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Asian stocks grind lower as focus shifts to Georgia Senate runoff

Asian shares edged lower on Tuesday amid uncertainty about Senate runoffs in Georgia, which could have a big impact on incoming U.S. President Joe Biden’s ability to pursue his preferred economic policies.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.05%, pulling back from a record high. Australian stocks fell 0.26%. Chinese shares erased early losses and rose 0.52%. In Hong Kong, China Mobile, China Unicom, and China Telecom rallied by more than 6% after the New York Stock Exchange abandoned plans to delist the companies’ shares from its bourse.

Japanese shares lost 0.34% after a spokesman said the government will reach a decision on a state of emergency for Tokyo and surrounding cities on Thursday to curb coronavirus infections.

U.S. S&P 500 stock futures edged up 0.03%. Euro Stoxx 50 futures were down 0.39%. German DAX futures fell 0.34%, and FTSE futures fell 0.26%. Oil futures were little changed in cautious trade as investors awaited a meeting later on Tuesday where major crude producers are set to decide output levels for February.

In the United States, control of the Senate is at stake with Tuesday’s dual runoff elections in Georgia. A Democratic victory in both races could tip control of the Senate away from Republicans, but both contests are very tight and the results may not be immediately known, which could lead to a repeat of the chaotic vote re-counts after the U.S. presidential election last year. “2021 starts with a bang with pivotal political and economic news for markets to digest. The undisputed highlight will be the result of the Senate seat run-off elections in Georgia,” James Knightley, chief international economist at ING, wrote in a research memo.

“If the Democrats win both seats this should lead to the most substantial 2021 fiscal stimulus. Nonetheless, it could be the excuse for a near-term consolidation in risk markets after a strong post-election rally.”

Uncertainty about the Georgia vote and worries about rising coronavirus infections sent Wall Street sharply lower on Monday. The Dow Jones Industrial Average fell 1.27%, the S&P 500 lost 1.49%, while the tech-heavy Nasdaq dropped by 1.48%. Outgoing Republican President Donald Trump’s call to pressure Georgia’s top election official to “find” votes to overturn his loss to President-elect Biden in the state has also unnerved some investors.

The House and the Senate are scheduled to certify Biden’s election win on Wednesday, but some Republicans have pledged to vote against this and thousands of Trump supporters are expected to converge on the capital in protest.

The MSCI’s broadest gauge of global stocks was unchanged, sitting just below a record reached in the previous session. Increased risk aversion helped the dollar index rebound from a 2 1/2-year against a basket of major currencies, but moves were subdued at the start of the year.

The British pound bought $1.3591, recovering some of Monday’s losses after Prime Minister Boris Johnson ordered a lockdown to try and slow a fast-spreading coronavirus variant.

U.S. crude futures were little changed at $47.61 a barrel, while Brent futures edged down by 0.1% to $51.04 per barrel. Major oil producers will meet later on Tuesday to decide on output levels for February after talks broke down the previous day. Gold was slightly lower. Spot gold fell 0.16% to $1,939.25 per ounce.

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RIL share price gains 1.5% today after Reliance-BP start gas production from Asia’s deepest project

Reliance Industries Ltd (RIL) share price gained 1.5 per cent to Rs 2,022 apiece in the morning deals on BSE today, taking the total market capitalisation to Rs 12.74 lakh crore. On Friday, after market hours, Mukesh Ambani-led Reliance Industries and BP announced the commencement of gas production from an ultra-deep-water gas field in block KG D6 R-Field of Krishna Godavari basin. In another development, the oil-to-telecom conglomerate will set up the ‘Greens Zoological Rescue and Rehabilitation Kingdom’ in Jamnagar district. MK Das, Additional Chief Secretary to the chief minister said at the virtual conference to mark ASSOCHAM foundation week on Friday, that this will be one of the world’s biggest zoos in terms of number and species of animals and spread over 250 acres in Jamnagar, according to PTI.

