The Maharashtra state government imposed a 15-day curfew, allowing only essential services to remain open. The state has also announced a simultaneous Rs.5,400 crore package to alleviate the pain of such a lockdown and its impact on the vulnerable sections. The total active cases in the state had crossed 5 lakhs and the health infrastructure was struggling. Banks, stock exchanges, ecommerce and cargo services will continue as usual while groceries, dairy etc will be allowed staggered operations. This was anticipated.
Mutual fund managers have been consistently selling into large cap stocks during the month of March 2021. Mutual funds collectively deployed Rs.1600 crore in IPOs, while the share sales of BPCL, BOB, Wabco, SBI cards and Tata Communication attracted a lot of interest. However, mutual funds were seen paring their stakes in blue chips like, Reliance Industries, Hindustan Unilever, ICICI Bank, Vedanta and Maruti Suzuki during March 2021. This has been the general trend in the last few months with MFs.
One surprising beneficiary of the pandemic has been steel exports. Finished steel exports at 11.65 MT was 31% higher yoy while semi-finished steel exports at 7.25 MT was up 153% yoy for FY21. The slight strain on domestic consumption was more than compensated by the spike in global demand. The exports of both classes of steel represent a life-time high. Nearly 65% of these exports happened in the first half of the fiscal year when China was importing aggressively. Export realizations are better than local prices.
Even as India explores the SPAC or special purpose acquisition company opportunity, Singapore based Grab may soon be making the largest SPAC issue of $40 billion. Altimeter Growth Corp will be the SPAC that will be used to list Grab. After a record $83 billion of SPACs in 2020, year 2021 has already seen $99 billion of SPACs till date. A SPAC is a shell company that is floated to acquire a potential IPO candidate and to wind up the SPAC and exit at a profit after the company lists. It simplifies the IPO process in the US.
The Competition Commission of India or CCI approved the acquisition of 89.6% stake in Gangavaram Ports by Adani Ports SEZ for a consideration of Rs.3,604 crore. Adani will acquire this stake from the DVS Raju family and Warburg Pincus. While Adani Ports will acquire 58.1% from the former, it will pick 31.5% from the latter. The Gangavaram Port is located next to Vizag port. However, the stock slipped by 6% on Tuesday after the stock was removed from the Sustainability Index. Adani has seen a major rally in FY21.
With the Coronavirus infections showing no signs of respite, Cipla has decided to double the production of Remdesevir to keep pace with the growing demands. India has already overtaken Brazil and is next only to the United States in terms of gravity of the COVID situation. Remdesevir is an antiviral that is being administered to COVID patients in India to help in the recovery process. Cipla holds the license to make Remdesevir and supply to over 100 countries as part of a strategic agreement with Gilead Inc.
Net indirect tax collections for FY21 were 12.3% higher on a yoy basis despite the fall in GST collections during the year. For FY21, indirect tax collections stood at Rs.10.71 trillion compared to Rs.9.54 trillion in FY20. While the GST revenues were lower by 8% on a yoy basis, the year saw net customs collections up by 21% and net excise duty collections up 59% in the year. This is largely accounted for in the form of levies on products like petrol, diesel, liquor that are outside the ambit of goods and services tax or GST.
As India gets prepared for a hot summer, there is good news on the Monsoon front. For the third year in succession, SKYMET has predicted a normal monsoon. The last time India had 3 successive normal monsoons was in the 1996-1998 period. The monsoon is expected to be 103% of the long period average or LPA, which is defined as normal rainfall. This estimate is for the monsoon months of June to September. In the last 2 years, Indian agriculture has enjoyed the benefits of bumper Kharif and Rabi harvests.
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