The top 10 stocks on the NSE added Rs.246,000 crore in market cap during the week with the RIL being
the big contributor. Reliance alone added Rs.73,100 crore to its market cap during the week crossing the
Rs.10 trillion market after a long gap. HDFC Bank also saw its market value rise by Rs.46,000 crore while
Kotak Bank soared Rs.31,000 crore on the hugely successful share placement. The other stocks that
added value included TCS, HDFC, Bharti Airtel, ICICI Bank, Hindustan Unilever, Infosys and ITC. The Nifty
and the Sensex have gained close to 12% in value over the last two weeks of trading.
Direct tax collections for fiscal 2019-20 were lower by 4.92% at Rs.12.33 trillion. This was largely on
account of reduced personal tax rates, higher standard deduction and above all the sharp cut in
corporate taxes in September 2019. The CBDT also noted that it had foregone revenue of Rs.145,000
crore during the year purely on account of the lower rates of taxes and MAT on corporate taxes. The
impact on personal income taxes due to the lower tax rates and higher standard deduction was to the
tune of Rs.22,300 crore. The COVID-19 impact will only be known in the fiscal year 2021.
Foreign portfolio investors (FPIs) invested Rs.18,589 crore in the Indian markets during the first week of
June 2020. The net buying in equities was Rs.20,814 crore while debt saw net selling of Rs.2225 crore.
This is more than the net inflows during any month during this year. Between March and May, FPIs were
consistent net sellers. Equity selling was heavy in March while debt selling was heavy in March and again
in May. The FPIs made a strong return in June on the back of normal monsoon forecast and a big
liquidity push to markets. A chunk of the flows were accounted for bulk deals in Kotak Bank and HDFC
Life.
Abu Dhabi Investment Authority (ADIA) will pick up a 1.16% stake in Jio Platforms for Rs.5684 crore. This
also implies an overall valuation of Rs.4.92 trillion for Jio Platforms. ADIA becomes the seventh marquee
investor in Jio Platforms after Facebook, Silver Lakes, Vista Equity, General Atlantic Partners, KKR and
Mubadala. With this stake sale, Jio Platforms has effectively raised Rs.97,886 crore by monetizing a little
more than one-fifth of Jio Platforms. This, combined with the rights issue proceeds, should go a long
way in helping the RIL group to become zero debt well before March 2021.
Even as the OPEC and Russia have pledged to continue their oil production cuts by another 2 months till
the end of July 2020, Mexico said it would prefer to sit out of these output cuts. The original decision
was to increase the supply cut from 7.7 million bpd to 9.7 million bpd for April and May. In June that was
to revert to 7.7 million bpd but OPEC and Russia want to continue the supply cuts for another 2 months
till end of July. As per the original agreement, Mexico refused to accept the proposal to cut crude output
by 400,000 bpd and instead agreed to cut output only by 100,000 bpd. Now, Mexico is not willing to cut
output even by 100,000 bpd. While the quantum of cuts applied to Mexico is quite small, the worry
could be about rising frictions within the group. Even Russia had been ambivalent till the last moment.
The COVID-19 crisis is likely to hit Indian steel demand much more than global steel demand. While
world steel demand in 2020 is expected to contract by 6.4%, India’s steel demand is likely to contract
during the year by 18%. During the current year, while global steel demand is likely to be 1654 million
tonnes, Indian demand is expected to be 82 million tonnes. India implemented the most stringent
lockdowns in the world bringing industrial production to a virtual standstill. The sharp fall in steel
demand in India can be explained by the tepidness in the auto and construction space.