Loan moratorium, AT1 bonds, IPOs, SEBI rules among major market moving factors in the week!

Last updated: 26 Mar, 2021 | 12:40 pm

Loan moratorium, AT1 bonds, IPOs, SEBI rules among major market moving factors in the week!

The markets saw another volatile week, with the index gyrating between losses and gains in the March 22nd to March 26th period. After minor losses on Monday, the index recovered to close beyond the 50,000-mark on Tuesday. The indices had posted declines over March 24th, 25th (Wednesday and Thursday) as rise in US 10-year treasury yields, increasing Covid-19 cases globally, and potential US tax hike weighed.

The Indian equity market rebounded from 2-month lows on Friday, on the back of global macroeconomic data indicating recovery and value-buying. The indices closed the week nearly 1.7% lower, despite the pullback on Friday. Friday's gains were not enough to prevent the benchmark indices from posting their second straight weekly loss.

Newsflow about ending of loan moratorium, SEBI’s stance on AT1 bonds, rise in Covid-19 cases, FII flows and ongoing IPO’s dominated investors’ sentiments.

Top gainers and losers

  • Except Pharma & Metal, all major sectoral indices gave negative returns in the week
  • PSU, Auto & Energy indices fall 4% each, Nifty Bank & Nifty PSU decline over 3%
  • 33 Nifty Stocks post negative returns in the week; PSU companies (IOC, ONGC & Power Grid) top losers
  • Shree Cement, Tata Steel, Asian Paints, Cipla, Dr Reddy’s top Nifty gainers this week
  • Here is a quick recap of the market moving developments:

    • Loan moratorium ends: The Supreme Court has rejected the plea to extend the six-month loan moratorium offered by the Reserve Bank of India. Further, the court said that a complete waiver of interest during the moratorium will not be granted. Banks will now have to classify NPAs as per the delinquency record of borrowers, which they had not been able to since the end of the moratorium period in August 2020. According to Jefferies, Q4 results can see higher downgrade and income reversals. According to estimates by ICRA, in the absence of standstill by the Supreme Court, the gross NPAs for the banks would have been higher by Rs 1.3 lakh crore. 
    • SEBI board meet outcome: SEBI has approved several key changes in its regulations for delisting, Alternative Investment Fund, promoter reclassification, sustainability reporting and dividend policy in its board meeting. To address information asymmetry among shareholders, SEBI said that listed firms should audio and video recordings of analyst and investor meets available on their websites as well as stock exchanges within 24 hours or before the next trading day.
    • SEBI gives partial relief on AT1 bonds valuation: Sebi has announced minor relaxations in valuation norms of AT1 bonds. SEBI said that the deemed residual maturity of Basel III AT-1 bonds will be taken as 10 years till Mar 31, 2022. It will be increased to 20 years from Apr- Sep 22, and 30 years for Oct 22-Mar 23. From Apr-23, the residual maturity will become 100 years from the date of issuance of the bond. While this partial relief will help in avoiding panic redemptions by mutual fund houses, SEBI’s stance of valuing perpetual bonds as 100-year instruments remains. 
    • Tata Mistry case: The Supreme Court has upheld Tata Sons’ decision to oust Cyrus Mistry as the executive chairman of the Tata conglomerate. Tata Group shares including TCS, Tata Consumer Products, Tata Motors, Tata Steel and Tata Chemicals ended Friday’s session higher. 
    • IPOs list at discount, despite oversubscription: The week saw a reversal in trend, with even oversubscribed IPO’s listing at a discount. Anupam Rasayan (44 times) listed at a discount of 6% over its issue price. Craftsman Automation (3.82 times) listed at a discount of 9%. Kalyan Jewellers (2.6 times) listed at a discount of over 15% from issue price. Suryoday SFB (2.4 times) listed at a 4% discount. Barbeque Nation IPO was subscribed by about 6 times at the end of the third day of the issue. 
    • Fitch on India: Fitch Ratings has upgraded India’s growth projection for FY22 to 12.8% from its previous estimate of 11%, based on a stronger statistical effect, a looser fiscal policy and better virus containment.   

    Gold prices

    Gold prices continued their decline in the week to hit a on-year low. Rising US Treasury yields, appreciating US Dollar, and optimism around global recovery have weighed on gold prices.

    Check out our other analysis on important market developments!

    US markets last week: Volatile crude, bond yields, Fed commentary on investors' radar: Most of the global markets ended lower in the week, as US Treasury Yields soared to their highest levels in one-year, raising concerns of FII outflows from economies. While central banks around the world maintained their dovish policy stance to support an economic recovery, concerns about a resurgence in coronavirus infections in certain countries soured sentiments. View our analysis

    US Treasury Yield soars to one-year high: The concern is that the US Federal Reserve will have to taper its bond purchases and consider interest rate hikes due to rise in inflation, similar to ‘taper tantrum’ witnessed in 2013. ‘Taper tantrum’ is a phrase used to describe the surge in the U.S Treasury yields in 2013. The surge had come after the Fed’s announcement of future tapering of its policy of quantitative easing, inorder to reduce liquidity in the economy. Read our analysis here

    How global and Indian markets fared in 2021: Key equity market indices in the USA ended higher in February. After registering notable gains in the first 20 days, indices in the US markets fell in the last 10 days of the months. Here’s our analysis.

    Nifty Q3 earnings review: Most of the companies in the Nifty 50 index have reported better-than-estimated results in Oct-Dec 20 period, signalling that Nifty companies have left pandemic blues behind. Check our detailed review.

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