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Alok Industries stock soars 9 times in 4 months; Ambani touch takes stock from NCLT to multibagger

From bankruptcy to becoming a stock which has given investors 822% returns in the past few months, the story of Alok Industries has one name associated with it which has changed the fortunes of the firm on the stock exchanges. The name is Mukesh Ambani. Alok Industries, once a bankrupt textile manufacturer based out of Mumbai, was taken over by Mukesh Ambani’s Reliance Industries along with JM Financial Asset Reconstruction company earlier this year. Post restructuring, Alok Industries stock was listed on the bourses on February 27, at a price of Rs 14. The scrip now trades at Rs 36.15, for the first time since the 2008 global financial crisis.

Shares of Alok Industries, after listing on the bourses post-restructuring, were first caught in a severe fall that equity markets across the globe witnessed in March. Alok Industries’ shares tanked to as low as Rs 3.92 per share by the end of March. However, since then the stock has staged a smart recovery, going higher and higher with each passing day. Mukesh Ambani’s Reliance Industries along with JM Financial Reconstruction company won the bid for Alok Industries for Rs 5,050 crore, of which Rs 4,550 crore were paid by Reliance Industries. The Ahmedabad bench of the National Company Law Tribunal had in 2019 approved the joint bid.

At the end of March 2020, Reliance Industries held over 83.33 crore shares in the textile manufacturer. RIL has also infused Rs 500 crore in equity into the company since then. In the October-December quarter, Alok Industries posted a consolidated net loss of Rs 194.49 crore which was significantly less than the Rs 1,307 crore loss it posted in the same period a year earlier. Total income of the company also increased to Rs 877 crore from Rs 714 crore, on-year basis. Alok Industries owed lenders Rs 30,000 crore before heading into insolvency proceedings.

Recently, Alok Industries has been asked by Reliance Industries to manufacture PPE kits as the country fights the novel coronavirus pandemic, according to reports. Alok Industries will manufacture more than 1 lakh PPE kits per day at a cost of Rs 650 per unit, which will be at one-third the cost of PPE kits imported from countries like China.

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India Cements share price jumps over 10% as reports suggest Radhakishan Damani considers takeover

India Cements share price surged 10.5% on Wednesday morning amidst media reports of ace investors Radhakishan Damani considering a takeover of the south-India based cement manufacturer. India Cements shares opened at Rs 134 per share only to surge higher to Rs 139.30 apiece, a jump of 10.5% from its previous close of Rs 126. Radhakishan Damani has informally approached India Cement’s controlling shareholder N. Srinivasan, for exploring the possibility of a takeover, Bloomberg News reported. As per shareholding pattern publicly available on the stock exchanges, Radhakishan Damani along with his brother Gopikishan Damani holds a 19.89% stake in the firm at the end of March 2020.

Shares of India Cements have surged repeatedly whenever Radhakishan Damani has upped his stake in the company. The Avenue Supermarts promoter held just 4.69% stake in India Cements at the end of the December quarter. Reports claimed that Radhakishan Damani is not looking for a hostile takeover of the Chennai based company. Cement sector has been adversely affected by the coronavirus pandemic and the resultant lockdown but price hikes have helped the cement manufacturers improve realisations. Motilal Oswal in a recent research note said that their channel checks showed a price hike of Rs 40-80 by south India based manufacturers.

Analysts are expecting some recovery for the cement sector, primarily driven by rural India and some pent-up demand. At the present juncture the shortage of labour in urban India has hit the demand from cities. “As per our channel checks, overall sales declined ~10-15% in north/central/east regions, while it fell 20-30% in west and south regions. Faster traction in rural/semi-urban cement demand (before monsoon hits), came to the rescue for the industry while labour/liquidity shortage have led to sharp fall in non-trade sales,” said HDFC Securities in a research report.

India Cements stock price has surged 80% year-to-date and is among the few stocks that beat the March mayhem that equity markets witnessed, sending benchmark indices to their multi-year lows. Radhakishan Damani’s retail hypermarket outlet Avenue Supermarts has also successfully turned positive year to date after a sharp 29% fall between February and March. Avenue Supermarts shares have jumped 31% since their march lows.

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RBI’s ‘soft yield-curve control’: Here’s how this innovative tool with tame bond yield spikes

India’s central bank may adopt its own version of yield-curve control as it digs deeper into its toolbox to cushion the economy during the coronavirus pandemic, according to a unit of the country’s second-largest private lender. The Reserve Bank of India may buy debt at irregular intervals to tame spikes in yields as it seeks to accelerate transmission of cuts in policy rates, breaking from the hard yield-control policies followed by the Bank of Japan and Reserve Bank of Australia, A. Prasanna, chief economist at ICICI Securities Primary Dealership Ltd. in Mumbai, wrote in a report to clients.

