· Pharma midcaps are on a tear
· Tata Steel is having its day in the sun
· Debate intensifies at RBI’s MPC on efficacy of yield control strategy
· Biden plans to double capital gains tax on the wealthy
Hi there. Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh.
Let’s start with a quick glance on the state of the markets.
Dalal Street looked headed for some more pain ahead as Nifty futures traded with deep cuts on the Singapore Exchange ahead of the opening of Indian markets, signalling depressed sentiment ahead. Stocks in other Asian markets also weakened in early trade following broadbased declines in US benchmarks, which dived overnight on reports that President Joe Biden was planning to double the capital gains tax. Dow, S&P500 and the Nasdaq each lost 1% . The yield on 10-year US Treasuries rose by one basis point to 1.55%. The dollar was hemmed into a narrow trading range as traders contemplated the next moves by major central banks ahead of next week’s meeting of the Federal Reserve. Bitcoin declined for the sixth time in seven days to sell at $50,500. Crude oil rose mildly as investors assessed a patchwork recovery in energy demand.
That said, here’s what else is making news.
Pharma midcaps are on a tear, gaining rapidly as investors bet on defensive stocks that are more attractively priced and have strong earnings growth prospects in the near to medium term. Nectar Lifesciences ended in the 20% upper circuit on Thursday, while Morepen Laboratories and Marksans Pharma each gained over 19%. Suven Life Sciences, Novartis India, Poly Medicure, Panacea Biotech, AstraZeneca India, Shilpa Medicare, Hikal, Lincoln Pharma, Sun Pharma Advanced Research, Alembic and Suven Pharma rose 5-13%.
But there is depressing news on the banking counter. RBI has curbed banks’ dividend paying ability for the financial year 2020-21, citing the economic cost of the second wave of Covid-19 pandemic. “Banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021, subject to the quantum of dividend being not more than 50% of the amount determined as per the dividend payout ratio prescribed,” the central bank said in a notification on Thursday.
Meanwhile, Tata Steel is having its day in the sun. CLSA said it sees upside risk to its estimates on Tata Steel and on consensus estimates after the company’s subsidiary Bhushan Steel reported higher-than-expected earnings before interest, taxes, depreciation and amortisation per tonne. The brokerage, which has a ‘buy’ rating and target price of Rs 950 on Tata Steel, said long products segment also reported strong operating earnings of Rs 500 crore. Morgan Stanley has also maintained ‘overweight’ rating with a target price of Rs 1,000.
US President Joe Biden may propose to almost double the capital gains tax rate for wealthy individuals to 39.6% to help pay for a raft of social spending that addresses long-standing inequality, Reuters reported quoting people familiar with the proposal. For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means the federal tax rates for wealthy investors could be as high as 43.4%. The new marginal rate of 39.6% would be an increase from the current base rate of 20%. This is what spooked US equities on Thursday.
And lastly, RBI’s Monetary Policy Committee is debating the efficacy of the yield curve control. While the resurgence of Covid virus dominated MPC deliberations at the last rate-setting meeting, it also saw a debate about the efficacy of the central bank’s guidance. While RBI Governor Shaktikanta Das was hesitant to commit himself on a time-bound guidance, MPC member Prof Jayant Varma declared the yield control strategy ineffective and called for action by the central bank.
NOW Before I go, here is a look at some of the stocks buzzing this morning…
Top PE firms including Carlyle Group, KKR, Advent and Baring Asia are in talks with Arun Kumar and KR Ravishankar to buy them out from their flagship Strides Pharma Science, as the serial entrepreneurs look to monetise their first public company, set up 31 years ago.
Indian Oil subsidiary Chennai Petroleum has withdrawn the sale of its corporate bonds after investors demanded a higher rate due to the likely shrinkage in refinery margins and auto-fuel consumption in view of the localised mobility curbs.
RBL Bank is the latest to reduce its lending rate. It has cut lending rates by as much as 35 basis points on various tenors across the board.
Premji Invest-backed Gold Plus Glass Industry plans to raise up to ₹2,400 crore through a mix of debt and equity to fund greenfield expansions.
Dish TV promoter & MD Jawahar Goel has offered the company’s shares as security for credit facilities availed by his elder brother and Zee founder Subhash Chandra, the latter’s office confirmed.
Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.
That’s it for now. Stay put with us for all the market news through the day. Happy investing!
