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Jubilant Life Sciences share price up 83% since March, inks pact with Gilead for potential coronavirus cure

The rally that pharmaceutical companies have witnessed on Dalal Street in the past few months has seen a lot of the stocks jump manifold, among these, Jubilant Life Sciences has recorded the second-best performance, up 83% from its recent low. The scrip traded at a 52-week-low value of Rs 234 per share on the last day of March and since then has been galloping northward, to now trade at Rs 482 apiece. What could further help Jubilant Life Sciences stock is the firm’s new deal with Gilead Sciences, which will see the pharma major register, manufacture and sell Gilead’s investigational drug, remdesivir, a potential therapy for coronavirus in 127 countries including India.

Jubilant Generics Limited, a subsidiary of Jubilant Life Sciences has entered into a non-exclusive license agreement with Gilead, the company said in a regulatory filing on Tuesday. Jubilant Life Sciences will now be able to register, manufacture and sell the drug, that is being touted as the potential therapy for coronavirus, in 127 countries. “Under the licensing agreement, Jubilant will have the right to receive a technology transfer of the Gilead manufacturing process to scale up production to enable expedited access of the medicine to Covid-19 patients upon approvals by regulatory authorities in respective countries,” it said.

The move, according to analysts, would help the stock. “It will work in favor of Jubilant Life Sciences, as technicals suggest a higher high higher low chart formation is in progress. It is strongly bullish. The next target will be 480-508,” Vishal Wagh, Research Head of Bonanza Portfolio told Financial Express online. Remdesivir, an investigation antiviral by Gilead has received an Emergency Use Authorization by the USFDA, which will help in a broader use of the drug on people suffering from coronavirus. “ The EUA is based on available data from two global clinical trials – US National Institute for Allergy and Infectious Diseases’ placebo-controlled Phase 3 study in patients with moderate to severe symptoms of COVID-19, and Gilead’s global Phase 3 study evaluating remdesivir in patients with severe disease,” Jubilant Life Sciences said.

Jubilant Life Sciences has a board approval to separate the Life Sciences Ingredients business. “The separate listing of Jubilant’s two business segments is expected to unlock value even as an NCLT approval and the demerger could now be delayed. With the pharma business expected to deliver steady growth and the LSI business expected to recover aided by an improved demand & pricing scenario for key products, the medium-term outlook remains positive,” said analysts at JM Financial with a buy rating on the stock and a target price of Rs 705 per share.

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Facebook, Apple, Google stocks on wish list: Indian investors’ interest soars in US stock market

More and more Indian investors have begun investing directly in the United States stock markets this year, in the hunt for overseas equities exposure and geographical diversification of portfolios amid a freefall in domestic share markets. Starting the trading journey in a foreign stock market has always been a fraught task but with new age investing methods making it less taxing, those FAANG stocks that investors always wanted are rapidly becoming a part of their portfolios. Stockal, a platform that enables investments in a diverse set of global assets from a single account, saw over 17,000 retail investors from India register on its platform.

“In September-October last year we saw interest from people who purely wanted to diversify their portfolio. During this time investments worth $2,000-$5,000 were coming; from January though, the median investment went up to $8,000-$9,000. This was what they were sending to their US brokerage accounts,” Sitashwa Srivastava, Founder and CEO, Stockal Inc, told Financial Express Online. January onwards, investors have been more frequent on Stockal’s platforms sending in more and more money to their US brokerage accounts where they invest in various instruments of various sizes.

Crossing the Chasm

Outward remittances under the Liberalised Remittance Scheme (LRS) for Indian residents have also risen, the RBI data shows. LRS remittances in the month of February — the latest month for which the data is available with the RBI — for investments into overseas debt and equity markets rose to nearly $30 million, from $26 million a month ago. A year ago, In February 2019, the amount remitted for investment in equity and debt stood at $24.5 million. In a similar trend, Stockal saw investments worth Rs 22 crore in four months during September-December 2019. This amount rose to as much as Rs 69.75 crore in just two months of March and April of 2020.

Indian asset management company Motilal Oswal has also seen the demand for international investment options. “We have seen high demand for international funds over the last 6-12 months. We have been educating our investor base on the benefits of International diversification – which is relatively new but could be a part of every investor’s portfolio in the long-run,” Pratik Oswal, Head – Passive Funds, Motilal Oswal Asset Management Company, told Financial Express Online. Pratik Oswal said that a good portion of their investor base has been looking to invest 10-15% of their equity corpus into international funds. Motilal Oswal’s recently opened S&P 500 index fund. The NFO saw over 50,000 applicants over a short period.

Why is Uncle Sam so lucrative?

The US equity markets have a wide range of offerings and some items that an Indian consumer depends on are listed in the United States. “A lot of technologies we use as consumers in India don’t have any listed companies from India in which we can invest. For example, we use Amazon for shopping, Android or Apple phones, we use google search, use WhatsApp, Instagram, Facebook for social media, Netflix Youtube and Prime for entertainment but we can’t participate in any of these trends as investors in India because none of these companies are listed here. The US market provides a lot of such unique investment opportunities that represent new consumption trends,” said Raunak Onkar, Fund Manager, PPFAS Mutual Fund. Onkar said that a percentage of an investor’s portfolio can be allocated to take advantage of such opportunities.

