Wednesday, 29th December 2021

While the gross NPAs in FY21 fell to 7.3% from 8.2% a year earlier, RBI has still warned in its Report on Trends and Progress in Banking, that asset quality could worsen. It pointed that banks may see stress rising once the schemes to support them start unwinding. The report shows muted credit growth due to pandemic impacting aggregate demand. Gross NPAs have fallen further to 6.9% in Sep-21. The RBI report has also pointed out that NBFC and SFBs may have to grapple with the problem of higher delinquencies.

SEBI, in its 28-Dec board meeting, cleared rules for tightening IPOs norms. The anchor investor lock-in for 50% of the investment has been enhanced from 30 days to 90 days. In regulating usage of IPO funds, SEBI has now stipulated that if acquisition target is not identified, then outlay for inorganic growth cannot exceed 25% of amount raised. For IPO price bands, the minimum price band shall be 105% of floor price. Within the HNI quota, one-third will be reserved for application sizes between Rs.2 lakh and Rs.10 lakh.

In the aftermath of the Franklin Templeton fiasco, SEBI has also tightened norms for mutual funds winding up schemes. To safeguard interests of unit holders, SEBI has stipulated that trustees will have the responsibility of obtaining the consent of unit holders for winding up of schemes. Schemes can be wound up only if 75% of the unitholders vote in favour of the winding up based on 1 vote per unitholders. Now KRAs will have to carry out independent validation of KYC records uploaded. Full audit trail is mandatory.

The stock of KPIT Technologies rallied more than 7% on 28-December to touch a new high of Rs.595. It has surged 30% in the last 6 days. In fact, since the start of November 2021, the stock of KPIT Tech has surged 93% on the back of higher volumes. This was after the FY22 growth outlook was raised from 18% to 20%. KPT focuses on mobility industry with niche offerings in power trains. With its strong EV franchise, KPIT was recently upgraded by ICRA as the slew of factors promised healthy revenue visibility for KPIT.

In a rather ominous move, India’s benchmark 10-year bond yields rose to a 20-month high level of 6.49%. Investors had grown cautious of the heavy government debt pipeline and hawkish statements from the US Fed. The bond yields had last scaled a level of 6.50% way back in April 2020. Yields have been driven up by variable rate repos at the short end and the secondary market selling of bonds by RBI. The bond yields are expected to harden due to heavy supply of bonds and steep levels of domestic retail inflation.

Telecom stocks like MTNL and TTML were locked at their respective upper circuits as telecom stocks per se saw a surge in investor demand. This was after the DOT announced on Monday that 5G services will be rolled out in 13 major Indian cities in 2022. TRAI has already released a consultation paper to get industry feedback on spectrum auctions. Some of the notable gainers in the telecom and support infrastructure space included ITI, Tejas Network, HFCL, Sterlite Tech, Onmobile, Tata Communications and Route Mobile.

Ajanta Pharma approved a buyback of shares at its latest board meeting which resulted in the stock rallying 6% to Rs.2,310. The company has fixed 14th January 2022 as the record date for the buyback. The board of Ajanta has approved the buyback of up to 11.20 lakh shares representing 1.29% of the total shares. The buyback price has been set at Rs.2,550 per share which will entail an outflow of Rs.285.60 crore. Ajanta Pharma is a specialty pharma company and has been a consistent top-class wealth creator. 

With the 01st April 2022 deadline fast approaching, proxy advisory firm IIAS has reported that nearly 50% of the Nifty 500 companies were yet to separate the posts of chairman and managing director. This deadline has already been extended by 2 years and Ajay Tyagi has ruled out any further extension. The stipulation is that the chairperson and the CEO should not be related, which has created a piquant case for family run businesses. Institutional investors are insisting on greater clarity from company boards.

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