August 2020 was a decent month of returns for most of the themes under FYERS Thematic coverage. Barring IT stocks, which stayed flat due to concern amid rupee appreciation, other themes returned 5% on an average.

Banking Magnates theme witnessed the best traction, after a lull since the stock market lows of March 2020. Underpinned by multiple moratoriums, poor credit offtake, this sector took a back seat and under performed the major indices as well the broader market considerably.
While the general understanding is that the moratoriums have ended, Supreme Court is yet to adjudicate on the interest waiver case, which can impact the banking sector in general. Hence, investors need to be cautions and follow the news emanating out of the SC judgement. Government in its note to SC is of the opinion that the moratorium can be extended for a period of 2 years. This might not augur well for the banking and financial space.
In addition, the Telecom AGR case judgement is mixed and could have a negative connotation.
- 10 years for staggered payment of AGR dues...not 15 yrs or 20 yrs as asked.
- Telcos to pay 10% upfront; to submit an undertaking to pay dues as per SC order.
- Default of payment will invite interest on dues, penalty along with contempt of court.
- Payment starts from Apr 1 2021.
- 10% upfront on the balance payment (expected) & might not be 10% of the total AGR demand.
- AGR dues of bankrupt Cos (Aircel, RCom etc) need not be paid by current Cos (Reliance Jio, Airtel).
- Spectrum sale: not for SC to decide; NCLT to decide future course of action on this matter.
While a reduced term of 10 years is positive for banks, the recovery of AGR dues from bankrupt telecom companies would pose a serious challenge now.
Watch out for more information on the themes and effect of regulations during this extraordinary period of Corona Virus Pandemic.
Thematic Investing has a great potential and future