Week 6

That's a big drop! 🎿

August 15, 2020

Good Morning,

Welcome! I hope you have your “Subah Kee Chai” ready and you're excited to read your weekly 10-minute digest. 

Firstly, from Subah Kee Chai, I wish you a very happy 74th Independence Day. 

This week saw major drops in a number of companies across the market as they struggle to generate output due to the pandemic. It also saw riots break out in Bengaluru, and new development plans being introduced by the Indian Government. Lastly, India cried as two cricket legends MS Dhoni and Suresh Raina announced their retirement from international cricket.  

I hope you enjoy today's newsletter,

Now let’s get into the news.

Markets

Following massive losses in European equities, the Indian equity markets took a

at the start of the week. After the UK announced its worst recession, domestic traders realized the true economic reality of the Indian markets. Over the past 5 months, small-cap shares rose significantly with valuations going through the roof. However, analysts believe these rises were merely a blanket covering the true declining economic reality. Similarly, the price of gold dropped by 4% this week as a result of the weak cues in foreign markets.  

Downhill 

A recurring theme during the pandemic has been downsizing, downfalls, reductions, contractions, and every other word that contradicts the idea of expansion. In the commercial market, a number of companies have faced a major downhill due to output significantly dropping, and costs incrementally rising. Here is a list of a few companies that were heavily affected this week:

1. Ever seen those huge buses with

"Elcher"

written on the front driving around. Well, the manufacturers

experienced a 5% drop in share price on Friday after the company reported a net loss of INR 55 Crore for the first quarter. In comparison, last year during the same quarter Elcher Motors reported a net profit of INR 452 Crore. A huge drop!

2. Similarly,

, India's largest two-wheeler manufacturer, reported a 2% drop in share price on Friday after the company reported a 95.38% decline in net profit for the first quarter. In comparison, Hero MotorCorp reported a net profit of INR 1,256.69 Crore during the same quarter last year. Once again, a major drop!

3. A world-known name in the steel industry,

of INR 4648 Crore during the first quarter of the fiscal year 2021 due to output significantly dropping. In comparison, the company had reported a profit of INR 714 Crore in the same quarter last year. Tata Steel's plants are currently functioning at 95% with hopes of returning back to full production over the next few months.

4.

(in terms of how many passengers they carry) fell by 9%, its lowest ever. As mentioned in previous newsletters, air travel has significantly reduced due to lockdown measures being imposed in several countries. While scheduled domestic travel was allowed to recommence in June, Air India has struggled to maintain the market share that it previously held. IndiGo currently holds 60% of the market, with SpiceJet sitting in second place with only 15%. Air India sits in a distant third with a 9.1% share of the airline market. This is the worst performance the airline has seen in its history, and major action is needed to boost the airline numbers in the future.

Big picture:

While the nation is slowly getting back to its feet, the world is currently on the path to face a recession as output has significantly dropped. Key industries such as retail, automobile, tourism, and airlines are some of the most heavily impacted sectors. Economists believe India will return to pre-COVID level outputs by late 2021. 

Bengaluru Riots 

Areas under the

turned into a warzone on Wednesday as angry rioters flooded the streets. 

What happened?

Reports indicate that a social media post put up by a relative of Congress MLA Akhanda Srinivasa was offensive and communally sensitive, which led to an unruly mob going on a rampage and torching vehicles. A senior police official also speculated that the riots were fuelled by opposition MLA's who envied the rising popularity of the Congress MLA. 

Major damage!

Cars were torched, glasses shattered and stones and bricks filled the streets of Bengaluru as riots rapidly grew intense on Tuesday evening. Three people were killed in police firings and a number of individuals were wounded, including 50 policemen. The violent crowd also torched police cars and stormed into DJ Halli police station. 

Following the riots, 110 people have been arrested and the social media post was taken down. 

Future Plans 

1. As part of its Indian operations,

injected an additional INR 2700 Crore bringing their total India investment up to INR 18,200 Crore. This is the second time, Deutsche Bank has infused an additional investment into India, the first being in 2019. The bank plans to expand its operations even further, with the additional capital being used to grow segments such as corporate banking, investment banking, and international private banking. This year marks the 40 year anniversary since Deutsche Bank opened its first branch in Mumbai. Since then, the Bank has become one of the largest international banks in the country with assets worth INR 1.2 lakh crore.