Around 9.55 AM, RIL shares were trading 1.3 per cent up at Rs 2,018 apiece on BSE, as compared to a 0.05 per cent rise in S&P BSE Sensex. In the previous week, RIL along with Hindustan Unilever Ltd witnessed erosion from the market valuation. While RIL remained at the top in the ranking of most valued firms last week. RIL share price hit a 52-week low of Rs 867.82 apiece on March 23 on the back of COVID-19 induced lockdown. The stock rose to Rs 2,368.80 apiece, an all-time high, in September this year. With today’s gain, RIL shares are up 133 per cent from March lows.

Earlier this month, during the India Mobile Congress event, Reliance Industries Ltd (RIL) chairman Mukesh Ambani pitched for policy interventions to shift 30 crore 2G users to 5G in India. Ambani also said that the Indian economy will soon bounce back and prove cynics wrong by becoming a $5 trillion economy. Ambani also announced that Reliance Jio will launch 5G services in the second half of 2021 in India, which will be powered by the indigenous network, hardware and technology components.

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PVR fundamentals intact despite near-term hiccups

PVR has scheduled a board meeting on December 18 to consider raising funds through issue of equity (or other instruments) by way of QIP (or other modes). We believe that the company is adequately funded to sustain operations for 6-7 months even if occupancy remains subdued and cash burn elevated at current levels. Additional funding would help reduce debt to enable investments in organic/inorganic opportunities post-Covid, or in event of resurgence of Covid-19.

PVR had liquidity of Rs 5.5 billion as at end-October 2020. It has to repay debt of Rs 1 billion by March 2021. As per our estimate, PVR is incurring Ebitda loss of Rs 500-600 million/month and interest expense of Rs 110 million/month at present (from November 2020).

Cash burn is higher (on expected lines) versus 1HFY21, as operations have resumed at subdued occupancy pending release of key movies. PVR is adequately funded to sustain operations for 6-7 months even if one assumes cash burn to continue at the current run rate.

PVR’s gross/net debt is about Rs 15 billion/Rs 10 billion as of date; equity fund raise would reduce leverage enabling PVR to invest in organic and inorganic growth opportunities post-Covid. We note that PVR raised Rs 3 bn in August 2020 through a rights issue.

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Burger King India shares fall, hit 10% lower circuit; what should investors do now?

Burger King India share price sharply fell in the afternoon deals today after surging for the last three days. The stock fell to hit the 10 per cent lower circuit at Rs 179.35 apiece today afternoon, after rising in the morning to hit the upper circuit. In the morning deals, Burger King shares were locked in the 10 per cent upper circuit. The company’s market capitalisation has also fallen to Rs 6,844.98 crore from Rs 8,363.96 crore in the morning.

According to an analyst, the rally in Burger King India shares was beyond expectations, and the stock became much more expensive above Rs 200 levels. “The expected profit booking is on cards. The listing day high of 135 may be tested soon. Below 135 one should not hold it in the portfolio,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online.

Burger King India made stock market debut earlier this week with 92 per cent premium over the issue price of Rs 60 apiece. At the current level, Burger King shares are up 55 per cent from the listing price of Rs 115.35 per share, and 199 per cent up from the IPO price. Burger King India’s Rs 810-crore initial public offer was subscribed a massive 156.65 times during the three-day bidding process. During the IPO process, most of the research and brokerage firms had recommended to ‘subscribe’ to Burger King India IPO for the listing gains.

Out of the 12 IPOs that the stock markets witnessed so far this year, Burger King India is among the top four IPOs. From the listing day, Route Mobile shares have gained 221.6 per cent, Happiest Minds Technologies 94.7 per cent while Rossari Biotech stock price surged 94 per cent.

Meanwhile, Mrs Bectors Food Specialities’ Rs 540-crore IPO has also witnessed strong demand from investors across categories so far on the last day of the bidding.

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