Markets closed lower on Monday, although the damage to the index overall was quite limited. The markets opened in the green but dipped into the red after the Jharkhand election outcome gave clear indications of the BJP losing power in the state. However, the bigger trigger for the weakness in the market was the stock price of Reliance. After, the government refused to approve the $15 billion deal to sell a stake in its refining business to Saudi Aramco, the stock corrected over 2%. The government has called on RIL to pay nearly $4.5 billion along with British Gas towards the Panna-Mukta and Tapti fields.
Jet Airways will now seek fresh bids for the company after the NCLT granted an additional 3 months time to the sole bidder, Synergy of South Africa, to do a deeper due diligence. Jet Airways had ceased operations in April 2019 due to liquidity shortfall and has remained grounded ever since. Since the NCLT had approved additional 3 months time for the Jet Airways insolvency, the Committee of Creditors (COC) thought it fit to also get additional bids to bring in competition in pricing. Jet owes Rs.8500 crore to banks and if you add the operational creditors, then the debt would be above Rs.12,000 crore.
Indiabulls Real Estate part of the Indiabulls Group, has agreed to sell commercial assets in Mumbai and Gurugram for a consideration of Rs.811 crore. Indiabulls Real Estate has been in debt woes for some time now and has been looking to monetize it is assets to repay part of the loan. The current outstanding debt of Indiabulls Real Estate stands at Rs.4950 crore and this sale of commercial property will help to defray part of the borrowing. The buyer will be Blackstone, which has been a consistent investor in Indian commercial realty. Sale of the Mumbai property will be a distress sale.
Year 2019 has been the year of ironies as some of the multi-baggers of 2018 turned out laggards in 2019. According to a report in the ET, 75% of the multi-baggers of 2018 destroyed wealth in 2019. Some of the big gainers of 2018 like Sadhna Nitrochem, Sakuma Exports, GSS Infotech and KIC Metaliks destroyed 75% to 80% value in 2019. One explanation could be that most of these stocks became richly valued by the end of 2018 and the growth and the margins did not justify sustaining such valuations. However, there are also stocks like Dolat and Darjeeling Ropeways that did well in both years.
The Tata Sons case may be taking a curious twist with the Registrar of Companies (ROC) under the Ministry of Company Affairs (MCA) approaching the NCLAT to be made a party to the Tata / Mistry dispute. The NCLAT order had cast some aspersions at the speed with which the ROC had acted in converting Tata Sons from a public limited company to a private limited company. ROC also objected to the use of the word “illegal” for converting Tata Sons from public limited to private limited. ROC was of the opinion that a hands-off approach had been adopted and hence the NCLAT bench should expunge such comments from its final order. NCLAT had passed an order terming Mistry’s removal as illegal and also striking down the conversion of Tata Sons from public limited to private limited structure.
As a difficult decade comes to an end, the clear stock market winner has been the S&P 500 index. With less than 2 weeks left for the decade to be completed, the S&P 500 has given 250% returns in the last 10 years, outperforming most of the other asset classes. The rally in the S&P 500 was led less by growth or value and more by liquidity and the relative attractiveness of equity versus other asset classes. Among the 10 largest economies, the US, Japan, India and Germany doubled their equity market cap in the last decade. S&P 500 remains the top performer followed by the BSE Sensex.