The authority may implement “soft yield-curve control” involving “strong, sporadic interventions around specific thresholds, which may not be in keeping with any specific script,” he said. “The RBI would cap any sell-off in bonds but at the same time abstain from specifying any defined range or level.”

Whether with the use of a Federal Reserve-style ‘Operation Twist’, the European Central Bank-like cash boost to banks and open-market debt purchases, the RBI has shown to be decisive in its quest to keep rates low. Still, the gap between the most-traded 2029 notes and two-year debt is near the widest in a decade, hindering the pass through of rate cuts.

The RBI may buy 3 trillion rupees to 6 trillion rupees ($79 billion) of bonds this fiscal year to implement its plan, Prasanna wrote. The authority has bought about 1.2 trillion rupees of debt since April 1, which has helped pull down yields on the 6.45% 2029 notes by more than 50 basis points since end-January.

“The RBI should keep an intervention threshold very close to current market levels,” said Prasanna. “Actions reinforcing this premise would incentivize market participants to veer around to RBI’s thinking.”

Yield-curve control, a policy that involves purchasing, or selling, government bonds in order to target the yield on a specific maturity, has been used by Japan for years to boost economic activity and was recently adopted in Australia. Economists expect the U.S. to adopt the tool in coming months as policy makers seek to provide more support for businesses and households.

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Asian shares fall on fears virus outbreaks are rebounding

Shares were mostly lower in Asia on Monday on concern over a resurgence of coronavirus cases and pessimism after Wall Street posted its worst week in nearly three months.

Benchmarks in Tokyo, Sydney and Shanghai fell after China reported an outbreak of new infections in Beijing and reimposed precautions to prevent it from spreading. Stocks are turning wobbly as investors re-evaluate their expectations for economic growth, which many skeptics have been saying were overly optimistic.

Case numbers are still growing in various nations, including emerging economies, and without a vaccine, relaxing lockdowns and reopening travel could bring on further waves of COVID-19 cases.

Japan’s benchmark Nikkei 225 dropped 0.6% to 22,180.58. South Korea’s Kospi slipped 0.2% to 2,127.15. Australia’s S&P/ASX 200 shed nearly 0.4% to 5,826.80. Hong Kong’s Hang Seng slid 0.6% to 24,157.08, while the Shanghai Composite was little changed at 2,919.41.

”Once again, the pandemic has triggered cause for fear and doubt about the road ahead,” Hayaki Narita at Mizuho Bank said in a commentary. Rising COVID-19 cases in Latin American and parts of Asia, re-emerging ?second wave? risks in parts of the US, South Korea and China and so-called ‘cluster’ cases in Japan were adding to worries, he said.

The illness has continued to spread in countries that make up about 60% of the global GDP, noted Robert Carnell, regional head of research Asia-Pacific at ING.

”If globally, we are still in wave 1, then it is possible that without a vaccine, the big-wave is still lying out there somewhere waiting to hit,” he said.

On Wall Street Friday, the S&P 500 rose 1.3% a day after dropping nearly 6% in its biggest rout since mid-March.
It lost 4.8% for the week, snapping a three-week winning streak for the benchmark index.

Small-company stocks and bond yields rose, meaning investors were a bit more willing to take on risk again a day after the sell-off. That interrupted what had been a dramatic rally for the market as stocks sold off for three straight days as a rise in COVID-19 cases in the US and a discouraging economic outlook from the Federal Reserve dashed investors’ optimism that the economy will recover relatively quickly as states lift stay-at-home orders and businesses reopen.

The Dow Jones Industrial Average rose 1.9%, to 25,605.54 and ended the week with a 5.6% loss after slumping nearly 7% on Thursday.

The Nasdaq, which climbed above 10,000 points for the first time on Wednesday, gained 1% to 9,588.81. The Russell 2000 index of smaller companies gained 2.3%, to 1,387.68.

Despite the uncertainty, stocks have mounted a historic comeback in the past couple of months, with the S&P 500 rallying 44.5% between late March and Monday, erasing most of its losses tied to the pandemic.

Benchmark US crude oil lost 95 cents to $35.31 a barrel in electronic trading on the New York Mercantile Exchange.
It fell 8 cents to settle at $36.26 a barrel Friday. Brent crude oil, the international standard, fell 68 cents to $38.05 a barrel.

The dollar inched down to 107.19 Japanese yen from 107.37 yen. The euro fell to $1.1259 from $1.1303.

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