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ICICIdirect Research Posted on 09:01am 16-Sep-2020

Aurobindo Pharma is collaborating with Biotechnology Industry Research Assistance Council (BIRAC)...

* Market Outlook

Indian markets are likely to open with a flat to negative bias tracking volatile global markets, Coronavirus updates and US-China trade war. However, global news flows and sector specific development will be key monitorables.

* Markets Yesterday

• Domestic markets ended higher on the back of positive global cues and encouraging news about potential Covid-19 vaccines

• US markets ended strongly positive amid positive global cues and continued strength in tech stocks


* Key Developments  

• Crude oil prices rose ~2% on Tuesday (September 15) following the news of reduction in crude inventory

• SpiceJet has said that an interim offer of compensation from Boeing is higher than what has been recognised earlier. The company has recognised other income of | 854 crore ($117 million) as compensation in the past five quarters due to grounding of its 13 Boeing 737max jets

• Sterlite Technologies (STL) has announced a partnership with telecom operator Bharti Airtel, to build a modern optical fibre network for Airtel across 10 telecom circles

• Hexaware has received extension of its delisting offer to September 16. Securities and Exchange Board of India has allowed extension of the bid closing date to September 16 from September 15 earlier

• SpiceJet reported a loss of | 593 crore for Q1FY21 with air travel segment reporting loss of | 641.6 crore for the quarter. On the other hand, cargo segment helped cushion losses with PBT of | 48 crore as the government allowed freight operations to continue even during lockdown

•VA Tech Wabag reported a revenue fall of 5.6% YoY to | 431 crore, impacted by poor execution from India business. However, better execution from European cluster and Asian cluster assisted the topline performance for the quarter. Revenues from the India business fell 35.5% YoY to | 147.8 crore. On the other hand, revenue from Asian and European cluster improved 38% YoY to | 126 crore & 18% YoY to | 185 crore, respectively. OPM contracted 150 bps YoY to 6.7% resulting in EBITDA decline of 23% YoY to | 29 crore. The operational performance remained subdued on account of unabsorbed fixed overheads from India cluster due to poor execution. EBIT margins from India business fell 1450 bps YoY to 13.9%. Lower taxes outgo improved bottomline growth for the quarter. PAT for the quarter remained at | 5 crore against | 64 lakh in Q1FY20

• Minda Industries has raised | 242 crore via rights issue at a price of | 250/share. The fund raising has resulted in ~3.8% equity dilution, with issued share base rising by 97 lakh shares to 27.2 crore shares now

• Aurobindo Pharma is collaborating with Biotechnology Industry Research Assistance Council (BIRAC), set up by the Department of Biotechnology for Covid-19 vaccine development. The company is developing the vaccine candidate based on a proprietary vaccine delivery platform through its wholly-owned US subsidiary, Auro Vaccines. Aurobindo is also in the process of setting up a manufacturing facility for viral vaccines, which will be used to produce the Covid-19 vaccine among others

• Infosys announced that it has been selected by Essential Utilities, one of the largest publicly traded water, wastewater and natural gas providers in the US, as a strategic partner to drive its digital transformation. Infosys, along with SAP will implement SAP S/4HANA and the SAP Customer Relationship Management and billing for utilities package in an agile operating model to enable nimble and real-time decision making while transforming digital user experience and operations for essential utilities

• In respect of the new margin requirements, Sebi has clarified that it would levy penalty if the trading member or the clearing member does not collect payment from its client in the cash segment within T+2 days

• Multiplex Association of India has requested the government to allow cinemas to reopen saying that many jobs are at stake and exhibition sector has lost an estimated | 9000 crore in the last six months

• IIFL Securities has informed exchanges regarding the appointment of Anand Bathiya as an Additional and NonExecutive Independent Director, which would be, in effect, post regulatory approvals

• A CNG terminal will be built in Bhavnagar, Gujarat with annual capacity of 15 lakh tonne at an investment of | 1900 crore

• Infosys Finacle and Prabhu Bank Ltd, a leading banking and financial services group in Nepal, today announced the successful implementation of the Finacle Core Banking Solution

• As per media sources, the Customs Department will closely monitor import of goods under free trade agreements (FTA) to check the misuse of duty benefits claimed at ports. Import of white goods, set top boxes, cameras, electronic goods and agarbattis (incense sticks) will be monitored under the new Rules of Origin (ROO) verification norms. Irregular imports under FTAs have caused serious damage to the domestic industry

• As per media sources, debit card spends beat credit card spends amid lockdown. Credit card spends during June were at | 42818 crore against | 67000 crore in January 2020 while debit card spends during the same period were at | 47252 crore, which was | 62153 crore in January 2020. As on June 2020, credit card volumes of transactions were at 12.5 crore while debit cards volume were at 30.2 crore

• As per media reports, US has imposed restrictions on the import of certain products such as apparel, hair products and technology goods from the Xinjiang Autonomous Region in China


* Today's Highlights

Key Events: UK CPI YoY, EU trade balance, US retail sales, US Federal Reserve interest rates