The week starting on 31 May is likely to be a data heavy week. The all-important GDP data will be announced on Monday and the RBI monetary policy will be announced on Friday. While the MPC is likely to keep interest rates and the monetary stance static, markets would be more interested in the borrowing program and the GSAPs. GDP is expected at 2% for Q4 and -7.5% for FY21 and anything better will cheer markets. There is also the core sector, auto sales numbers, Markit PMI data expected during this week.
A total of 8 of the top-10 most valuable companies by market cap on Nifty gained Rs.139,567 crore in the previous week ending 28 May. Reliance led the charge with its Friday rally, followed by TCS and Infosys. In terms of market cap, RIL gained Rs.59,591 crore, TCS gained Rs.23,563 crore and Infosys Rs.21,395 crore. Among other big gainers, SBI rallied by Rs.18,697 crore and Kotak Bank Rs.8,435 crore. Among value losers, Hindustan Unilever lost Rs.8,905 crore followed by Bajaj Finance at Rs.1,283 crore in the week.
PSU banks will provide unsecured loans up to Rs.500,000 to individuals to meet COVID-19 expenses for their family members. This was announced as part of 3 new loan products to vaccine manufacturers, hospitals, laboratories, oxygen suppliers, drugs logistics units etc. SBI will offer a maximum loan for COVID treatment of up to Rs.5 lakhs at an interest rate of 8.5%, payable in 5 years. Hospitals can get loans up to Rs.2 crore at 7.5%. These loans, being part of COVID loan book, will classify as priority sector lending.
The Southwest monsoon could be delayed by 2 days and rains are likely to hit the Kerala coast by June 3, according to the IMD. This is attributed to weak westerly winds near Kerala coast. Normally, the Kharif cropping is substantially dependent on the quantum and timeliness of the rains. Onset of monsoons in the first week of June is normally acceptable. This year, the IMD is expecting normal monsoons, which is rainfall between 96% and 104% of long period average or LPA. Delayed monsoons delays the seeding.
Bank of Baroda reported net loss of Rs.1,047 crore in the Mar-21 quarter due to a spike in tax provisions as the bank shifted to a new tax structure. In Mar-21 quarter, tax provisions were Rs.3,726 crore against tax write-back of Rs.2,289 crore in Mar-20 quarter. However, full year profits for FY21 at Rs.828 crore was higher yoy by 51.6%. Net interest income (NII) of the bank was up 4.54% at Rs.7,107 crore while the NIMs improved by 9 bps to 2.72%. Gross NPAs were lower by 53 basis points at 8.87% in the Mar-21 quarter.
FDI in computer software and hardware has picked up and picked up hard. The FDI for this technology driven sector picked up 3.4X in one year at $26.14 billion in FY21 against just $7.67 billion in FY20. In fact, this sector accounted for 44% of all FDI into India in FY21. Post COVID, the end-to-end digitization efforts have opened new avenues for the technology space in India. Global FDI investors are seeing tremendous traction in supporting technology enablement across sectors and across the complete tech value chain.
Central government plans to aggressively monetise big-ticket infrastructure projects over next five years as part of its Asset Monetisation Programme (AMP). This AMP is expected to generate Rs.85,0000 crore for the government by FY25. Government will monetize Rs.20,000 crore of highways annually on an average over next 4 years. In FY21, nearly 566 KM of roads were monetized to the tune of Rs.5,011 crore via the TOT model. The TOT is a pure securitization model which also facilitates efficient toll collections.
Foreign portfolio investors turned net sellers for second month in succession. Till May 28, FPIs had taken out Rs.3,375 crore from equities but infused Rs.1,646 crore into debt, resulting in net outflow of Rs.1,729 crore in May. This comes on top of Rs.9,435 crore outflow by FPIs in April. However, with markets at new highs, FPI flows showed signs of stabilizing. During May, South Korea and Taiwan saw biggest FPI outflows of $8.5 billion and $3.13 billion respectively. Falling COVID cases should be positive for FPI sentiments.