BQuick On May 8: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Covid-19: No Need For Army Deployment In Mumbai, Says Chief Minister
The total number of confirmed Covid-19 cases in India crossed the 56,000-mark today as the country reported over 3,000 cases for the second straight day.
- India reported 3,390 new cases in 24 hours, according to the Health Ministry’s 8 a.m. update today, taking the total number of confirmed cases to 56,342.
- This includes more than 16,540 people cured and 1,886 people dead.
- The country has added over 20,000 cases in the first eight days of May alone.
- Brihanmumbai Municipal Corporation chief Praveen Pardeshi was replaced by Iqbal Chahal as coronavirus cases continued to surge in Mumbai despite the lockdown.
- Maharashtra Chief Minister Uddhav Thackeray said there’s no need for army deployment in Mumbai, and that any help sought from the central government to reinforce police strength should not be misunderstood as call for the armed forces.
- All five markets run by the Agriculture Produce Market Committee in Vashi will be shut from May 11 to May 17. The APMC market is Mumbai’s main source of supplies of foodgrains, fruits, vegetables, onions and potatoes, and masalas.
- Meanwhile, letters have been sent to as many as 75,000 doctors in Mumbai with a private practice, requiring them to sign up for at least two weeks duty at one of the state-run hospitals. Those who do not comply may face prosecution.
Track developments around the Covid-19 outbreak in India here.
Globally, cases crossed 38 lakh with deaths going above 2.7 lakh.
- Spain and Germany reported an uptick in new coronavirus cases as lockdown measures eased.
- Turkey plans to conduct over half a million coronavirus antibody tests to help monitor and contain the spread of the outbreak.
- Almost one million people in Johannesburg, South Africa’s commercial hub, are in need of food aid due to movement restrictions.
- China's Sinovac Biotech is in discussion with regulators in other countries to start testing its most promising vaccine.
Follow the global spread of the virus here.
2. India Raises FY21 Borrowing To Tackle Covid-19
The Indian government has raised its gross borrowing programme for the current financial year sharply as it seeks more funds to deal with the economic fallout of Covid-19.
- In a circular issued on Friday, the government said that the gross borrowing target for the year has been raised to Rs 12 lakh crore from the budgeted Rs 7.8 lakh crore.
- It did not provide any further details on the financing of the deficit or whether the RBI will step in to buy government securities directly or indirectly.
- As a result, the auction size for each weekly auction goes up to Rs 30,000 crore from the week of May 11.
- In total, in the remained of the first half of the fiscal year, the government will borrow Rs 6 lakh crore from the markets.
Find out more details on India’s revised borrowing plan here.
3. Ambani Gets Another Investor On Board For Jio Platforms
In less than three weeks, Reliance Industries Ltd. brought in a third investor for its digital and telecom asset as part of promoter Mukesh Ambani’s efforts to cut debt at his conglomerate.
- Vista Equity Partners, a private equity firm, will invest close to Rs 11,367 crore for a 2.32 percent stake in Jio Platforms Ltd, according to a media statement by parent RIL.
- The deal values the digital unit at Rs 4.91 lakh crore.
- Previously, RIL said Facebook Inc. would invest Rs 43,574 crore for a 10 percent stake in Jio Platforms. That was followed by a Rs 5,656-crore investment by Silver Lake Partners, an American private equity firm.
The investment will be used by Jio to redeem the optionally convertible preference shares held by RIL. Here’s what it means.
4. Sensex Rises 200 Points; U.S. Stocks Rally Despite Jobs Shock
Indian equity markets drifted off the highest point of the day to end with modest gains.
- The S&P BSE Sensex fell 500 points from the day's high of 32,088 to end 0.7 percent higher at 31,642.
- For the week, the 30-stock index was down over 6 percent.
- The NSE Nifty 50 index too fell 150 points from its day's high of 9,382 to end at 9,251.
- The index ended the week with losses of 6.1 percent.
Follow the day’s trading action here.
India’s sovereign bonds rallied after the government sold a new 10-year note at a yield lower than market expectations.
- The yield on the existing 10-year benchmark securities fell by as much as seven basis points to 5.96 percent following the debt auction results, their lowest since 2009.
- The new 10-year bond, which will eventually replace the current benchmark, was sold at 5.79 percent versus 5.83 percent forecast in a Bloomberg News survey.
U.S. stocks rose for a second day with investors embracing risk in spite of the biggest monthly loss in jobs in at least 70 years.
- Shares of energy, industrial and financial companies put the S&P 500 on pace for its first weekly gain in three.
- The latest jobs report showed a cut of 20.5 million workers in April, propelling the jobless rate to 14.7 percent. While that was the highest since the Great Depression, investors were anticipating the damage and speculating it will mark a low point during the pandemic-fueled economic slump.
- Meanwhile, oil headed for its first back-to-back weekly gain since February as output cuts from the biggest producers and a nascent recovery in demand began to rebalance a market awash with crude.
Get your daily fix of global markets here.
5. Equity Mutual Fund Inflows Nearly Halve In April
Investments into equity mutual funds fell to the lowest in four months even as the benchmark indices recovered from the worst plunge in more than a decade.
