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NIPUN - Daily News and Market Round-Up

EQUITY MARKET ROUNDUP (Source : NSE India, BSE India)

07 May 2021 Today 10 May 2021 Change
Nifty Fifty 14823.15 14942.35 119.20
Sensex 49206.47 49502.41 295.94
Nifty MidCap 100 24545.65 24776.80 231.15
Nifty SmallCap 100 8737.20 8870.60 133.40
Sensex P/E (Trailing) 31.41 31.48 0.07
Nifty Fifty P/E (Trailing) 30.23 30.43 0.20
Nifty MidCap 100 P/E (Trailing) 41.65 42.05 0.40
Nifty SmallCap 100 P/E (Trailing) 61.79 62.56 0.77

DEBT MARKET ROUNDUP (Source : CCIL India)

(Weighted average yeild) 07 May 2021 10 May 2021 Change
Call Rates call rates 3.2234 3.2445 0.0211
Repo 3.2422 3.2980 0.0558
TREP 3.2789 3.2710 -0.0079
5.77 G-Sec 2030 6.1694 6.171 0.0016
Market and Economy

Government eases procurement norms

To expedite procurement of critical Covid-19 supplies, the government on Monday relaxed the General Financial Rules (GFR) and removed all restrictive provisions to enable larger participation and faster procurement. Bank Guarantees have been waived off for all procurement.Relaxing tendering norms, the government has allowed global tenders to be floated for less than Rs 200 crore as well. 100% payment of advance has been approved for critical Covid procurement. Procurement on nomination basis has been permitted in case of constrained supply market.The commerce and industry said in a statement that oxygen production has increased to 9,446 metric tonne (MT) per day in May 2021 from 5,700 MT daily in August 2020 and the production capacity has increased to 7,314 MT per day, and capacity utilization has gone up from 84% to 129% during this period.?There is a mismatch between producing and consuming states, and equity among states to be maintained. Moreover, one-third of the production is concentrated in East India, while the 60% of demand for oxygen is in North and South India, resulting in transportation challenges,? it said, adding that oxygen allocation was based on its requirement, number of active cases, and availability of hospital infrastructure including ICU beds.As per the statement, the Total Liquid Medical Oxygen Production by steel plants was 3,680.30 MT on May 4.Besides, additional capacity expansion is planned in the near future to enhance oxygen production capacity through oxygen from power plants, refineries and steel plants.The government said that 50,000 MT of Liquid Oxygen is being imported with orders and delivery schedule for 5,800 MT finalized and 2,285 MT of LMO being imported from the UAE, Bahrain, Kuwait and France, a part of which has already arrived.Concentrators, tankersIndia has also sanctioned the procurement of 1 lakh Oxygen Concentrators under PM Cares Fund on April 27 of which offers for 50,000 concentrators have been received from domestic manufacturers. Award for 9,800 units have been finalized with a delivery schedule of 4,800 units on May 15 and 5,000 units on May 27.?In addition, 55 bidders have expressed interest to supply 70,000 ? 75,000 units of concentrators,? the ministry said.The capacity of oxygen tankers is now 23,056 MT and their number has increased to 1681, which includes 408 converted tankers and 101 imported tankers. 248 oxygen tankers are being imported, with 101 tankers imported so far and another 58 tankers to be imported in the next 10 days while 100 tankers are being manufactured domestically.There are 901 cryogenic tanks for storing oxygen at hospitals and 11.19 lakh medical oxygen cylinders, and additional 3.35 lakh cylinders are being procured.

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Economic activity down in April, May but shock less severe than 2020: Fitch

The global rating agency said there are growing indications that the latest wave of COVID-19 infections will add to risks among financial institutions (FIs) and anticipates that the Reserve Bank of India (RBI) may introduce additional measures to support the financial sector if indications of economic stress mount.

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RBI modifies norms for undertaking govt business by private banks

The Reserve Bank on Monday came out with modified guidelines that allow sound private sector banks to undertake government business, whether at the Centre or in states. According to the modified norms, scheduled private sector banks, which are not under the Prompt Corrective Action (PCA) framework of the RBI, can undertake government business after executing an agreement with the central bank. "Scheduled private sector banks, not having agency banking agreement with RBI, but intend to handle government agency business, may be appointed as agents of RBI upon execution of an agreement with RBI. "This will be subject to the condition that the concerned bank is not under PCA framework or moratorium at the time of making the application or signing of the agreement with RBI," the central bank said in a notification. It may be mentioned that the Finance Ministry in February 2021 had lifted the embargo imposed in September 2012 on further allocation of government business to private sector

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Ahead of Market: 12 things that will decide stock action on Tuesday

?A strong hurdle still exists at the 15,050 level. If Nifty manages to sustain above it for a day or close above it, only then we may see further upside," said Rohit Singre, Senior Technical Analyst at LKP Securities.

