Business News at 10:00 am on 5th June, 2024

Let’s begin, till Tuesday morning, India was debating whether the National Democratic Alliance will be able to walk the talk on ‘abki bar 400 par’ and whether the Congress will be able to hold on to its strength of 52. A couple of hours later, the 400 figure looked like a bad joke as a stunned nation was busy assessing whether the BJP would be able to form a government on its own. That hope was also dashed as soon as it became clear that the party will have to depend on at least two of its key allies, Chandrababu Naidu’s Telugu Desam Party and Nitish Kumar’s Janata Dal United. While the TDP was ahead in 16 seats, the JD(U) led in 12.

Moving to Economy news, the new government at the Centre may go slow in some key pending reforms, including in labour and agriculture as well as in privatisation of state-run firms, given the reduced majority of the National Democratic Alliance, analysts said.The BJP, which is short of the majority mark on its own, will have to carry allies together on key decisions. The NDA with 117 members is just four short of the 121 majority mark in Rajya Sabha at present. The setback in the Lok Sabha polls could make its Upper House majority tenuous over the coming months. The Modi government made several attempts to carry forward structural reforms in the economy, but had to backtrack on many occasions

Another news from Economy front, the National Democratic Alliance government, which is set to return to power for the third time albeit with reduced majority, may push capital expenditure and targeted welfare programmes while undertaking further fiscal consolidation. In the upcoming Budget session, the Centre may push pending reforms, including creating a national financial information registry, liberalising the insurance sector and further streamlining the insolvency framework. The higher-than-expected dividend of Rs 2.11 trillion from the Reserve Bank of India as against the Budget estimate of Rs 80,000-90,000 crore will let the Centre reduce its market borrowings in the current fiscal. The extra transfer by the RBI is almost 0.4% of GDP and may help the Centre bring down further to 4.8-4.9% of GDP.

Moving to Markets, volatility index India VIX witnessed its highest single-day jump in nine years, rising nearly 52% to hit an intra-day high of 31.71. The surge was seen after counting trends showed unexpected vote gains for the INDIA bloc in the general elections even as BJP-led NDA managed to cross the majority mark. The index closed nearly 24% higher at 25.89 on Tuesday. In August 2015, the VIX had risen 79.1% during intra-day trade. In the last three months, the VIX Index has shot up sharply by nearly 74%. Going ahead, market experts expect volatility to persist till the announcement of the Union Budget. The current VIX levels of around 26-28 suggests strong uncertainty and likelihood of a negative bias.

Now latest update on Adani shares, shares of Adani Group companies were dealt a heavy blow on Tuesday with their market valuation declining by Rs 3.6 trillion as the counting of votes for Lok Sabha polls showed a tighter contest than market’s expectations. The combined market valuation of all the 10 listed companies stood at Rs 15.78 trillion at the end of the trading session. The shares of Adani Group companies fell in the range of 10-22% and were among the worst hit stocks in the market. Adani Ports and Special Economic Zone and Adani Enterprises were the worst hit stocks in the Nifty index as they tumbled 21.3% and 19.4%, respectively. Eight of the 10 group firms hit their lower circuit limits during the day.

Next from banking sector, Tata Motors Finance, the vehicle financing subsidiary of Tata Motors, will be merged with Tata Capital through an NCLT scheme of arrangement, after the boards of all the companies gave their approval on Tuesday. As consideration for the merger, Tata Capital, will issue its equity shares to the shareholders of Tata Motors Finance which will result in Tata Motors effectively holding a 4.7% stake in the merged entity. Tata Capital is the financial services company of Tata Sons and is one of the largest diversified non banking finance companies in India with an assets under management of Rs 1.6 lakh crore. Tata Motors Finance which has an AUM of Rs 32,500 crore, predominantly provides financing solutions.

Lastly, let’s have a look at today’s stocks in focus- Infosys, Wipro, HAL, Tata Motors and CCI. Infosys on Tuesday announced its collaboration with Nihon Chouzai, Japan’s dispensing pharmacy chain, in order to expand healthcare access in Japan with enhanced online medication guidance services and payment solutions. On the other hand, Wipro announced the appointment of Bruno Schenk as the Country Head and Managing Director for Switzerland, effective immediately.