Bond yields of the benchmark 10-year bonds in India fell sharply to its lowest point of the year at 6.23%. The bond yields have lost nearly 50 basis points in the last couple of months. This sharp fall in the bond yield was triggered by the Fed opting to cut rates by 50 basis points in one stroke to avert an economic slowdown. This put pressure on 10-year bond yields in the US falling below the 1% mark for the first time in 50 years. The markets in India are expecting that like the US Fed, the RBI may also choose to cut rates to boost growth. The sharp fall in bond yields will come as a boon to banks and bond funds.
SBI Cards IPO got a stellar response in the market despite tough market conditions. The IPO saw 15.49 times oversubscription at the end of the third day of the IPO. Institutional bidding closed on Wednesday while the non-institutional segment will be open for one more day. As at the end of the third day of the IPO, the institutional portion of the IPO got oversubscribed 57 times. The retail portion was oversubscribed 1.77 times and the HNI segment oversubscribed 2.19 times. The HNI portion normally gets most of its funded subscriptions on the last day of the IPO; which is the 06 of March.
Sensex and Nifty did a repeat of Monday on Wednesday as the markets fell sharply from higher levels to close in the negative once again. The sharp fall in the Nifty was driven by the increasing cases of Coronavirus infection in India. A total 30 people have already been reported to be infected by the virus in populous tourist destinations like Delhi, Agra and Jaipur. The government is apprehensive that many more such cases may be reported in the near future, which led markets into a state of panic. Banks and metals continued to see deep cuts while safe haven buying was seen in IT and pharma stocks.
Larsen & Toubro plans to become asset light by hiving off debt to the tune of Rs.30,000 crore from its books. The company may look to sell its entire stake in L&T IDPL and Nabha Power as well as its stake in the Hyderabad Metro to an Infrastructure Investment Trust (InvIT). Like another Indian corporate giant, Reliance Industries, L&T is also undertaking a serious exercise to reduce debt, become light on assets and thus improve the ROI. The consolidated debt of L&T stood at Rs.124,000 crore as on March 2019 and the company incurs an annual interest cost of Rs.9354 crore. This is the group level debt of L&T.
Finance Minister, Nirmala Sitharaman, has confirmed that the merger of 10 PSU banks into 4 banks will take effect officially from April 2020. The respective banks are expected to meet in March and finalize the swap ratios so that the integration of balance sheets can be effective from April onwards. Under the scheme, OBC and UBI would combine into Punjab National Bank. Syndicate Bank will merge into Canara Bank while Allahabad Bank will merge into Indian Bank. Finally, Union Bank will subsume Andhra Bank and Corporation Bank into its fold; leaving just 4 banks in place of 10. This move is expected to give the banks a much larger balance sheet and lending capacity. More importantly, this merger will also allow these banks to centralize their manpower, administration and treasury departments.
The Enforcement Directorate (ED) has filed fresh money laundering cases against Naresh Goyal of Jet Airways. It may be recollected that the ED had already filed cases under FEMA against Goyal. These cases pertain to illegal diversion of funds from the company though dubious transactions. ED already has details of 19 companies held by Goyal of which 5 are based abroad. ED has contended that many of these companies are located in tax havens. It may be recollected that Jet Airways shut operations in April 2019 and since then SBI has been struggling to hive off the airlines to potential buyers.
