Companies and Markets

Companies & Markets

M&A not real solution, says Sanyal

Even as the finance ministry is considering merger of weak banks with strong ones, Sanjeev Sanyal, principal economic adviser, said merger is not a “big solution” to the problems of state-owned lenders. “Consolidation and merger of banks can be done as one of the many things. It is not even a first order solution. The first priority is to clean up the balance sheets of banks and see that the IBC process is carried through to its logical end so that banks make recoveries,” he said.

Consumer loan rates to go up

With RBI reversing its interest rate cycle, consumer loan rates are likely to go up. While some of the banks have already hiked MCLR rates, others are likely to follow suit. This will make home, auto, personal and business loans dearer. “There is no option other than increasing lending rates as the cost of funds have gone up. Commerical paper has become costlier by 100 basis points since March. Banks are raising funds through public deposits and CDs and their cost of funds are going to further go up,” said Asuthosh Khajuria, ED and CFO of Federal Bank.

Hike to hurt growth prospects: Industry

The 25 basis points rate hike by the RBI will hurt India’s growth prospects and exhorted the central bank to revert to the policy of benign interest rates, said the industry on Wednesday.

However, a section from India Inc said the decision of the Reserve Bank (RBI) was a clear hint to the industry to push for growth by taking investment decisions, while some believe the central bank’s hawkish monetary policy stance is here to stay for a while.

IDFC Bank, Capital First shares gain on RBI nod for merger

Shares of IDFC Bank on Wednesday surged over 7 per cent after it said it has received RBI's approval for merger of Capital First, Capital First Home Finance and Capital First Securities with the company.

The stock soared 7.32 per cent to end at Rs 41.05 on the BSE. During the day, it jumped 8.49 per cent to Rs 41.50. On the NSE, the shares surged 7 per cent to close at Rs 41.05.

 Shares of Capital First also rose by 5.32 per cent to close at Rs 561.35 on BSE.

Electrosteel allots shares worth Rs 7,400 cr to lenders

Electrosteel Steels, undergoing the insolvency resolution process, has allotted equity shares worth Rs 7,400 crore to lenders as loan conversion, with SBI getting the largest chunk— about 37 per cent.

The company had on Tuesday spelt out steps to be taken for completion of its takeover by Vedanta Star, an arm of mining giant Vedanta which won the bid to acquire the stressed firm.

It has allotted nearly 740 crore equity shares to 26 lenders, out of which the country's largest lender, State Bank of India, got the largest 36.70 per cent chunk—271.61 crore equity shares.

Dealscape gets larger

After hitting a five-year low in 2017, mergers and acquisitions (M&A) saw a quantum leap this year, with May creating a new record in M&A and private equity (PE) transactions, thanks largely to the $16-billion Walmart-Flipkart deal.

The year so far has recorded 542 deals—including M&A and PE—worth a staggering $71 billion, a significant 86 per cent increase by value. This also marks the highest year-to-date values recorded.

Fund outflow of Rs 32,078 cr in Jan-May is highest since 2008

Foreign funds have turned aggressive sellers in the domestic market with over Rs 32,078 crore being pulled out in the first five months of 2018, making it the highest outflow seen in any calendar year since 2008 when FPIs pulled out Rs 41,216 crore from Indian markets.

NCLT admits Videocon case; Dhoot says banks to recover 80% debt

The NCLT on Wednesday admitted Videocon Industries under the Insolvency and Bankruptcy Code, and the debt-ridden firm is hopeful that its lenders will be able to recover up to 80 per cent of the Rs 20,000-crore debt. The company in April had approached the principal bench of the National Company Law Tribunal (NCLT) requesting it to direct all insolvency cases filed by its lenders to be heard together.

Rupee soars 23p to 1-mth high

The rupee appreciated after a two-day fall and ended at a fresh one-month high of 66.92, up by 23 paise against the US dollar, even as the RBI hiked repo rate by 25 basis points on Wednesday. Forex market sentiment was buoyed by the Reserve Bank retaining growth forecast for the current fiscal at 7.4 per cent on hopes of further boost to investment and higher consumption. A relief rally in local equities also supported the recovery momentum. However, bond markets reacted negatively, with the 10-year benchmark bond yield shooting to 7.92 per cent from 7.83 per cent.

Consolidation seen as continuing

The market ended lower in a volatile trading session. The S&P BSE Sensex fell 108 points or 0.31 per cent to settle at 34,903.21. The Nifty 50 index fell 35.35 points or 0.33 per cent to settle at 10,593.15. Selling continued as the BSE Mid-Cap index fell 1.20 per cent and Small-Cap index fell 2.43 per cent.

The market breadth was weak as 2,216 shares fell, while 483 shares rose on BSE.

Technical view