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Crisil flags off downside risks to its FY'22 growth forecast after the second wave

CRISIL?s base GDP growth forecast for fiscal 2022 at stands at 11% but risks are firmly tilted downwards. It has projected two scenarios. One of a moderate downside where GDP growth drops to 9.8%, assuming second wave peaks by May-end. The other of severe downside where GDP growth drops to 8.2%, assuming second wave peaks by June-end.

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Portal launched for grievances in govt procurement

The Department for Promotion of Industry and Internal Trade (DPIIT) has launched an online portal to enable companies participating in government procurement to file complaints for alleged violation of the Public Procurement (Preference to Make in India) Order, 2017.The government issued Public Procurement (Preference to Make in India) Order, 2017 on June 15, 2017, to promote production of goods and services in India and enhance income and employment in the country.The order aimed at incentivising production linked through local content requirements to encourage domestic manufacturers' participation in public procurement activities over entities merely importing to trade or assemble items.According to an office memorandum of the DPIIT, stakeholders can lodge grievances for alleged violation of the order and the department can refer those to procuring entities/ministries/departments concerned through the portal on real-time basis for examination, necessary corrective action."DPIIT has launched an online portal to enable entities like suppliers/bidders participating in government procurement to lodge grievances for alleged violation of the PPP-MII Order, 2017," it said.It added that companies can register themselves on the portal and generate user ID/password for filing their online grievances."It is expected that the portal shall significantly reduce the grievance redressal time. All suppliers/bidders as well as procuring entities/ministries are advised to make efficient and effective use of the portal," the memorandum said.From July 1, the grievances will mandatorily be required to be lodged through this online portal.Earlier, the department had cancelled government tenders worth thousands of crores because of discriminatory practices being followed. Restrictive and discriminative tender practices prevent participation of domestic companies in government procurement.

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How to beat depressed debt returns via market-linked debentures?

MUMBAI: Debt returns have been rather depressed, with rates plunging to record lows. So, how does one earn more from this asset class ? at least more than the headline inflation rate? One way to do this is to buy into MLDs (market-linked debentures), now offered by the likes of Piramal Finance or Shriram Transport Finance.They aren?t alone in selling these. TPG-backed Five Star Financial and the IIFL Group have also been selling MLDs, which make a comeback after a time-gap during which the cost of debt funds hit the floor. These MLDs offer indicative yields ranging from 7.20% to 9.10% annualised for about 18-24 month maturities, dealers said."Wealthy investors are now looking short term as the interest rate cycle will likely turn after 12-18 months," said Ajay Manglunia, head of debt capital market at JM Financial. ?MLDs are gaining popularity in this environment as the absolute returns would be rewarding after factoring in the long-term capital gain tax." 82539545Individual companies could not be reached immediately.An MLD is a type of debenture that does not pay any coupon before maturity. On maturity, apart from the initial principal component, there is a pay-off, which depends on the underlying index. The returns are liked to predefined conditions mentioned in the issue, such as the benchmark bond yield or the Nifty."Investors should look at credit rating, profitability & current leverage, as all that determines the repayment ability before investing in both debt-focussed or equity focused MLDs," Manglunia said.MLDs are of two types ? principal protected (PP) and non-principal protected (NPP).?MLDs are suddenly catching investor fancy, particularly for wealthy people,? said Virkam Dalal, managing director at Synergee Captial, a Mumbai-based advisory firm. ?Wealthy investors and even family offices are willing to bet on these papers, which are billed as tax efficient and short tenure investment options in an otherwise illiquid market. You should be choosy while investing into MLDs, which carry credit and liquidity risks.?The size of MLDs is not large, at a few hundreds of crores - or even less. This creates a problem of illiquidity.Secondary market trades are thin. Over the past one month, at least half a dozen companies have tapped this route, sensing the appetite. These MLDs are generally of shorter duration tenors - within three years.Bombay Burmah Trading Corporation and Ess Kay FinCorp are double-A rated MLDs with credit enhancement, an additional feature.Since the bond doesn?t pay a coupon and has a redemption premium dependent on an underlying condition, the price of the bond moves in a similar pattern to that of a Zero-Coupon Bond.The usual practice in the market is that the premium at which the bond is sold is considered a capital gain and taxed according to the Capital Gains Taxation Norms. MLDs are usually sold after holding them for a period of at least one year and before the final fixing date so as to avail the LTCG taxation benefit.

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RBI's relief measures to only delay stress for financial institutions: Fitch

RBI rolled out last Wednesday a slew of measures including a loan restructuring scheme to help lenders tide over mounting bad loans and give some borrowers more time for debt repayment.

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Sebi proposes segregation and monitoring of collateral at client level

The regulator has proposed to put in place a framework to ensure identification of each client?s collateral.

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