Deal momentum moderated in Oct with 8 deals of ~$0.9bn (vs 18 deals worth ~$1.6bn in Sept), notable ones being Angel Broking IPO (~340mn), Sumitomo Chemical’s OFS (~$65mn) and Mazagon Dock Shipbuilders’s IPO (~$60mn).
● Fiscal Stimulus: Second round of fiscal stimulus worth Rs730bn (~0.4% of GDP) was announced by the FM but most of it being in the form of advance or already budgeted expenditure meant smaller additional cash outgo for the govt. The measures were a mix of consumption nudge primarily focused on govt. employees and an infra push.
● US Elections- A Democrat victory is expected to allay a prolonged trade war with China, increased spending in form of stimulus and infra-push while bringing corporate taxation to pre-Republican era to 28% from current 21%. This is expected to lead to a short-term spike in yields and a mild dollar weakening.
● Make in India: The Government of India has continued with its thrust on Atma Nirbhar Bharat policy by notifying certain revisions to the eligibility criteria of PLI (production linked incentive) scheme for manufacture of API which was issued recently in Jul-2020. These revisions have been made taking into consideration the feedback received from the pharma industry. Incentives under the earlier scheme were eligible only for domestic sales of these 41 products.
However, this provision has been removed from the revised guidelines, and hence export sales of these products would also be eligible for incentives now. The responsiveness of the government to suggestions made by the industry gives us confidence about the success of these schemes.
● Bihar Elections: 71 constituencies of Bihar went to polls in a three-phase elections scheduled to end on 7th Nov (Results on 10th Nov). Voter turnout in 1st phase at ~55% was impressive, surpassing the turnout in Lok Sabha polls.
● Covid 19: The month has marked a huge flattening in the new cases curve – from 86,821 cases on October 1st to 48,268 cases on October 31st. The recovery cases has recorded a staggering 92% against 83% in September and 75% in August. India still continues to record the third highest mortality rate at 1,23,000 deaths just behind USA and Brazil. There are at least 182 Covid vaccine candidates in pre-clinical or clinical-trial stages across the globe. Of these, nine are in final human-trial stage. In India, two vaccines are in Phase-II trials and one (the Oxford University one) in Phase-III. It is widely opined by experts worldwide that vaccines are likely to reach the general public in the Q2 of 2021. Many drug makers have been more ambitious with their calculations with firms like Moderna Inc and Pfizer are eyeing the emergency-use authorization route to launch their vaccine by end of 2020. India has also as per many reports pre-ordered 600 million doses of the Covid-19 vaccine and is negotiating for another billion.