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ICICIdirect Research Posted on 09:04am 03-Jul-2020

National Highway Authority of India (NHAI) is in the process of setting up an Infrastructure Investment Trust (InvIT)...

* Market Outlook

Indian markets are likely to open flat to positive on the back of encouraging US economic data, ICMR’s claims to launch indigenous Covid-19 vaccine latest by August 2020 in India. However, global news flows and sector specific domestic market development would be key monitorables.

* Markets Yesterday

• Domestic markets ended higher tracking gains in IT and auto sector along with positive global cues

• US markets ended higher on the back of better-thanexpected employment data


* Key Developments  

• Bajaj Auto reported a 31.3% YoY decline in June 2020 volumes to 2.78 lakh units, with 2-W volumes down 27.4% and 3-W volumes down 56.9%. Exports decline (27.6%) was lower than 34% slide in domestic operations

• JSW Steel’s | 19,700-crore bid to acquire Bhushan Power and Steel (BPSL) is in jeopardy, as the Enforcement Directorate (ED) has filed a fresh plea in the Supreme Court to scrap the sale, finalised under the Insolvency and Bankruptcy Code (IBC). The ED has argued that the National Company Law Appellate Tribunal (NCLT) has no jurisdiction to unfreeze and approve the sale of an asset attached by the investigating agency

• Maruti Suzuki has launched a vehicle lease subscription service for individual buyers called Maruti Suzuki Subscribe in association with Orix Auto Infrastructure Services on a pilot basis in Gurugram and Bengaluru for Swift, DZire, Brezza, Ertiga, Baleno, Ciaz and XL6

• As per media sources, RBI is likely to arrive at a decision regarding the one-time loan restructuring by late August or September 2020. Decisions would be taken after the Q1FY21E results of banks to have a clear picture of the quantum of stressed loans and the magnitude of crisis. Further, RBI may decide to provide either one time loan restructuring or may provide relief through other measures if it deems appropriate

• Axis Bank has informed exchanges regarding closure of operations of its subsidiary company: Axis Bank UK. The bank is targeting surrendering of banking license by the end of April 2021. Regulatory approval for the same has been taken. Axis Bank UK is not a material subsidiary of the bank. Thus, closure of its operations should not impact the financials of the bank

• As per media sources, HDFC Ltd plans to raise | 1.25 lakh crore via issue of secured redeemable nonconvertible debentures and/or other hybrid instruments on a private placement basis 

• As per media sources, the Defence Acquisition Council (DAC) has approved a proposal worth | 38900 crore for capital acquisitions of various platforms and equipment required by the Indian Armed Forces. DAC also approved a proposal for procurement of 21 MiG-29 fighters along with upgrade of 59 MiGs for ~| 7418 crore and procurement of 12 Su-30 MKI for ~| 10730 crore

• South Indian Bank has informed exchanges regarding reduction of reference rate for external benchmark linked loans from 4.4% to 4% with effect from July 1, 2020

• PI industries is going to launch a QIP within a week to raise funds. The quantum of the QIP is close to | 2000 crore. The company is going to utilise the same for growth opportunities. The QIP floor price has been set at | 1,534.24 per share at a discount of 2% to yesterday’s closing price

• USFDA has revoked exception to the import alert for Ipca Labs' Hydroxychloroquine sulphate API & formulations as the shortage situation for the same has been resolved. This comes nearly a week after USFDA revoked the exception to the import alert for the company’s chloroquine phosphate API in June 2020

• Cadila Healthcare has got Drug Controller General of India - Central Drugs Standard Control Organisation (DCGI-CDSCO) permission to initiate Phase I/II human clinical trials for its Covid-19 (plasmid DNA) vaccine. The company has completed preclinical development and plans to begin the trials in July 2020 

• National Highway Authority of India (NHAI) is in the process of setting up an Infrastructure Investment Trust (InvIT). It is a part of the government’s plans to tap alternative sources of financing to boost public spending in roads and infrastructure sector amid declining private sector interest in the build, operate and transfer model

• Affle (India) has signed a definitive agreement to acquire 8.0% ownership in OSLabs Pte. Ltd, Singapore (Indus OS) for US$2.86 million ( ~| 21 crore). The transaction is expected to be completed by July 25, 2020 and is valued at ~15x EV/sales. Indus OS is an apps store and is a default apps store for all Samsung devices in India powering the Samsung’s Galaxy store. It partners many of the Indian OEMs as well

• Hindustan Unilever (HUL) has replaced the word ‘Fair’ with 'Glow' from its iconic skin-care brand Fair & Lovely. The men's range will be called 'Glow & Handsome'. These products would be available on the shelves in a few months

• Emami has said it is evaluating legal action against HUL for renaming its men cream "Glow & Handsome", which sounds similar to the former’s brand "Emami Glow & Handsome". The company launched the brand digitally a week back

• The Oil Minister reiterated the government's intention to gradually introduce pricing and marketing freedom for natural gas as well as rationalisation of pipeline tariffs

• The Department of Telecom (DoT) is planning to seek Cabinet approval for a policy, which will allow cable operators to provide broadband services using the landline network

• According to media sources, Chinese mobile phone manufactures are worried of the ban on Chinese apps. Hence, they are planning to hold their near term investment plans. Major smartphone players planned to invest about | 11000 crore for local manufacturing of smart phones. However, they may review the investment plan in anticipation of an extension of such bans on Chinese phones also

• Indian Hotels, which has a 50% stake through its subsidiary in Taj Captown, South Africa, has acquired the balance 50% stake from its JV partner Tata Africa holdings for a transaction price of $1 million

• The Multiplex Association of India has expressed its displeasure over the government's decision to keep cinema halls shut in the Unlock 2.0 phase

• Media reports indicate PVR has restarted its international operations as it reopened nine screen in the Sri Lanka property on July 2

• BPCL has raised ~ | 2000 crore from the corporate bond market through its five year paper on July 2


* Today's Highlights

India Nikkei services PMI, European Union services PMI, UK composite PMI, UK services PMI