August was a busy month with 19 deals worth ~USD 8.1bn being executed (vs 9 deals worth ~USD2.9bn in July), notable ones being ICICI Bank / HDFC Ltd QIP (~USD2bn each), Bandhan’s promoter stake sale (~USD1.4bn) & Axis Bank QIP (~USD1.3bn).
● GST : Based on the monthly PIB release, total GST collection was at Rs 865bn for July compared to Rs 875bn in June. Gross GST collections in 5MFY21 were at Rs 3.6tn-a contraction of 30% over 5MFY20. CGST collection for July was Rs159 bn (June: Rs161 bn), SGST was Rs211 bn (Rs214 bn), IGST at Rs423 bn (Rs426 bn), and compensation cess was at Rs72 bn (Rs73 bn). After allocations from IGST, CGST for July was Rs341 bn (June: Rs395 bn) and SGST was Rs357 bn (June: Rs403 bn). Domestic GST contracted 8.2% in July.
● GST Council Meet: Auto industry was disappointed after the GST Council didn't cut rates on 2W, especially after the Finance Minister's comment on 2-wheelers not being demerit / luxury goods. In response to states plea to release compensation cess shortfall of ~Rs2.4trn, the centre gave the states two options, both involving the states to borrow from the RBI
● Restructuring of Loans : RBI permitted a one-time restructuring of loans wherein the restructured loans remain “standard assets,” unlike earlier, when any restructured debt would be considered a “non-performing asset”. Recognizing that these restructured assets have higher probability of turning nonperforming, banks have been asked to provision to the tune of 10% of the post-restructured debt.
● Monsoon: After an erratic July, August witnessed excess rainfall of 26%, highest print since 1901 (when the weather office started recording). Rainfall is already at a record in states of Maharashtra, Madhya Pradesh, Gujarat, Odisha
● Covid 19: India recorded its highest single day increase in new COVID-19 cases at >80,000 in end August which was also the highest daily case load reported by any country. Daily new COVID-19 cases have averaged ~64k+ in August vs ~36k in July. Globally India has the third highest number of deaths at ~65k behind the US and Brazil. However, the mortality rate has been trending lower at ~1.8% (vs 2.2% in end July) while the recovery rate continues to pick up ~77% (vs ~62% in end-July). COVID-19 continues to broaden its geographical reach within the country.
● Unlock 4.0: Centre provided further relaxations under Unlock 4.0 in non-containment zones - Metro rail will be allowed from 7 Sep in a graded manner, no restrictions on inter / intra-state movement of people and goods, social / sports / cultural / religious / other congregations will be permitted with a ceiling of 100 persons from 21 Sep. However, schools, colleges, cinema halls, swimming pools, theatres (except open-air theatres allowed from 21 Sep) will still remain closed
● Earnings : Delivered earnings by companies in 1QFY21 have fallen YoY and are amongst the weakest they have been for the last several years. Yet, 1QFY21 is also amongst the best (in recent times) in terms of earnings beats, suggesting companies (at least the larger ones) seem to have coped with the lockdowns better than expected, especially in terms of controlling costs.