Under the 'feel good' impact, the market which was limping yesterday, staring at a fresh round of correction, suddenly turned into a beast to contend with. Small & Mid-cap space started the rally and after some initial apprehension, even the Large caps and financials also caved in by end of the day.
Sensex closed 767 points up while Nifty closed above the level of 9,100. Small & Mid-cap stocks also continued their good run with gains of 0.70% and 0.95% respectively. Zee Entertainment (up 20.00), Reliance Industries (up 9.83%) and Asian Paints (up 5.27%) were the major gainers while ONGC (down 5.62%), Vedanta (Down 2.55%00) and L&T (Down 1.71%) were the major losers.
What is the impact of the Reliance Jio-Facebook deal?
Facebook’s $5.7 billion investment in Reliance Jio came at a time when oil-based economies are under pressure due to the crash in crude prices. It has derailed RIL’s much-anticipated deal with Aramco.
This deal with Facebook has also brought RIL's debt reduction plan back on track. However, the implications of this deal are far-reaching, with the potential to revolutionize the entire telecom, media, DTH and E-commerce industries in India. Importantly, It once again outlined India's importance as an emerging market in the pro-COVID-19 era.
Key takeaway: The significance of this deal can be summed up in words of renowned business tycoon Anand Mahindra. He tweeted: "Jio’s deal with Facebook is good not just for the two of them. Coming as it does during the virus-crisis, it is a strong signal of India’s economic importance post the crisis. It strengthens the hypotheses that the world will pivot to India as a new growth epicentre. Bravo Mukesh!"
Restarting the economy, one step at a time:
Preparing for life after lockdown, the government has made fresh exemptions for industries, operating from the green zones.
The FMCG companies have received permission for starting their production of essential category products like food, home care and personal care. On similar lines, auto manufacturers, having plants in green zones are also exempted from the lockdown.
Among other industries, Cement and auto ancillaries including tyre manufacturers have also resumed their operations where restrictions are lifted. However, no restrictions are lifted for companies operating from yellow or red zones.
For time to come, more than streamlining the operations at the plant, re-establishing the broken supply chain and crossing logistical hurdles are going to be the key challenges that the industries are going to face. The operations are expected to be completely streamlined only by the second half of the financial year 2021.
Key takeaway: While lockdown was temporary, its effects are going to linger for a long time to come. Though companies are permitted to restart, their dealers or suppliers operating from red or yellow zones are not yet given any such exemptions. Movement of products also remains restricted as the movement of trucks still remains restricted due to the lockdown.