Coal India is making good gains on the back of the recent hike in coal prices. However, the stock looks to have momentum in its favour. I suggest you hold on to the stock for now and we can look at exiting the stock above the Rs.170 levels. There could be some selling in the market on Friday being the last trading day of the week and after a sharp rally. Here is what you can do with Coal India.

· Coal India Rs.154 (CMP – 163) – Suggest to Hold

You are in a market where the Nifty is approaching 18,000 and the Sensex is approaching 60,000. Now, it is all about reforms, and big reforms at that. The story was about Telecom Relief Package on 15th September and on 16th September it was all about the creation of the Bad Bank with government guarantees. Bad bank will address bad loans of Rs.2 trillion.

One thing is clear that it would smartly impact the cash flows of stressed banks as they can now get 15% in cash and the balance in security receipts. This is likely to be a big boost for banks like BOB and IOB where the quality of assets is relatively good and improving. Telecom has been another big story after the relief package on Wednesday.

Foreign portfolio investors were net buyers worth Rs.1,622 crore on 16th September while DFIs sold equities of Rs.795 crore. FPI interest appears to be building up with the focus on big reforms. Global markets saw flat performance from the US and Europe while the SGX Nifty is up nearly 40 bps in early trades on Friday. There could be some weekend pressure.

If you look back, this week the rally has been largely on the back of reforms. Big bang reforms like bad bank and telecom relief plus the massive automobile PLI package have all come in the last 2 days. Clearly, markets are enthused and are expecting a surge in buying interest coming from foreign investors in the light of all these reforms.

The Bad Bank idea has been around for a long time, but the big question always was how much loans it would assume and what would be the government guarantee. The latter was the most important. The announcement has finally come on 16th September, with details of the government support. Nirmala Sitharaman has confirmed that the National Asset Reconstruction Company or NARCL, as the apex Bad Bank would be operational soon.

The modus operandi will be that PSU banks would be allowed to transfer up to Rs.200,000 crore of stressed assets to the Bad Bank. The Bad Bank will pay 15% of the value of the assets in cash and 85% in security receipts. The government will guarantee up to Rs.30,600 crore for security receipts issued by NARCL. However, such guarantees will automatically expire if not exercised in 5 years. There will be a guarantee fee payable to NARCL.

JSW Steel, part of the Sajjan Jindal group, has raised $1 billion via issuance of sustainability-linked bonds in the overseas market in US dollars. JSW Steel is the first steel company in the world to issue SLBs in hard currency with fairly stringent sustainability conditions. The company has even confirmed that the response from global investors had been overwhelming, considering the green nature of these bonds and ESG compatibility.

The proceeds of this $1 billion bond issue will be deployed for funding capital expenditure and to refinance debt. However, being sustainability bonds, the company has committed to progressively achieve sub-1.95 tonnes of CO2 per ton of steel (carbon dioxide emissions) by 2030. If JSW fails to meet this target, then the coupon interest payable on these bonds will be automatically escalated by 37.50 bps as a penal payment.

Not likely as of now, if you go by the statements coming from the chairman of Tata Sons and from Mr. Ratan Tata. N Chandrasekaran, chairman of Tata Sons, clarified that there were no such plans. Ratan Tata also dismissed these as pure rumours. Bloomberg had earlier reported that Tata Sons was planning to create a CEO role in the structure and that the CEO would report to the current chairman, Mr. Chandrasekharan.

The idea was that having a professional CEO would bring in greater transparency and corporate governance standards would improve. Speculation has been rife in recent times about a change since Chandra’s tenure at the helm of Tata Sons ends in Feb-22. It remains to be seen if the contract would be renewed or whether the group would go for a management structure rehaul of Tata Sons.

The Rs.171 crore IPO of Paras Defence and Space Technologies consists of Rs.141 crore by way of fresh issue and Rs.30 crore by way of offer for sale or OFS. Th issue will open for subscription on 21-Sep and close on 23-Sep. The company has just announced its price band in the range of Rs.165-175 per share. At the upper end of the price band fixed, the market capitalization of Paras Defence works out to Rs.683 crore.

Paras Defence works extensively in the field of design, development, manufacture and testing of defence products. It basically serves government agencies and state owned PSU defence companies. It specializes in space engineering. For investors it is a novel way to participate in the fast growing domestic defence story, where local sourcing is proving to be a huge incentive for a plethora of Indian defence companies to bag big defence orders.

Zen Technologies surged 140% in one month due to its monopoly in drone manufacturing in India. Government just announced a PLI scheme for auto stocks which also included an allocation for drones. Once the drone licensing plan is in place, India can substantially increase the output of drones and companies like Zen stand to gain big time. Zen has also doubled its order book in last 2 months with a Rs.155 crore order from Indian Air Force in August 2021.

The fliers appear to be back in a big way, with a total of 67 lakh domestic passengers flying in August. This is more than one-third higher compared to 50 lakh travellers in July. According to the DGCA, this can be attributed to an increase in cap on capacity from 65% to 72.5%, which positively impacted load factors. The overall industry level occupancy also increased to 70.2%. Indigo reported best on-time performance at 96.5% across key airports.