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Well, this week was full of events for markets and Indian corporates.
Before we discuss in detail, let us take a look at how Indian markets performed in the week gone by. Nifty 50 finally crossed the mark of 16000 after consolidating for almost two months and made a lifetime high of 16349. The index closed 3.01% higher (475 Points) for the week as there was strong support majorly from financials and IT. HDFC twins and Kotak rebound while Reliance struggles due to stay put by Supreme Court on its deal with Future group.
The Monetary Policy Committee keeps the repo rate unchanged at 4 per cent and the reverse repo rate at 3.35 per cent. The Committee maintains an accommodative stance as long as necessary to mitigate the impact of the Pandemic, said RBI Governor Shaktikanta Das. The event turned out to be a non-event and did not have any major impact on markets.
The Supreme Court’s decision on the merger of Future Retail with Reliance Retail was in the favor of Amazon who had invested in Future Retail in August 2019 and claimed that the terms of this deal prevent Future Group from selling Future Retail to Reliance.
Also, Reliance Retail is in talks to buy Subway India for $200-250 mn. Read the full story here.
What is E-Rupi?
E-rupi is a Cashless product that can be used to make digital payments. The NPCI launched e-RUPI, is a new way of giving someone money for a specific purpose. It is a voucher issued to a person on his/her mobile phone in the form of SMS or QR code that can be used for a one-time payment by the receiver. This is not the same as Digital Currency.
What’s happening in Primary Markets:
4 IPOs oversubscribed and raised Rs 1.71 lakh crores, the required amount excluding anchor book was Rs 2107 crores. Yes, that’s right. The IPO Mania or should I say Euphoria continues. Glenmark Life sciences listed this week at a premium of almost 5% and closed the day at 3%.
The Unfortunate Tale of Vi
Coming to the most discussed stock this week i.e Voda-Idea. Many events took place around vi which led to huge moves in the share price downwards and upwards. Kumar Mangalam Birla stepped down from the board of Vodafone Idea as chairman and offered his stake in the company to the government for free. Vodafone UK has written off their entire investment in Idea. Promoters both including Birlas and Vodafone are not interested to invest further in the business. Still, many retailers are burning their hands by playing with its penny stock price.
Even before these adverse circumstances, vi was not gaining that much in terms of revenue and customer base. The number of private telecom players reduced from 9 in 2016 to 3 as of today after the introduction of the lowest data plans by Reliance Jio Infocomm Ltd. Jio and Bharti are competing neck to neck, whereas Idea is going through some serious issues even after its merger with Vodafone in 2018. The amount of debt piled up against vi as of 31st March 2021, stood at ₹ 1.8 lakh crore which is equal to the Mcap of Nestle India. Such huge debt will only be recoverable if the company remains operational. Bulk exposure of this debt is to PSU Banks and of course AGR Dues to GOI. As per the latest results, the net worth of the company is Negative.
Although one major announcement from the government last week was of the abolition of retrospective tax, this will not have any significant impact on the overall financial position of Idea. To understand the new bill in detail, check here.
Let us move on to Vi’s rival - Bharti Airtel, The company declared its Q1 results this week. Avg Revenue Per User stood at ₹146 as compared to ₹138 in the year-ago period, revenue from operations grew 15 per cent to ₹26,854, Consolidated EBITDA reported was ₹13,189 crore.
On the global front, US unemployment data was released on Friday. 943,000 jobs were added in July and the unemployment rate slides to 5.4%.
That’s all for this week. In case you like our newsletter, do subscribe and share it with your friends.