As the country enters the final week of the extended lockdown, a different kind of contagion seems set to disrupt the financial markets. There is a fear of a liquidity crisis in the debt markets, which could spread to the equity markets as well after Franklin Templeton voluntarily decided to shut down 6 of its debt schemes. The reason given for the abrupt closure of schemes was redemption pressure and lack of liquidity in the debt markets. Investors will be especially observant of the health of debt papers and there could be higher redemption pressure in an already delicately poised debt market. In the truncated week ahead, focus will also be on the spread of coronavirus in the country, which is yet to slow down. The number of Covid patients in India has surpassed 25,000 with the fatalities climbing to 800. Corporate earnings for the fourth quarter will also take centre-stage this week, which include heavyweights like Ambuja Cements, HDFC Life Insurance Company, Hindustan Unilever Ltd, among others. Equity markets will be shut on Friday for Maharashtra day. Let us look at the stocks that will be in focus as markets open on Monday:
- Mindtree Ltd: The software services company, now a Larsen & Toubro group, reported a 16.3% yoy decline in its net profit at Rs630.90cr for the financial year ended 31st March,2020. Mindtree's revenue, however, rose 10.6% to Rs7,764.3cr in FY20 as compared to Rs14,582cr in FY19, the company said in a statement to the stock exchanges post market hours Friday. In dollar terms, the company reported net profit at $28.2 mn in Q4FY20, while revenue for the quarter jumped 6.3% to $278.4 mn. The company said it anticipates softness in demand in FY21 due to the unprecedented COVID-19 pandemic.
- Housing Development and Finance Corporation Ltd: Mortgage lender HDFC said it has acquired 6.43% stake in debt-strapped Reliance Capital by invoking pledged shares. These shares were acquired pursuant to invocation of pledge by security trustee on behalf of the corporation, which was pledged against a loan given by the lender in its normal course of business, HDFC said in a statement to the stock exchanges on Saturday. As a result of this, the company acquired 25.27cr shares of Rs10 a piece, it said, adding that the total value of these shares are Rs252cr.
- Tata Steel Ltd: The company said its board has approved proposal to raise up to Rs5,000cr through issuance of non-convertible debentures (NCDs) on private placement basis. The funds will be primarily deployed towards repayment of debt and general corporate purposes, the steel maker said in a statement to the stock exchanges post market hours Friday.
- Dewan Housing Finance Ltd: The promoters of the beleaguered housing finance company Kapil and Dheeraj Wadhawan, accused in the Yes Bank-DHFL fraud cases, have been taken into CBI custody. Earlier, the Wadhawan brothers were placed in institutional quarantine at Panchgani since 9th April after it was found that they had traveled from Khandala in Pune district to the family's farmhouse in Mahabaleshwar in violation of lockdown for coronavirus. The Maharashtra government had earlier requested CBI to take custody of the two after their quarantine ended in Satara. The Wadhawans have also been named in the FIR lodged by CBI in the YES Bank scam. Besides that, the ED is probing the alleged quid pro quo between the two business groups and their promoters.
- Bank of Baroda: The public sector lender said it has received board approval to raise up to Rs13,500cr in additional capital for the financial year 2021. In a filing to the stock exchanges post market hours Friday, Bank of Baroda said that it had considered and approved raising of additional capital fund up to Rs13,500cr up to March 31, 2021 and beyond if found expedient. The fund raising would comprise of Rs9,000cr by way of common equity capital by various modes including QIP, etc. in suitable stages and Rs4,500 cr by way of additional tier 1/ tier II capital instruments with an inter-changeability option, issued in India/overseas in suitable tranches.
- NHPC Ltd: The state-owned electricity producer has raised Rs750cr through a private placement of bonds at 6.8% per annum for a loan tenure of 10 years. A company statement said the issue structure consists of a base size of Rs500cr with a greenshoe option of Rs250cr. NHPC said the issue was oversubscribed 3.87 times amid Covid-19 outbreak. The coupon rate of 6.8% is the lowest in the current fiscal and lower by 30 bps to the prevailing AAA rated 10 years bonds at 7.1%.
- Airline companies: Air carriers including Spicejet Ltd and Interglobe Aviation (IndiGo) have re-opened passenger bookings for flights starting mid-May. The move by the companies comes exactly a week after they were reprimanded by the civil aviation ministry for taking bookings even as restrictions on movement of people remained in force. It is not clear if the airlines have got the ministry’s approval to restart bookings.
- Torrent Pharmaceuticals Ltd: Torrent Pharmaceuticals said it issued non-convertible debentures (NCDs) worth Rs195cr on private placement basis on 24th April 2020. In a filing to the stock exchanges post market hours Friday, the drugmaker said that NCDs bear a coupon rate of 7.70% p.a. and hold tenure of three years. The debentures will mature on 24th April 2023, the company added.
- Nalco Ltd: ICICI Prudential Mutual Fund Bharat-22 ETF on Friday picked up shares worth nearly Rs59cr in National Aluminium Company (NALCO) through an open market transaction. The mutual fund purchased over 1.71cr shares at an average price of Rs 34.43/share, data from the National Stock Exchange showed. This took the total deal value to Rs58.9cr.
- IRB Infrastructure Ltd: IRB Infrastructure said its board has approved raising up to Rs2,500cr to fund ongoing and planned Capex and for general corporate purposes in the wake of lockdown due to COVID-19 pandemic. In a filing to the stock exchanges on Sunday, infrastructure company said that the funds will be raised through appropriate instruments in one or more tranches. The board approved fundraising through appropriate instruments, permitted under the applicable statute, in one or more tranches/series to the eligible investors, who are allowed to invest in or subscribe to such instruments.
The US stock markets ended higher in Friday's session as investors took solace in the passage of another round of stimulus. The Dow Jones Industrial Average rose 260 points, or 1.1% to end at around 23,775 while the S&P 500 index added about 40 points, or 1.4% to 28,36.74. the Nasdaq Composite index advanced 140 points, or 1.7%, to close at roughly 8,634.52.
President Trump signed a $484 bn stimulus package that will replenish a fund for small-business lending and direct money to hospitals and efforts to ramp up U.S. testing capacity in the fight against COVID-19. The bill will bring total federal spending on coronvirus to north of $2.7 tn. The measure contains another $320 bn to help small businesses. It also has about $75 bn for hospitals, $25 bn for coronavirus testing and $60 bn for the Small Business Administration’s Economic Injury Disaster Loan program.