India stocks drop as second-wave worries drag Asian markets

Bloomberg

India stocks declined as the number of coronavirus cases continued to rise even as the economy gradually reopens for business. A second wave of infections in China was a drag on the sentiment in the region.
The S&P BSE Sensex was set for its steepest drop in four weeks, falling 2.3% to 32,999.44 as of 12:30 pm in Mumbai. The benchmark index has completed its worst week in four, falling 1.5%. The NSE Nifty 50 Index lost 2.2% on Monday.
“Factory output data, negative global cues and concern around India’s rising coronavirus cases are dragging down the market,” said Anita Gandhi, an investment adviser at Arihant Capital Markets Ltd. in Mumbai.
India has allowed private companies, factories and shops to resume partial operations even as Covid-19 cases continue to rise and are now among the highest in Asia. Wholesale prices in May contracted 3.21 percent from a year earlier, government data shows, exceeding the 1.2% drop predicted by economists in a Bloomberg survey.
“Fear of the virus spreading as the economy opens up and volatility in global markets will play a critical role,” said Ajit Mishra, vice president of research at Religare Broking Ltd. in Mumbai. Investors will also watch for progress in the southwest monsoon, which waters more than half of India’s farmland.
Widespread rain is expected in parts of country’s west coast and northeastern region during the next five days, the weather office said. As an extended reporting season continues, 12 out of 39 Nifty 50 companies that have reported quarterly results so far have beaten or matched analyst estimates.
The yield on the most traded 6.45% 2029 bond dropped by one basis point to 5.98%, while the rupee weakened 0.4% to 76.1325 per US dollar.
Reliance Industries Ltd. fell 1.2% as shares of India’s largest company sold in a rights offer began trading. Shareholders got one rights share for every 15 held, at 1,257 rupees each, lower than last week’s closing of 1,588.80 rupees.
Investors who bought into the $7 billion rights have to pay in installments. A 314.25 rupees-per-share amount was due May 17, with a further 314.25 rupees apiece to be paid by May next year, and the balance by November 2021.
The partly-paid up stock traded at 688 rupees on the NSE at 9:52 am, up 6.5% over its previous close, estimated at 646.05 rupees. The stock briefly hit an upper circuit of 710.65 rupees in early trade.
The previous close is arrived at by adding the first installment of 314.25 rupees to the difference between Friday’s closing price (1,588.80 rupees) and the rights price (1,257 rupees). That works out to 646.05 rupees.
“The rights shares are attracting interest from small investors, who have to shell out less for the partly-paid stock versus the regular Reliance shares,” said Premal Sanghvi, a remisier — a broker paid on commission — at Sharekhan by BNP Paribas in Mumbai. “With the money that Jio is attracting, retail investors are bullish on Reliance.”
A Texas-based private equity firm and a fund backed by luxury retailer LVMH added $850 million to the surge of investment in Jio Platforms Ltd., the telecom and digital services business of Reliance, according to separate statements dated June 13. Reliance has raised $13.7 billion from a clutch of well-known global investors since April.