Global PE firm, Warburg Pincus will invest a sum of Rs.800 crore in Adani Ports Special Economic Zone Ltd via its affiliate, Windy Lakeside Investment. This investment will be in exchange for a 0.49% stake in Adani Ports. The entire Adani group stocks have been among the top performers in the stock market in terms of market cap growth over the last 1 year. As part of the deal, 10 million shares will be allotted to Windy Lakeside at a price of Rs.800 per share, a premium of 6.7% to its last closing price. An extraordinary general meeting or EGM of shareholders has been called on 6 April to seek approval for the proposed deal.
The saga of redemptions continued in February 2021 as Mutual funds pulled out Rs.16,306 crore from equities. Thus Feb-21 marked the ninth consecutive month of outflows from equity funds. It was attributed to profit booking at higher levels as well as a shift to direct equity investing as reflected by the surge in demat accounts in the last few months. For the calendar year 2020, mutual funds withdrew a sum of Rs.56,400 crore as per NSDL data. One reason being proffered is that the lump-sum investors in equity funds have largely shifted to direct equity investing even as the SIP investors continue to keep their faith in equity funds. Expensive valuations are also one reason. Since Jun-21, investors have redeemed Rs.124,172 crore from equity funds. This is despite the sharp rally in the Nifty and Sensex in 9 months.
China’s Feb-21 exports grew at a record pace compared to the year ago period even as the rise in imports was more subdued. On a yoy basis, Chinese exports spurted by 155% compared to the Feb-20 period even as imports were up by just 17.3% having substantial positive implications for the trade surplus of China. During the Jan-Feb period, exports jumped 60.6%, substantially better than the 38.9% growth projected by Reuters. There was a surge in global demand for Chinese inputs as factories in the US and in Europe started getting back to action. China has posted a trade surplus of $103 billion for the Jan-Feb period.
FDI in the computer software and hardware sector in India was up four-fold to $24.4 billion during the April-December period in this fiscal year. During the year-ago period, the FDI was just about $6.4 billion. Experts have opined that the huge opportunity for the computer hardware and software sector came from the accelerated digitization and enhanced use of artificial intelligence in the midst of the WFH trend globally. Most observers of the FDI scene have opined that the sector witnessed a surge in FDI due to the electronics and digital transformation globally with Indian tech firms best poised to capture the trend.
In the previous week ending 05-March, 8 out of the top 10 most valuable companies on the NSE-Nifty added Rs.194,000 crore in market value. Only HDFC Bank and SBI witnessed losses during the week. RIL was the big star, adding Rs.60,035 crore. Among other big names, TCS added Rs.41,041 crore, Kotak Bank Rs.28,011 crore, Infosys Rs.27,114 crore, HUL Rs.16,388 crore, Bajaj Finance Rs.12,419 crore and ICICI Bank Rs.8,424 crore. In contrast, HDFC Bank lost Rs.2,590 crore and SBI lost Rs.5,712 crore during the week. During the week ended 05-March, the Sensex was up 1,305 points or 2.7% amidst the volatility.
In the first week of March 2021, FPIs pulled out Rs.5,156 crore. The amount is too small and also one week is too early to judge a trend. However, this is significant in the background of the consistent flows that we saw from the FPIs in the last few months. This profit booking by FPIs was in the backdrop of the rising bond yields in the US and a similar trend reflecting in India too. Of course, only Rs.881 crore was pulled out of equities with the balance Rs.4,275 crore being pulled out of the debt segment. Apart from the US bond yield risk, this profit booking can also be attributed to the market scaling elevated levels in terms of market cap / GDP ratio. Bond markets are clearly discounting reflation in the US in the light of the massive monetary and fiscal stimulus. However, the focus this week will shift to macro points like CPI and IIP data.