Tuesday, 1st June 2021

India’s GDP growth for the fourth quarter ended Mar-21 came in at +1.6% while the full year GDP contraction for FY21 was better than originally estimated at -7.3%. On the demand front, public spending was up 28.3% in Q4 while agricultural growth remained positive. For the full year FY21, only agriculture and public utility services remained positive while all the other components remained in negative territory. In Q4, manufacturing rebounded by 6.9% due to base effect. COVID pressures remain high.

The central fiscal deficit for FY21, came in lower at 9.2% against the revised budge estimate of 9.5% largely on account of better than expected revenue receipts and checks on a number of heads of spending. One reason could also be that the absolute GDP number turned out slightly better than expected for the full year leading to lower ratio of fiscal deficit to GDP. The tax revenues in the last two quarters were much better than anticipated. However, the food subsidy bill overshot due to prepayment of FCI liabilities.

Core sector growth for Apr-21 came in a whopping 56.1% higher on the back of low base in Apr-20. However, the core sector growth on a sequential basis was down -15%, which is basically reflective of the stressed caused by COVID 2.0. On a yoy basis, 7 out of 8 sectors showed positive core sector growth with only oil extraction being in the negative. On a sequential basis, all the 8 sectors showed negative growth. Due to revision of core sector growth for Mar-21, FY21 core sector growth improved by 50 bps to -6.5%

One of the world’s most formidable chip companies, Intel Corp has affirmed that it could take several years for the global semiconductor shortage to be resolved. This has shuttered many production lines from electronics to automobiles. Also, the WFH trend had led to an explosion in the demand for chips and the current capacity did not have the capacity to service such a huge demand accretion at short notice. Intel has already announced a $20 billion plan to expand its advanced microchip manufacturing capacity.

Sensex rallied 515 points on the last day of May even as the Nifty closed at historic highs. Heavyweights like Reliance, ICICI Bank and HDFC Bank led from the front. FPI flow sentiments also improved in the light of continuous improvement in the COVID situation. The better than expected GDP for Q4 and for FY21 is also likely to be a short term positive for markets. Among the losers during the day were M&M, Infosys, Larsen & Toubro and Sun Pharma. However, Brent Crude stays delicately poised at around $69.46/bbl.

Ahead of its mega Rs.22,000 crore IPO, Paytm proposes to raise $1.5 billion. Essentially, Paytm will test waters by offering shares to qualified institutional buyers or QIBs as well as to retail investors. The DRHP is expected to be filed in July this year. Paytm had total revenues of Rs.3,406 crore in FY20, much larger than its nearest rivals like Phone Pe and Google Pay. The Paytm is expected to be the largest IPO in Indian stock market history, not counting LIC as an when it happens. Paytm is targeting valuation of $30 billion.

Venture investor, Tiger Global, led the $15.6 million round of investment Plum, a start-up to facilitate group health insurance. Other names like Sequoia and Tanglin also participated in this round. Plum plans to use the fresh funds for engineering, business development and regular operations. Plum builds insurance products for small businesses that cannot afford annual premiums. Plum is targeting 10 million lives insured by 2025. Group health insurance market in India is 50% and growing at a rate of 25% annually. 

PNB Housing may be getting angel investors on board. A group of investors led by Carlyle will raise a sum of Rs.4,000 crore for PNB Housing. Carlyle has already invested Rs.3,185 crore via preferential allotment of warrants. Another marquee investor is the family office of Aditya Puri, former HDFC Bank CEO. The stock was on upper circuit at Rs.525 on Monday. PNB Housing is the fourth largest HFC in India with loan assets of Rs.62,255 crore with 2nd largest deposit base of Rs.17,129 crore. This will trigger an open offer.

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