Markets may be edgy; Vodafone Idea, Reliance shares in focus

MUMBAI: Indian markets are likely to be on the edge on Monday following global peers. Trends in the SGX Nifty suggest a negative start fo Indian benchmark indices.

On Friday, the BSE Sensex ended at 38,357.18, down 633.76 points or 1.63%. The 50-share index Nifty was at 11,333.85 shedding 193.60 points or 1.68%.

Asian shares were on the defensive on Monday as investors grappled with sky-high valuations against the backdrop of a global economy in the grip of a deep coronavirus-induced recession while oil prices dropped sharply.

World shares hit a record high last week as central bank stimulus drove asset valuations to heady levels. The rally has since cooled as tech stocks sold off while worries over patchy economic recovery dogged investors.

Promoters of Vodafone Idea Ltd are staring at a sharp erosion of their shareholding if the telco’s fundraising plans bear fruit, given the company’s relatively low market value. The cash-strapped firm has tapped several private equity investors, including Blackstone and Apollo Global, according to a Mint report. The company is expected to make an announcement today.

Reliance Industries Ltd on Sunday released details related to carving out its oil-to-chemicals business into a separate entity, six months after it first announced the proposal as a precursor to a stake sale. According to the plan, RIL’s oil-to-chemicals assets, including its refining, petrochemicals, fuel retail (majority interest only) and bulk wholesale marketing businesses, along with its assets and liabilities, will be transferred to a new unit.

Tata Steel’s production level has now recovered to 100% as the company sees a revival in domestic demand in the current quarter led by a good monsoon and rural economy, its CEO and Managing Director T.V Narendran has said.

The government will provide guidance on employee protection, asset stripping and business continuity in Bharat Petroleum Corp Ltd (BPCL) to potential acquirers of the company only at a later stage of bidding, according to privatisation rules issued by the disinvestment department. The government is selling its entire 52.98% stake in India’s second-largest fuel retailer and third-biggest oil refiner.

In commodities, oil prices dropped more than $1 a barrel, hitting their lowest since July, after Saudi Arabia made the deepest monthly price cuts for supply to Asia in five months.

Fading optimism about demand recovery amid the coronavirus pandemic also weighed. US crude fell 1.3% to $39.24 a barrel. Brent crude skidded 1.1% to $42.16.

Action in the forex market was muted.

In currencies, the dollar was flat against the yen at 106.27 ahead of a heavy week of macroeconomic data with figures on household spending, current account and gross domestic product due on Tuesday.

The euro held at $1.1838 while the British pound was a 0.3% weaker at $1.3241 ahead of a new round of Brexit talks with the European Union on Monday.

Reuters contributed to the story.

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