Monday, 20th September 2021

Out of the top-10 Nifty companies by market cap, four companies added Rs.65,465 crore during the week ended 17th September. Bharti Airtel and SBI emerged the biggest gainers, but laggards outnumbered the gainers. Among gainers, Bharti added Rs.22,984 crore, SBI added Rs.19,500 crore, TCS Rs.14,315 crore and HDFC Bank Rs.8,665 crore. Among losers, HUL lost Rs.20,606 crore, while declines in other stocks was quite small. Bharti Airtel and SBI gained from the positive vibes coming from the Telecom Relief Policy.

DGCA has now allowed domestic airlines to operate at 85% capacity against 72.5% currently. In addition, even the price formula was tweaked to allow airlines to set fares beyond 15 days. This is likely to improve the passenger load factor further, ensuring better absorption of fixed costs and superior operating performance of airline companies. For Aug-21, the domestic air traffic was up 34% yoy at 6.7 million. The progressive relaxation of peak capacity led to occupancy rates rising to well above 70% mark in Aug-21.

FPIs showed a lot of confidence in the week as they invested a net amount of Rs.16,305 crore into Indian capital markets. This included inflows of Rs.11,287 crore into equities and Rs.5,018 crore into debt. This is just for the first half of September and is almost equivalent to the total inflows from FPIs in August. Some experts even point to the FOMO factor for the return of the FPIs. Inflows have been robust across EMs with Taiwan getting inflows of $2.60 billion, South Korea of $535 million and Thailand $290 million.

Merchant bankers who had submitted bids for IDBI Bank divestment indicated that entire process could take up to one year to complete. IDBI Bank is currently controlled by LIC. This may not be in sync with the government’s intent to complete the divestment during the current fiscal year itself. KPMG had placed the lowest bid of Rs.1 and was selected as transaction adviser. GOI and LIC jointly own 94% of IDBI Bank. The extent of the divestment by the government will be decided subsequently based on the price signals.

Welspun India will invest Rs.800 crore on capacity expansion of home textiles and flooring businesses. This business is expected to grow rapidly over the next 2 years. It plans to augment the capacity of home textiles business and the towels manufacturing business by 20%. Towel manufacturing capacity goes up from 85,000 TPA to 102,000 TPA. Its existing unit at Vapi in Gujarat has already approved expansion of its rugs capacity by 80% which is currently underway.  Revenue potential of this expansion is Rs.1,207 crore. 

Natural gas has been on a frenetic rally in the last 6 months. In fact, the average price of natural gas on the IGX has more than doubled from $6.1 MMBTU in April 2021 to at $13.8 per MMBTU. This is based on the demand for spot gas in India and the prices are synced with global prices of gas. The reason for the spike in turnover is that the supply constraints are back. Gas inventories have fallen below 5-year averages due to hurricanes and lower production in the Gulf of Mexico. India gas prices are based on global cues.

KEC International will acquire 100% equity in Spur Infrastructure Private Ltd at an enterprise value of Rs.62 crores. The deal is expected to be consummated in the next 60 days. Spur Infra is an Indian EPC company engaged in setting up of cross-country oil and gas pipelines and city gas distribution (CGD) networks. Spur has annual revenues of over Rs.100 crores and an order book of Rs.600 crores. This acquisition will help KEC to capture the lucrative growth in oil and gas cross-country pipelines EPC sector in India and abroad.

The shutdown of the Tuticorin Copper Smelter of the Vedanta group has led to India becoming a net importer of copper. For the Jun-21 quarter, the imports of copper were up 26% at 60,755 tonnes. Total copper imports for FY22 are likely to cross 300,000 tonnes. The copper scenario changed after the Tamil Nadu government ordered shutdown of the Vedanta copper facility in Tuticorin on environmental grounds. Copper is used in a variety of applications like electrical goods, construction, automobiles etc.

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