More than just diversifying the egg baskets

Investing in foreign stock markets is largely about diversifying investment portfolios, however, the recent trend has more than one justification. “As 2020 started more diversification was on the mind so that one idea, the dollar was also marching up so people wanted to send money out while it was rising,” said Sitashwa Srivastava. The surge in new registrations for Stockal has been aided by these reasons coupled with the firm’s growing customer base. Investing in the big names could also be one of the reasons with half the population investing using Stockal’s platforms hunting the big names.

The low performance of Indian mutual funds has also pushed investors towards exploring other avenues, said Pratik Oswal. “The rupee has fallen 4.5-5% every year over the last decade and is expected to weaken in the future too. As a hedge against this devaluation – international funds offer two advantages – buying some of the best companies out there and buying the dollar. Companies like Facebook, Amazon, Google, Netflix etc. have become household names in India over the last decade,” he added.

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FPIs invest Rs 15,958 crore in first week of May

Reversing their two-month selling streak, overseas investors pumped in a net Rs 15,958 crore in the Indian capital markets in the first week of May. As per latest depositories data, foreign portfolio investors (FPI) infused a net Rs 18,637 crore in equities, but pulled out a net Rs 2,679 crore from the debt segment between May 1-8, taking the cumulative inflow to Rs 15,958 crore.

The latest inflow comes after two consecutive months of huge withdrawls.

In March, FPIs had withdrawn a record amount of over Rs 1.1 lakh crore on a net basis, while Rs 15,403 crore was pulled out in April from the domestic capital markets (both equity and debt).

“Despite uncertainty looming large over the severity of the possible impact of coronavirus pandemic on the global as well as Indian economy, FPIs surprisingly changed their stance this week as they turned net buyers in the Indian markets,” said Himanshu Srivastava, senior analyst manager research, Morningstar India.

The recent investment could be attributed to India doing fairly well compared to many other countries in terms of containing COVID-19 pandemic from spreading aggressively, Srivastava said.

In addition to that, measures announced by the government and the RBI periodically to revitalise the sagging economy would have also resonated well with investors, he added.

However, he cautioned that though it is a welcome shift in FPIs’ investment pattern, it would be premature to term it as a change in trend as this could be short-term buying given the relatively attractive valuations.

The growing fears of a prolonged global economic slowdown has triggered a risk-averse environment with investors taking flight to safety, he said. Harsh Jain, co-founder and COO at Groww pointed out that “we are seeing more tensions rise globally as Trump threatens action against China…Such news does affect the global investor’s sentiments.”

Going forward, Srivastava said FPIs would track how selective relaxations in the lockdown and gradual opening up of the economic activity in the country plays out.

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SEBI rebukes Franklin Templeton after CEO’s comments: ‘Focus on returning investors money’

Market regulator Securities and Exchange Board of India (SEBI), late Thursday night advised Franklin Templeton to focus on returning investor’s money after the fund house decided to wound up six of its debt mutual fund schemes. The comments from SEBI came soon after Franklin Templeton’s President and CEO, Jennifer Johnson partly blamed a SEBI rule from 2019 for the eventual closing of the debt fund schemes. SEBI rebuked the claim made by Franklin Templeton and said that since the credit events of September 2018, a need was felt to change the regulatory framework for mutual funds to safeguard investors’ interest and maintain the robustness of their investments.

“It was observed that unlisted debt securities, particularly bespoke securities in which only a single investor invested, suffered from both forms of opaqueness: opaqueness of structure and true nature of risk on the one hand and lack of ongoing disclosure in respect of financials of the issuer on the other,” SEBI said. The market regulator said that in order to address issues and improve transparency and disclosure of investments in debt securities made by mutual funds with money entrusted to them by investors, SEBI had constituted various working groups.

The working groups constituted by SEBI, consisting of representatives from AMCs, industry and academia, who were to review the risk management framework with respect to liquid schemes and to review the existing practices on valuation of money market and debt securities. “Further, an internal working group was constituted to, inter-alia, review prudential norms for Mutual Funds for investment in various debt and money market instruments. The analysis along with recommendations of the working groups were placed in a meeting of Mutual Fund Advisory Committee (MFAC) held in June, 2019,”SEBI said.

The market’s regulator in the late evening press release said, “MFAC had made several recommendations for prudential norms for Investment in Debt and Money Market instruments by Mutual Funds including investments only in listed NCDs and Commercial Papers (CPs) in the interest of greater transparency and accountability.” The MFAC, led by former SBI boss Arundhati Bhattacharya also had Franklin Templeton’s India head, Sanjay Sapre on the committee, according to SEBI.

“Despite the regulations being clear, some mutual fund schemes chose to have high concentrations of high risk, unlisted, opaque, bespoke, structured debt securities with low credit ratings and seem to have chosen not to rebalance their portfolios even during the almost 12 months available to them so far,” SEBI said while asking franklin Templeton to focus on returning the money of investors as soon as possible=, but refrained from setting a timeline.

Franklin Templeton had earlier last month announced wounding up of six debt fund schemes and blocked redemptions indefinitely. The closed funds include — Franklin India Low Duration Fund, Dynamic Accrual Fund, Credit Risk Fund, Short Term Income Plan, Ultra Short Bond Fund and Income Opportunities Fund. Johnson, in an earning conference call had said that the 2019 order by SEBI orphaned one-third of its funds, which led to the eventual wounding up of the six schemes.

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