- Net inflows into equity and equity-linked schemes declined 47 percent over the previous month to Rs 6,213 crore in April, according to data released by the Association of Mutual Funds in India.
- That snapped a three-month gaining streak.
- Inflows into equity mid caps fell to the lowest since AMFI started releasing granular data from April 2019, while that into small caps jumped more than twofold.
Find out how the mutual fund industry performed in April.
6. Adani Looks To Bring Promoter Pledge To Zero
Adani Group, which has six listed companies in India with a combined market value of more than Rs 1.4 lakh crore, plans to bring down its pledged holding—one of the key overhangs on the stocks.
- The Gautam Adani-founded conglomerate intends to lower its pledged holding to zero over the next 12-18 months, Karan Adani, chief executive officer of Adani Ports and Special Economic Zone Ltd., said in a post-earnings conference call.
- As of March 2020, more than a third of the group’s ownership was pledged, according to data compiled by BloombergQuint.
- Since then, the percentage of stake offered as collateral by controlling shareholders has fallen to 27 percent.
Of the six listed flagship entities, promoters of five have pledged holdings. Find out which.
7. Dr. Reddy’s Gets FDA Relief; SeQuent Scientific Gets A New Owner
Shares of Dr. Reddy’s Laboratories Ltd. jumped to the highest in more than four years after the drugmaker said it received the U.S. regulator’s report that paves the way for fresh approvals for its products and exports to its biggest market.
- The Hyderabad-based company received an establishment inspection report from the U.S. Food and Drug Administration for the active pharmaceutical ingredient manufacturing plant at Srikakulam, Andhra Pradesh, indicating closure of the audit, according to an exchange filing.
- The regulator classified the inspection as “voluntary action indicated”—a status given to facilities that are considered compliant with current good manufacturing practices.
- The site was issued a warning letter in November 2015, after the inspection in 2014, and was classified as “official action indicated” till now.
The resolution of the API plant at Srikakulam is a key catalyst for the stock.
Some of the promoters of SeQuent Scientific Ltd. have agreed to sell stake to Carlyle Group as part of a transaction that will give the private equity firm control over the maker of pharma ingredients and animal health products.
- Seventeen promoter entities have agreed to sell their entire shareholding to a Carlyle Group subsidiary, CA Harbor Investments, SeQuent Scientific informed the stock exchanges.
- Carlyle Group will buy more than 5 percent additional stake from another shareholder and then launch the mandatory open offer.
The open offer will be at a 7 percent premium to SeQuent’s closing price on Friday.
8. Are Private Labs Overcharging For Covid-19 Tests?
A Delhi court last week exposed the high mark-ups middlemen were charging for supplying rapid antibody tests kits for Covid-19 in India. But a lack of clarity in pricing is not just confined to this type of testing.
- The pricing of the more accurate RT-PCR tests being conducted by private labs has kicked off a bigger debate.
- While public hospitals are doing tests free, for 121 private labs, the government capped the price of the reverse transcription-polymerase chain reaction test, the gold standard of testing for the new coronavirus, at Rs 4,500 per test. This includes screening and confirmation.
- BloombergQuint’s conversations with suppliers, however, revealed that each test kit costs less than half of that price.
- Meaning, private labs are charging Rs 2,000-2,500 as operating costs and margins.
Read more to find out how the government decided the prices and how much a test actually costs.
9. Should India Monetise Debt To Fight Covid-19? Raghuram Rajan Weighs In
Former Reserve Bank of India Governor Raghuram Rajan has weighed in on the debate over whether the Indian central bank should monetise the government’s additional financing requirements amid the Covid-19 crisis.
- Monetisation will neither be a game-changer nor a catastrophe, Rajan wrote in a note posted on his LinkedIn account.
- At a time like this, the government should be concerned about protecting the health of the economy and should spend what’s needed, Rajan said.
- “Obviously it should cut back unneeded spending, and prioritise. It should also worry about getting the fiscal deficit and its debt back in shape over the medium term, and the more it spends now, the harder it will be,” Rajan wrote.
- “However, its inability to finance itself or fears of monetisation should not be a constraint,” Rajan, who currently teaches at Chicago Booth School of Business, wrote.
The former central banker explained that there are implications of direct financing and it isn’t free.
10. India Inc. Turns To Japan For Funds
In these times of crisis, India’s top companies are leaning on Japanese lenders for funding.
- From Mukesh Ambani’s Reliance Industries Ltd. to Tata Capital Financial Services Ltd., the nation’s biggest firms have raised a record 181 billion yen ($1.7 billion) from yen-denominated loans this year, helping them to tide over a crunch in the dollar market.
- With benchmark sovereign yields in Japan falling back below zero on increased stimulus from the central bank, the country’s banks are hungry for higher-yielding assets.
- Access to overseas loans for refinancing is critical for Indian firms, whose offshore debt bill for this year comes to an unprecedented total of about $31 billion.
While India’s safest borrowers can rely on yen loans, the nation’s riskier firms are struggling to raise funds.