Monday, 15th March 2021

For the fortnight ended 15-January, bank credit grew 6.36% and deposits grew by 11.41%. Clearly, the C/D ratio continues to remain unfavourable. If you consider the first 9 months ending Dec-20, the bank credit was up by 3.2% even as the deposits grew by a whopping 8.5%. In the last one month, the non-food credit growth tapered from 7% to 5.9%. While loans to industry contracted by 1.2% the growth in the agricultural credit was 9.4%. In the 9-months to Dec-20, personal loans grew at a slower rate of 8.9% compared to 15% last year. Transport operators and trade triggered the credit growth to private sector.

A total of 5 IPOs will open during the week starting on 15 March, even as the IPO of Anupam Rasayan opened on 12-March and will be closing on 16-Mar. The IPOs include; Craftsman Automation and Laxmi Organics opening on 15-Mar, Kalyan Jewellery opening on 16-Mar while Suryoday Small Finance Bank and Nazara Technologies will open on 17-Mar. The 5 IPOs will raise a total sum of Rs.3,764 crore from the IPO market. Nazara Technologies will come out with a pure OFS, while the other four IPOs are a combination of fresh issue and an offer for sale. All IPO candidates have raised funds through the anchor shares route. In addition, the IPOs of MTAR Technologies and the IPO of Easy Trip will also get listed on the NSE and BSE during the coming week. In the IPO market, it is a virtual race to complete the IPOs before March end.

Foreign portfolio investors or FPIs were overall net sellers to the tune of Rs.7,013 crore in the first half of March 2021. In the first 2 weeks, investors pulled out a nominal Rs.531 crore from equities but Rs.6,482 crore from the debt segment as the markets were spooked by the sharp spike in bond yields. In contrast, the FPIs had infused Rs.23,663 crore into Indian markets in Feb-21 and Rs.14,649 crore in January. The moderation of flows into equity was largely on account of profit booking. Interestingly, during this period the emerging markets like South Korea, Thailand and Malaysia have seen marginal inflows into markets.

For previous week ending 12 March, 8 out of the top-10 most valuable companies by market capitalization added Rs.72,443 crore in value. SBI and Reliance Industries saw value erosion during the week with the other eight seeing value accretion. In terms of market cap accretion, Infosys added Rs.24,963 crore while TCS added Rs.18,458 crore. Among other value additions were HDFC Bank Rs.12,124 crore, Bajaj Finance Rs.6,644 crore, HDFC Rs.4,436 crore, Kotak Bank Rs.2,648 crore and ICICI Bank Rs.2,231 crore. On the downside, Reliance Industries lost Rs.25,294 crore and SBI Rs.2,320 crore in market value for the week.

If the bank strike goes through, we could a deep impact on banking operations across India on 15 March and 16 March. The unions have given a call for nationwide strike to protest against the privatisation of two state-owned lenders. It is likely that cash transactions, cheque clearing and loan approvals could get delayed. The call has been given by UFBU, an umbrella body representing 9 bank unions. Nearly 10 lakh employees and officers are expected to participate in the strike. In the Union Budget 2021, the FM had announced that two public sector banks would also be privatized, apart from non-life insurers.

The draft Ecommerce Policy Document appears to be an outcome of the constant criticism of the business practices followed by large ecommerce players like Amazon and Wal-Mart. One contention has been that these ecommerce platforms flout federal regulations. This includes giving preferential treatment to a group of sellers on its India platform and used them to circumvent FDI rules. The new Ecommerce policy has called for such platforms to be impartial in their dealings with sellers. As of now it is only a draft policy and it will be open for public comments before it becomes a rule. Indian traders had also complained about steep discounts offered by online companies which small companies find it tough to match. The draft calls for transparent policies on discounts and treats all sellers in a fair and  transparent manner.

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