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ICICIdirect Research Posted on 09:12am 02-Jul-2020

In order to expand its export business, Polycab India has formed a 100% subsidiary in Australia to supply wire and cables from India...

* Market Outlook

Indian markets are likely to open in the green tracking positive Asian cues after positive developments in clinical trials for Covid-19 treatment by leading drug manufacturer Pfizer. However, global news flows would be a key monitorable.

* Markets Yesterday

• Domestic markets ended higher led by gains in financials and banking sector alongside optimistic PMI data

• US markets ended mixed with optimism around a potential Covid-19 vaccine partly offset by weakness in the energy and banking sector


* Key Developments  

• GST collection improved in June 2020, crossing the | 90,000 crore mark

• Coal India reported production and offtake numbers for June 2020. Production volume for June was at 39.2 million tonnes (MT), down 12.8% YoY, while offtake volume came in at 41.6 MT, down 15% YoY. Production volume for Q1FY21 was at 121 MT, down 11.6% YoY, while offtake volume came in at 120.6 MT, down 21.4% YoY

• According to media sources, the Government of India has begun clearing Chinese shipments that were stuck for the last 10 days at ports. The government assured no physical check if bills of entry were filed till June 30. However, clearances will continue for imports from US and South Korean companies even after June 30. We believe this would bring some relief to contract manufacturers, which are running short of inventories of components thereby creating hurdles in the manufacturing process

• Jet fuel prices were hiked on Wednesday by 7.5% to | 42000/kl marking the third increase in a row in a month

• Dr Reddys (DRL) has partnered with Fujifilm and Global Reponse Aid (GRA) for Avigan (favipiravir), a potential treatment for Covid-19. Under the agreement, DRL will get exclusive rights to manufacture, develop and distribute Avigan in India. DRL and GRA will get rights to develop and distribute the drug in all countries other than Japan, China and Russia for which Fujifilm will receive an upfront license fee and sales royalties. Fujifilm will also transfer the manufacturing process for Avigan to DRL

• As per media sources, World Bank has approved $750 million (~| 5700 crore) MSME Emergency Response programme to finance Indian MSMEs impacted by Covid-19 crisis. This programme is expected to benefit ~15 lakh viable MSMEs as it seeks to improve funding capacity of small finance banks and NBFCs for MSME sector

• As per media sources, DHL and FedEx have temporarily suspended picking up import shipments from China to India, after border tensions between the countries led to clearance delays

• NMDC has reported production and sales volume for June 2020. For June, iron ore production remained flattish YoY at 2.52 million tonne (MT) (2.52 MT in June 2019). Sales volume declined 12% YoY to 2.48 MT (2.66 MT in June 2019). Furthermore, it reported production and sales YTD (April–June 2020) of 6.61 MT (8.46 MT in June 2019) and 6.41 MT (8.73 MT in June 2019), respectively

• Alembic Pharma has received USFDA approval for Doxycycline Hyclate (US RLD: Acticlate) tablets, 75/150 mg in US. The drug, used to treat malaria, anthrax and a wide variety of bacterial infections, had an estimated annual market size of US$17 million as per IQVIA MAT March 2020

• NTPC's Unit 2 of 150 MW of Kameng hydro-electric project of NEEPCO has been declared operational with effect from July 1, 2020. With this, the total commercial capacity of NTPC group has become 62086 MW

• Dixon Technology has announced its entry into manufacturing of set up boxes with an investment of ~| 50 lakh. The company expects a revenue potential of | 100-150 crore with decent profitability from the said business. We believe the current announcement is an extension of its reverse logistic business (0.4% of total revenue), wherein it is already providing repair and refurbishment services of set up boxes to its clients

• Indian Bank has informed exchanges that Arun Kumar Bansal, General Manager, will be the new Chief Financial Officer of the bank with effect from July 1, 2020. Mr Bansal has an experience of more than 29 years in the banking domain

• As per media reports, an Oil India and Engineers India led consortium will buy a 48% stake in BPCL's subsidiary, Numaligarh Refinery. Both BPCL’s divestment and NRL’s stake sale processes are expected to happen simultaneously

• For 11 blocks offered in the fifth OALP bidding round, the government has received 12 bids with seven bids from ONGC, four from Oil India and one bid from a private player

• ENIL's contract with ADMC for advisory service for launch of radio station in UAE and licensing for Radio Mirchi brand has expired on June 30

• Media reports indicate that Yes Bank will appeal against high court decision and ask Zee Entertainment's promoters Essel group to stop selling stake in group companies

• In order to expand its export business, Polycab India has formed a 100% subsidiary in Australia to supply wire and cables from India. The export business for Polycab India grew ~3x in FY20. It is continuously focusing on increasing its export business by expanding in new geographies


* Today's Highlights

Result – Maharashtra Seamless

Key Events – European Union unemployment rate, US trade balance, US unemployment rate, Japan services PMI