Creditors of Reliance Communications are expected to meet on 24 February to vote on Reliance Jio’s bid for assets worth Rs.4700 crore. The meeting will also consider a bid received from UV Asset Reconstruction Company. UV has made a much higher bid of Rs.14,700 crore for the assets of RCOM. RCOM currently owes Rs.33,000 crore to its secured lenders. However, Jio has only placed a bid for the tower and fibre assets of Reliance Infratel. UV has bid for assets of RCOM and Reliance Telecom. The final date for resolution of RCOM is March 05, post which the company would be liquidated as per NCLT.
The F&O expiry week is expected to be a week of data and key events flows. The markets will be closely watching the outcome of Trump’s 2-day visit to India as also his statements on Kashmir and the trade deal. In addition, the key data points to be watched would be the core sector data for January and the auto numbers for February. An important data point will be the GDP data for third quarter which will be announced on 28 February. In terms of specific news flows, the impact of the Coronavirus pandemic on Indian pharma and electronics industry as also the impact of farm waivers on banks will be watched.
It was a lacklustre week for the markets with 6 out of the top 10 companies seeing their market cap deplete by Rs.29,487 crore during the week. Most of the heavyweights like TCS, Reliance Industries, Hindustan Unilever, HDFC Bank and HDFC saw depletion in value during the week. But the biggest laggard for the week was Bharti Airtel which saw a value loss of Rs.10,693 crore as the government was virtually unrelenting on AGR dues collection. Even in the midst of a difficult week, a handful of stocks like Kotak Mahindra Bank, Bajaj Finance, ICICI Bank and Infosys finished the week with healthy gains.
In one of the steepest price cuts, the price of natural gas is expected to be cut by 25% from the month of April 2020. This will be the second reduction in 6 months and will take gas prices to the lowest level in nearly 30 months. This is in line with the slump in global gas prices, after crude fell on the back of the virus scare. Gas prices are likely to be cut from the current level of $3.23/bbtu to $2.50/bbtu. Even the price of gas produced from difficult fields may be cut by nearly $3 to $5.50/bbtu. While this will be negative for ONGC, it will benefit the CNG companies and the gas-based fertilizer companies in India.
The US has surpassed China as India’s largest trading partner and trade experts opine that this gap could widen in the coming months as China struggles to recover from the impact of the virus pandemic. According to data put out by the Ministry of Commerce, India’s trade with the US for 2018-19 stood at $87.95 billion while its trade with China was at $87.07 billion. For the Apr-Dec period, US trade stood at $68 billion as against $64.96 billion with China. One of the key items in the agenda during Trump’s visit will be to expand the trade relations between India and the US. If the US and India can arrive at a free trade agreement (FTA) as is popularly expected, then the gap could widen still further. Interestingly, India runs a trade surplus with the US while India runs its largest trade deficit with China.
In spite of the vagaries of the market, FPIs pumped in close to Rs.23,102 crore into Indian markets in Feb-20. While the FPIs infused Rs.10,750 crore into equities, they brought in another Rs.12,352 crore into debt. There is still one more week go in the month. While the RBI’s accommodative stance has helped bonds, India’s economic resilience in the face of the Chinese Coronavirus has led to positivity among FPIs. The budget proposal to do away with DDT and increase the FPI limit in corporate bonds from 9% to 15% has also helped FPI appetite. Global growth has slowed and India still looks better.
