Morning Update for 27 August 2021

Indices at previous closing

Nifty50: 16,636 ▲ +2 (+0.0%)
Sensex: 55,949 ▲ +4 (+0.0%)
Nifty Bank: 35,617 ▲  31 (+0.0%)

In the news

Bharti Airtel to consider raising funds

The telecom major has said that its board will meet on August 29 to consider various options for fund-raising. The company said that it will raise capital through equity or debt but didn’t reveal the quantum of funds.

Analysts believe that if the capital is raised to increase capacity, at a time Vodafone Idea is losing customers, then it is a positive for the company. However, the shares of Bharti Airtel dropped by 4.4% today. Meanwhile, shares of Vodafone Idea also dropped by 6.3%. 

Foreign oil majors eye BPCL buyout

Major global oil companies are reportedly coming together to acquire the government’s 52.9% stake in the country’s second-largest fuel retailer. According to reports, the next steps in the divestment process comprise asset valuation, due diligence of the company by bidders and the finalisation of the sale- purchase agreement. 

A security clearance of the bidders may be required as the stake purchase is likely to be made through consortiums. However, details of the bidders haven’t been revealed. A complete buyout of the government’s stake in BPCL would give the buyer access to over 14% of India's oil refining capacity and 23% of the fuel market share. 

Banks better placed for bad loans

Despite the risk of rising defaults in the wake of the second wave, credit rating agency Moody’s is optimistic about the banking sector. The agency reportedly stated that tight credit underwriting and strong provisions will help banks be better prepared to prevent and withstand bad loans.

There’s a chance that bad loans, especially in the individual and small business categories may rise. However, factors such as acceleration of credit growth, accommodative interest rates and loan-restructuring schemes will continue to mitigate severe deterioration of asset quality. The Nifty Bank index has gained about 7% since the start of this fiscal year. 

Sectoral indices (August 26)

Global markets (at 8:00 am)

Fact of the day

The unit of measurement for the movement of a computer mouse is called a mickey.

Source: Kensington

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