The start of the May series has hit where it hurts the most. Volatility returned, as global markets are staring at a fresh trade war between China. The U.S. Markets crashed as US Secretary of State Mike Pompeo claimed to have a significant amount of evidence connecting the coronavirus to a lab in the Wuhan region of China.
Back home, wait for the stimulus package continues, as India enters lockdown 3.0 with partial exemption issued in orange and green zones.
Intraday, the market went completely flat, sobering the mood post the highs of April. Sensex closed 5.94% down at 31,715.35 while Nifty crashed below 9,300 with a loss of 5.74%. All the indices except Pharma closed in red. Cipla (up 3.77%), Bharti Airtel (up 3.54%) and Sun Pharma (up 0.22%) were the major gainers while ICICI Bank (down 11.07%), Hindalco (down 10.98%) and Vedanta (down 10.72%) fall the most.
Reliance Industries Limited: Elephant put on a fast lane
RIL's 'going debt-free' effort is garnering most of the attention of the investors. Within a week of announcing a deal with Facebook, yet another boost came in the form of Silver Lake investing $750 million in Jio platform. Silver Lake investment comes at a premium of 12.5% to the equity valuation at which Facebook invested.
Apart from global giants, like Silver Lake and Facebook, seeing exciting opportunities in its Jio Platforms Entity, RIL's recently announced rights issue is expected to fetch Rs 10,370 crore to the company.
While the FB stake sale in Jio is expected to fetch Rs 43,600 crore; A Joint venture with BP is also in pipeline for the company, estimated to be signed for Rs 7,000 crore.
Reliance Industries Limited has so far remained committed to its promise of going debt-free by the end of 2021. RIL's consolidated debt stands at Rs 1.87 lakh crore. While new deal announcements are coming at a break-neck pace, its potential deal with Saudi Aramco also remains remains a prospect
Auto industry: Greenshoots, if any, stay far, far away!
The mood of the domestic automobile sector continues to remain grumpy. The industry has received permission to operate its plants but the situation remains far from ideal.
The fact is, Auto industry remains crippled without its fully functioning component industries; i.e. spare parts, tyre, steel manufacturers. Highlighting the importance of the resuming supply of auto parts, the industry has now asked for the complete relaxation of the Covid-10 lockdown for its subsidiaries.
Apart from supply disruption, the auto industry continues to stare at muted demand. It went through a shocker with zero April sales. With the lockdown extended again, the timeline to commence regular operations is going to get pushed for dealerships and further impact demand.