🎁 RBI's Generous Gift: Rs 2.11 Lakh Crore Record Dividend to Government

Hello reader,
Markets reacted extremely positively to the news that the RBI will ‘gift’ the upcoming government a record dividend of almost Rs 2.11 lakh crore or $27 billion. Today’s feature explores the potential consequences of the upcoming dividend on the stock market, policies and the economy.
Elsewhere, Indigo reported a profit for the first time in 4 years and further announced its foray into offering business class seats for passengers.

Markets

• Both benchmark indices recorded big gains, driven by strong performance in leading sectors like banking and automotive. The RBI announced a record dividend which is being compared to an indirect rate cut and is anticipated to lower bond yields.

• The broader market remained upbeat, supported by the composite HSBC PMI data for May, which indicated robust expansion.

Notable Gainer & Loser
Source: Moneycontrol

Adani Enterprises Ltd (NSE: ADANIENT) +8.19%

• Adani Enterprises is expected to replace Wipro in the BSE Sensex during the upcoming reconfiguration of the benchmark index. This will be the first time a company from the Gautam Adani-led conglomerate is included in the 30-share BSE Sensex index.

• According to IIFL Alternative Research, AEL's addition to the Sensex is anticipated to attract inflows of approximately Rs 1,000 crore ($118Mn) from passive funds tracking the index.

• Conversely, Wipro is projected to experience outflows of Rs 466 crore ($56 million) following its exclusion from the index.

Lupin Ltd (NSE: LUPIN) (5.06%)

• Lupin shares fell by 5 percent due to concerns over increased competition for its Albuterol Sulfate inhalation aerosol in the US market.

• This anxiety arises from US-based Amphastar receiving USFDA approval for Albuterol Sulfate. Analysts suggest that Amphastar might reduce prices by 10-25 percent to capture market share.

Yesterday’s Highlights

• JSW Group's paint business achieves profitability; and targets Rs 5,000 crore ($600Mn) sales by FY26. (Moneycontrol)

• RSIIL secures two projects valued at Rs 4,900 crore ($588Mn) from MSRDC to enhance connectivity around Pune. (ET)

• Apis, Roc Star, and Mio IV exit Star Health in a block deal worth ₹2,210 crore ($265Mn); Mio Star dilutes its stake. (Mint)

• Finvolve's maiden fund closes at Rs 100 crore ($12Mn); unveils new funds with Rs 500 crore ($60Mn) capacity. (YS)

• Reliance to enter consumer durable goods market with Wyzr brand. (BS)

• MahaRERA suspends registration of over 20,000 real estate agents. (HT)

• IndiGo is venturing into the business class segment following a record-breaking profit announcement. (TOI)

• MG Motor India partners with Vertelo to supply 3,000 electric vehicles. (ET)

• India is in discussions with Sri Lanka to acquire a graphite mine block in the country. (ET)

• Volkswagen explores a potential partnership for passenger car production in India. (BS)

• Tech Mahindra and Fuji TV sign an agreement to jointly produce content for global distribution. (Moneycontrol)

Featured Highlight

Impact of RBI's Record Dividend on Stock Market and Indian Economy

• RBI's Dividend Policy: The RBI's decision to transfer a record-breaking Rs 2.11 lakh crore ($27Bn) dividend to the central government reflects the central bank's robust financial performance, driven by factors such as higher income from forex reserves and monetary operations.

• Impact on Stock Market: The announcement of the substantial RBI dividend has positively influenced market sentiment, particularly benefiting sectors like banking and construction. This boost in confidence may lead to increased investor participation and stimulate further growth in the stock market.

• Economic Implications: The infusion of funds from the RBI dividend is expected to have significant implications for the Indian economy. Policymakers have the opportunity to utilize these additional resources to strengthen fiscal health, potentially reducing the fiscal deficit or boosting government spending to support economic growth and is a boon to the upcoming government.

• Long-term Fiscal Strategy: The government's handling of the RBI dividend will play a crucial role in shaping its long-term fiscal strategy. Decisions on whether to prioritize deficit reduction or increased expenditure will have implications for economic stability, investor confidence, and future growth prospects.

IPO / FPO / Issuances

This week’s mainboard IPO Schedule

• Go Digit General Insurance saw a 12.5% increase on its debut day of trading. (Moneycontrol)

• Awfis Space Solutions IPO was oversubscribed 4.28 times on Day 2; retail portion oversubscribed by 12 times. (Moneycontrol)

M&A / PE

• Zee seeks a termination fee of Rs 749 crore ($90Mn) from Sony for calling off the Rs 83,000 crore ($10Bn) merger deal. (ET)

• Capital Group acquires over 322,000 shares (0.5%) of IT firm Coforge for Rs 163 crore ($19.6Mn). (BS)

• Israel-based Taro’s shareholders approve merger with Sun Pharma. (ET)

• NCLT instructs IIHL to obtain regulatory approvals for the acquisition of RCap. (BS)

• Sterlite Power gets stakeholders' nod to demerge transmission business. (BS)

VC