For the first time since 2015, India is facing an inverted yield curve. India’s 1-year government bond yield rose above the 10-year bond yield, following higher than expected cut-off for short term treasury bills. The yield on the RBI 364-day T-Bill is at 7.48% while the 10-year benchmark is at 7.46%. Normally, inverted yield curve is an indication of a future slowdown in the economy since it shows that bond investors are keener to take a short-term view than a long-term view. Longer term yields have been rising much slower.
GQG Partners, founded by Rajiv Jain, is likely to invest more in the Adani group after it had infused $1.87 billion into Adani group companies just last week. Rajiv Jain underlined that they had the ability and the appetite for more of Adani stocks in their portfolio. The Adani group stocks had been under pressure after Hindenburg Research had issued a scathing report on the Adani group in late January. Since then, the Adani group lost $130 billion in market cap, although it has recovered a good deal in the last few days.
State Bank of India has raised Rs3,717 crore through the sale of additional tier-1 (AT-1) bonds. The latest issue of AT-1 bonds had been closed at a coupon rate of 8.25%. The funds will be used to augment its Tier 1 capital base and strengthen capital adequacy. AT-1 bonds are perpetual in nature with a call option at the end of 10 years. The response, as per SBI, was overwhelming with 2.27 times oversubscription with bids worth Rs4,537 crore from provident funds and insurers. That is 66 bps spread over the benchmark.
Sebi has imposed several restrictions on placement of bids, price and volume for companies undertaking share buyback via the stock exchange route. Companies cannot purchase more than 25% of average daily trading volumes in value terms, in the 10 trading days preceding the buyback day. Companies are also not allowed to place bids in the pre-market session. The purchase order must be at a range of 1% either side of the price. Companies and brokers have been asked by SEBI to ensure compliance with the provisions.
The new tax regime is likely to have a negative impact on the ELSS flows in the coming fiscal year, with the first few months seeing a lot of action. The government will be making the new tax regime the default tax regime from the start of FY24 and the new regime assumes no concessions under Section 80C. Hence, it could be a dampener to sales of ELSS funds. Also, experts point out that most of the ELSS funds have been among the bottom equity fund performers in the last one year. ELSS investments are discretionary.
Based on the latest testimony given by the Fed chairman, Jerome Powell, it looks like 6% interest rates in the US are perfectly possible. That has forced a lot of Indian companies to go back to the drawing board and review its possible implications for the US markets and for emerging markets like India. According to UBS, emerging markets like India would be the most vulnerable because of the real interest rate impact on foreign portfolio investor (FPI) flows and because of the cost funds implications for Indian companies.
Natco Pharma gets board approval for Rs210 crore share buyback proposal. It proposes to buy back shares through the open market. It will buy back up to 30 lakh equity shares, of face value Rs2 each, at a peak price of Rs700 per share. The maximum buyback price is 23% higher than the last closing price of Natco. At the peak buyback quantity, Natco will buy back 1.64% of its paid-up capital. Post the buyback, the promoter stake will increase from 48.82% to 49.63%, while public holding will fall from 51.18% to 50.37%.
Adani Group repaid the $500 million bridge loan due this week to give the markets assurance of the health of the Adani group and its liquidity position. From a peak market cap of over $250 billion, the market cap had fallen to a low of $124 billion and it has since bounced back to $154 billion. Global banks lent Adani group $4.5 billion to bankroll the purchase of Holcim’s stake in ACC and Ambuja Cements. In the last one month, Adani group repaid loans worth $2.3 billion, so the latest repayment takes it closer to $3 billion.