2. In an attempt to create greater relations, the Indian Government announced

including a USD 500 million Greater Male Connectivity Project (GMCP). This infrastructure project will connect Male with three neighboring islands: Villingili, Gulhifahu, and Thilafushi, by building a bridge covering a distance of 6.7 km. This project will significantly boost economic activity in the country by increasing employment and encouraging urban development.

Apart from this project, the Indian Government is also looking to create an air bubble with the Maldives to increase tourism as a means to generate greater revenue. Under the correct health guidelines, air travel to and from the Maldives is set to commence on the 18th of August.

India's total financial commitment to the Maldives exceeds the USD 2 billion mark and is a great step towards better relationships between the two countries.

Eye-opener:

The formation of the new partnership between the two countries will rapidly boost urban development, however, the Maldives is home to an exotic marine environment. The creation of an inter-island bridge will mean the destruction of many marine habitats. Can you think of some ways in which both Governments could promote development in a sustainable manner? Let me know in your feedback!   

Sports Special

In light of Independence Day celebrations over the weekend, this week's sports section highlights

of the last decade. As a nation, we are proud of our athletes! 

1.

Winning the ICC World Cup in 2011

 at the Wankhede Stadium (Mumbai) was arguably one of the biggest achievements in Indian sporting history, especially for our men in blue. That six from Dhoni still gives me goosebumps every time I watch it. Truly historic! 

2.

Pusarla Venkata Sindhu

, more famously known as PV Sindhu became the first Indian to win the BWF World Championship gold in 2019 etching her name as one of the greatest in badminton history.

3.

Sachin Tendulkar's

name will always be remembered as one of the greatest, if not the greatest in Indian cricket history. The "God of Cricket" completed a century of centuries in 2012, after bidding farewell to the sport a year and a half later in 2013.

4. In the last decade, the famous

Mary Kom

won six Asia-level golds, an Olympic bronze, one Commonwealth gold, and won her 6th World Championship. Indian boxing legend? Yup, that's Mary Kom.

5. Popularly known as India's best Olympian,

Sushil Kumar

became the first Indian to win two Olympic medals (Bronze Medal - Beijing 2008, Silver Medal - London 2012). Historic.

6. Following an extremely difficult upbringing,

Pankaj Advani

bagged his 23rd International Billiards and Snooker Federation World Title in 2019. His name sits on every title the federation has ever offered.  

There are many more athletes who are constantly breaking boundaries and achieving new records. While sports have come to a standstill due to pandemic, the joy of celebrating with fans will feel even better when tournaments resume again. 

Before you move onto the next section, take a moment to appreciate

MS Dhoni and Suresh Raina

, who announced their retirements from international cricket on Saturday night. MS Dhoni is the only captain to win all three major ICC tournaments. Absolute legends of the game, who will be thoroughly missed. #ThankyouMahi #ThankyouRaina 

Other News

1. In an attempt to cut costs,

to some European cities. Flights to Madrid, Vienna, Milan, Copenhagen, and Stockholm have been temporarily terminated. 

2. The US Embassy in Delhi announced its

for Indians previously holding H1B or L-1 visas so they can return to their previously held job roles in the USA. The US-Embassy will also resume

in Hyderabad, Mumbai, Delhi, Kolkata, and Chennai. 

3. Due to the rapidly declining airline industry, the

Vinay Dube resigned. 

4. Amazon Inc launched an

in Bengaluru. The service will provide over-the-counter as well as prescribed drugs straight to your doorstep. 

5. In response to the deadly explosion in Beirut, the Indian Government is

to support the Lebanese people. 

Quiz

Quiz time, get thinking! 

Take the word "STANDARD". Your task is to take away two letters and add three digits to make a logical sequence. 

See you next week!

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See you next week!

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Quiz Answer:Step 1: Take away the two "A's"Step 2: Add 1,2 and 3 to create "1ST 2ND 3RD"

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Written by: Adnan Bahrainwala (Founder of Subah Kee Chai)