Markets record a flurry of positive activity amidst falling infection rates; Tata Sons acquires a majority stake in Big Basket. It’s business as usual as Finance Minister chairs important GST Council meeting.
The Nifty 50, India’s blue-chip index, climbed north to a record high today as financials and materials stocks gained ahead of a key indirect tax related meeting by the country's finance minister Nirmala SItharaman later in the day.
Adding more optimism that the country may be slowly, but surely, turning a corner in its fight against the second wave of the pandemic, was the recorded lowest daily rise in infection rates since April 14. The infection rates were at 186,364 but the death rate rose to around 3,660. The infection rate on Thursday was recorded at 211,298 still the world's highest daily rise, but nearly half the daily infections it recorded earlier this month.
The NSE Nifty 50 index was up 0.65% at 15,437.05 by 0347 GMT, while the benchmark S&P BSE Sensex was 0.53% higher at 51,383.43. Both the indexes have gained around 2% for the week.
The core reason for this spike in the Nifty50 perhaps lies behind the fact that finance minister Nirmala Sitharaman will be chairing the GST Council (GST) meeting in New Delhi. One of the subjects on the agenda could be a possible reduction in the tax rate on Covid medicines and ways to make up for a revenue shortfall in various states.
READ MORE ON INDIA & ECONOMY:
The Reserve Bank of India (RBI) said the economy had not moderated as much as it did during the first wave of the coronavirus, but uncertainties might act as a short-term deterrent and private demand would be key to revival.
Despite the stress caused by the pandemic the markets have largely been cautiously optimistic, and this illustrates the presence of strong fundamentals that were put into place during the first wave of infections when the government stayed pro-active through reforms, stimulus and careful activation of strategies. ICICI Bank Ltd and HDFC Bank Ltd were among the top boosts to the Nifty 50, gaining 0.8% and 0.6%, respectively. Underlying a sort of consistency in performance ICICI has risen for the last five sessions out of eight.
Mahindra & Mahindra are set to report results later in the day.
In another sign that business will go on it was reported that India’s Tata Sons has acquired a majority stake in Alibaba-backed online grocery seller BigBasket. It is believed that the deal is worth a reported $1.2 billion giving India's largest conglomerate 60-63% stake in the e-grocer.
The transaction, which is a mix of a primary and secondary sale of shares, will provide a full exit to two of Big Basket’s biggest investors, Chinese e-commerce giant Alibaba and scandal-hit private equity firm Abraaj Group. Tata plans to take Big Basket public by 2022 as part of the deal terms. This is being touted as one of the biggest ever mergers and acquisitions (M&A) deals in the digital economy. Big Basket’s last-round valuation was $1.2 billion.
Across Asia the markets were also in a state of buoyancy. Sentiment has remained optimistic amidst signs that the US is set to play a leading global role in the fight against the pandemic with a multi-trillion dollar spending spree by the Biden administration. Amidst this news, equities were on course for a seventh day of gains in the broader Asian market.
With respect to the performance of the Indian states, ratings agency ICRA have surmised that their fiscal outcomes are likely to vary considerably this year depending on the impact of COVID-19 infections, restrictions and vaccinations on the local economy.
ICRA added that state governments had projected some "welcome fiscal consolidation" for the current 2021/22 budgets after the pandemic-induced disruption of 2020/21.
"However, most of these budgets were published before the second surge in COVID-19 infections, which has reignited uncertainty regarding the growth and fiscal outlook," the agency said.
Most Indian states have imposed restrictions although there has been no national lockdown imposed as in 2020.
All eyes and ears will now be glued to the post GST council meeting declarations by finance minister Nirmala Sitharaman.