In the latest brand new twist to the Amazon case, there is a letter that has been sent out by Amazon and addressed to the independent directors of Future Retail. Amazon has reiterated the commitment of Samara Capital to invest Rs.7,000 crore in Future Retail. Amazon has written to independent directors; Gagan Singh, Ravindra Dhariwal and Jacob Matthews. Samara Capital is a unit of Amazon and had given the term sheet in 2020.

It may be recollected that back in 2020, Samara Capital had given a non-binding term sheet to Future group regarding its commitment to invest Rs.7,000 crore into Future Retail. However, this offer from Samara Capital is much lower than the Reliance offer of Rs.24,700 crore, albeit for a much broader relationship. Amazon has made this offer after an SOS sent by the independent directors of Future group to Amazon on their upcoming payments.

Future group needs to pay Rs.3,500 crore to the banks and other lenders before the end of January if it has to prevent its debts from being classified as NPAs. That seems out of question without fund infusion. Classification as NPAs would mean that the banks will have to make substantial provision for these Future group outstanding amounts. It would also be the first step to put winding up pressure on Future group, something best avoided.

Amazon has also written about this offer to SEBI, stock exchanges, CCI and the lending banks. The challenge will be the structure but Amazon is clear that the FDI rules would not be breached. The deal would be done by an Indian company with Indian domicile with the backing of Samara Capital. It would still be a backdoor entry for Amazon into Future Retail and the response of regulators is awaited.

For now, Amazon and Samara want the same access to information and data given to Reliance Retail Ventures. However, FRL independent directors think that is like reinventing the wheel. Independent directors are not too enthusiastic considering that the deal is much lower than the RRVL offer. The bigger problem for the Future group is that time is rapidly running out for them.

There are two ways to approach your question. The first is about the short term. Nifty closed on Monday at 17,149 with an advance decline ratio of 2:48 biased in favour of declines. The VIX has also spiked higher to 23 levels. Clearly, the short term trends in the market are weak and volatile. That means; further downsides cannot be ruled out although the fall has been just too rapid and event driven.

The question is whether the Nifty can take support around 17,000 levels. There is a temporary support at these levels, but it is not a very strong support. IT would depend on how strong the trigger for the fall is. For example, if the Fed talks really hawkish on Wednesday night then the Nifty could dip further. But this may not be the right time to take a very short term view.

Over a longer view, if you even assume that rates are hiked by the Fed, there may not be much damage to the Nifty. For example, between Dec-2015 and Dec-2019, the Fed hiked rates from 0.25% to 2.50% over several tranches. During these 3 years the Dow and the Sensex gave around 13% annualized returns, which is actually very good. So Fed rate hikes may impact in short run but in the longer term the impact is often overstated.

How should your strategy shape up and that is more important. Firstly, use these dips to buy quality stocks. I don’t want to get into specifics. But, for example what could be so wrong about buying Infosys or Reliance 10% lower than their October prices? Use a more allocation approach to stocks and you should come out a winner. For now, the volatility indicates that markets could just spray the indices all over the place.

One of India’s largest ethnic retailing brands, Fabindia, has filed its draft red herring prospectus (DRHP) with SEBI for the proposed IPO. It will comprise of a fresh issue of Rs.500 crore and an offer for sale of 250.51 lakh shares by existing promoters and early investors totalling to around Rs.3,500 crore. This will take the total size of the IPO to Rs.4,000 crore. This would value Fabindia at around Rs.20,000 crore in post IPO terms.

The fresh issue portion will be used for organic and inorganic expansion as well as debt reduction. Apart from the OFS, the promoter Bissell family will gift 7.75 lakh shares to farmers and artisans who have contributed to the growth of Fabindia. This will be gifted to them out of their stake. On the OFS, apart from the Bissell family, investors participating in the offer for sale include Premji Invest, Bajaj Holdings, Kotak India Advantage and others.

Fabindia has been around for over 60 years and operates via 300 branded Fabindia outlets and over 70 dedicated outlets of Organic India. Fabindia directly sources from over 2,200 farmers, scores of artisans across India. In addition, the total farmers impacted, including the associate sales, covers 10,300 farmers. Incidentally, Fabindia’s competitor, Biba, is also planning to file for IPO. Biba is backed by PE investors; Faering Capital and Warburg Pincus.

Fabindia IPO comes at a time when retailers are facing tough times. Then are trying hard to keep their stores open amidst the pandemic and imminent restrictions. The third wave of the pandemic created by the Omicron variant has again resulted in several shutdowns. This has sharply reduced footfalls at retail outlets. In the last 2 years, most retail outlets across India have faced falling sales traction and rising costs.

Reliance expects its energy business to reap rich dividends since global fuel shortage has pushed gas prices to record highs. RIL will raise the price cap for its offshore gas sales by 60% to $10 per MMBTU. KG Basin output is already up 36-fold. It just turned into operating profits in Sep-20 quarter.

Owner of the popular Manyavar ethnic brand, Vedant Fashions, will open its IPO on 04th February and close 08th February. The listing on the NSE and the BSE is expected on 16-Feb. The total issue of 363.60 lakhs shares will be an offer for sale by early investors and promoters. Both early investors, Rhine Holdings and Kedaara will participate. Manyavar is a category leader in men’s wedding wear and has scores of EBOs across India.

It is simple, Financial creditors of Essel group want Subhash Chandra to settle their dues with Rs.1,100 crore non-compete fee from Sony Group as part of the merger deal. Creditors may oppose the merger deal if Chandra does not agree to pay up. Loans by IndusInd Bank, Axis and Yes Bank have Chandra’s personal guarantees.

The 5-day crash in markets wiped out around Rs.19.50 trillion of investor wealth. That is about $260 billion of wealth evaporated in just 5 days. The fall on 24-Jan was the steepest single-day fall since November 2021. The fall was broad-based as BSE Mid-cap index fell by 3.82% and BSE small cap index by 4.43%.

Like most of the other insurance companies, SBI Life also reported lower overall revenues due to lower net investment income. However, premium income for SBI Life was robust and saved the day. Here is a summary of the quarterly numbers of SBI Life.

Let me talk about the top line first. SBI Life Insurance reported -22.95% fall in revenues for the Dec-21 quarter at Rs.20,458 crore. One of the major triggers for the sharp fall in revenues was the income from investments falling vertically from Rs.12,777 crore in the Dec-20 quarter to Rs.2,424 crore in the Dec-21 quarter. However, Premium income was higher across the board; including single premiums, first year premiums and renewals.

An important metrics for insurance companies is the value of new business (VNB). For the 9 months of FY22, VNB was 66% higher at Rs.25,900 crore. The total annualized premium equivalent (APE) stood at Rs.10,170 crore. The VNB has grown at a healthy clip of 36% for the said period. SBI Life showed 13th month persistency and 61st month persistency at around 83.87% and 48.88% respectively, showing strong customer retention.

As of the close of the Dec-21 quarter, AUM of SBI Life stood at Rs.250,000 crore. Net profits were higher by 56.4% on yoy basis at Rs.364 crore for the Dec-21 quarter. That is because the fall in investment income was largely offset by a sharp spike in premium incomes. At the same time, actuarial provisioning estimates were sharply lower yoy. PAT margins improved substantially from a level of 0.88% in the Dec-20 quarter to 1.78% in the Dec-21 quarter.