rs 8,072 crore.

The company also reported lower other income and a higher tax outgo.

Dabur India Ltd.’s quarterly volumes contracted after the coronavirus-related isolation orders stalled most operations.

• India business volume of the ayurveda products maker contracted 14.6% year-on-year in the quarter ended March, according to a company presentation.
• Revenue declined 12.3% over to Rs 1,865.4 crore.
• Net profit fell 24.1% to Rs 281.2 crore.

Here’s how Covid-19 impacted business at Dabur in the fourth quarter.

5. India Added Over 50,000 Covid-19 Cases In Last Eight Days

The total number of confirmed coronavirus cases in India nears the 1.52-lakh mark with just five days left in the fourth phase of the nationwide lockdown.

• Total number of cases now stand at 1,51,767, including 64,426 who have recovered and 4,337 deaths.
• The number of active cases is now at 83,004.
• India added more than 6,000 fresh cases of infection for the fifth straight day.
• Authorities reported 6,387 new cases, 3,935 recoveries and 170 deaths in the last 24 hours, according to the Health Ministry’s update at 8 a.m. on May 27.

Track all developments around the Covid-19 outbreak in India here.

Globally, cases crossed 55 lakh leaving more than 3.5 lakh people dead.

• Cases soared in Brazil and police opened an investigation into Rio de Janeiro’s handling of the crisis, while Mexico had its deadliest day yet.
• U.S. fatalities approached the 100,000 level, though infections rose at the slowest pace since March
• Malaysia reported the smallest increase in new coronavirus cases since March 12.

Follow the global spread of the virus here.

6. India’s Lenders May Need Extra Capital...Lots Of It

Indian banks may see a rising need for capital as credit quality of borrowers weakens, leading to a jump in credit costs.

• Credit Suisse estimates the need for additional capital at $20 billion (about Rs 1.5 lakh crore) over the next 12 months, it said in a report on Wednesday.
• Of this, public sector banks will need $13 billion (about Rs 97,500 crore) in recapitalisation from the government, the research house estimates.
• “We raise our credit cost estimates by 20-60% given the lockdown extensions and unimpressive fiscal stimulus. Private banks tier-1 is healthy at 13%, and coupled with strong pre-provisioning profitability, adequate to absorb up to 4% additional credit costs,” said Ashish Gupta, head of equity research at Credit Suisse.

The need for additional capital emerges from the already deteriorating asset quality.

7. Covid-19 = Six Structural Changes?

The economic crisis triggered by the Covid-19 pandemic and the ensuing lockdowns could accelerate consolidation in favour of organised players and formalisation of jobs, and provide a stronger push to ‘Make in India’, according to BofA Securities.

• The cash crunch faced by the government and businesses alike could lead to six structural changes in the Indian economy, BofA Securities said in a report.
• Prime Minister Narendra Modi has been promoting ‘Make in India’ since his first term in office.
• But this time, in addition to the pull factor from the promised land, labour and power reforms, there is a push factor with global firms looking to diversify out of China, Amish Shah, India equity strategist at BofA Securities, said in an interview.

Find out how BofA expects sectors like infrastructure, real estate and retail to change.

Related Coverage

• High-frequency indicators begin to rise from record lows.
• Lessons India’s FMCG distributors are learning from Covid-19 disruptions.

8. Flying Hospitals, Jails For Shops… This Lockdown ‘Opening’ Ain’t Working

This fractured, bureaucratic, impractical ‘post-lockdown opening’ needs to be junked. It’s making things worse, writes Raghav Bahl.

• Are businesses actually worse off now than what they were under the complete lockdown?
• Then variable costs and revenues, both, had crashed to near zero. Now costs are back.
• All the ‘indulgent’ lockdown exemptions are gone, but revenues are still close to zero.

This is an impossible situation.

9. India-China Tensions: Trump’s Offer

India has moved additional troops along its northern border as it prepares for an extended conflict with neighbour China, after several rounds of talks failed to ease tensions between the nuclear-armed rivals.

• China has already placed about 5,000 soldiers and armoured vehicles within its side of the disputed border in the Ladakh region, an Indian government official told Bloomberg News, asking not to be identified citing rules.
• India is adding a similar number of troops as well as artillery guns along the border to fend off the continuing incursions by Chinese army, the official said.
• The standoff began on May 5, when troops clashed on the banks of Pangong Tso -- a glacial lake at 14,000 feet in the Tibetan plateau -- leaving scores of soldiers on both sides injured.

U.S. President Donald Trump said in a tweet Wednesday that he had offered to mediate. Read the full story here.

10. India Faces Locust Attack Ahead Of Crop Season

Indian authorities are helping farmers mount a pesticide spraying campaign to fight the swarms of desert locusts which have already devastated crops across Pakistan and East Africa.

• As many as 700 tractors, 75 fire engines and almost 50 other vehicles are engaged in spraying pesticides to kill the locusts, Trilochan Mohapatra, director general of the state-run Indian Council of Agricultural Research in New Delhi said on Tuesday.
• Drones will also be employed.
• “At this point it’s manageable, but if it continues it will be a problem” for monsoon-sown crops, said Mohapatra, who’s also the top bureaucrat at the department of agricultural research and education.
• The impact will be lessened by the current spraying campaign and the fact that the harvest of the winter crop is mostly over, he said.
• About 42,000 hectares (104,000 acres) of cotton, summer pulses and vegetable crops have been affected by locusts across six states, mainly in Rajasthan.

Swarms of desert locusts occur irregularly in India. Find out why the pink swarms this year are different.