Market Capsule

Posted on 17-Mar-2017 Comments  0

Highlights of the Week (Mar 20 – Mar 24) and Impact Analysis

Major News Item

Impact Analysis

  • ONGC to invest up to $10 billion in the Krishna Godavari Basin

  • Interestingly,both Reliance and BP had failed to operate anywhere close to capacity in the KG Basin

  • It will be deep sea drilling, which is fraught with risks, and can have repercussions on the financial rating of ONGC

  • FPIs infuse nearly $3 billion into Indian equities in March

  • The UP elections outcome and the dovish Fed outlook were responsible for the return to risk-on investing by FPIs

  • More importantly,the strong rupee has meant that FPIs are assured of their rupee returns being protected in dollar terms

  • D-Mart IPO had a bumper listing on NSE aftera 105 times over subscription

  • The stock gaine dover 100% on listing and also managed to hold on to the gainswith limited selling at higher levels

  • D-Mart scores over other retail players in India on the basis of store efficiency,profit per store and cost of operations

  • SEBI chairman gives an initial thrust to the commodity futures market

  • SEBI has permitted trading in diamond futures which will be a hedging tool for diamond polishers and traders

  • SEBI is also likely to push through with options on commodities to widen and deepen the commodity markets

  • Maharashtra Budget silent on loan write-offs to be leaguered farmers

  • While the state budget has elaborated on welfare measures for farmers, it has avoided mention of farm loan waivers

  • Farmers across Maharashtra have been under severe stress but banks are in no position to write-off loans currently

  • The week saw the Vodafone-Idea merger finally taking shape

  • Idea will issue shares to Vodafone to the extent of 50% of the post issue capital & AB Group will hold 26%

  • The merged entity will have nearly 40 crore subscribers and 41% revenue market share but will be low on efficiency

  • Government approves Rs.8000 crore secondtranche of bank recapitalization

  • The government has stuck its target and has also been flexible with respect to banks deserving infusion of capital

  • There are strict strings like review of bad loans, man power & branch rationalization, sale of non-core assets etc

  • Theresa May to commence the process of BREXIT officially on March 29th

  • The 2-year disengagement process will commence late March and UK will have 2years for full-fledged trade negotiations

  • EU has alreadyconfirmed that special concessions by EU nations outside theambit of EU framework are ruled out

  • SEBI to announce new benchmarks for measuring MF performance

  • Current bench marks like Nifty and Sensex are point-to-point indices which ignore effect of dividends and corporate actions

  • SEBI has proposed a Total Returns index which also factors in dividends to give a more realistic view of relative performance

  • KKR has pitched a revival plan to GOI for the $180 billion NPA problem

  • KKR has also proposed a plan akin to the bad bank which will take over bad assets and will be capitalized by government

  • This will avoid the risk of banks cherry picking assets for selling off and ending up with inadequate cover for the loans

  • Paris Climate Accord likely to add nearly $19 trillion to global wealth

  • The Paris Climate accord, with its thrust on alternate energy investments, will boost world GDP by 0.8% each year till 2050

  • $10 trillion of fossil fuels will be written off but new energy will entail $145 trillion of investments and create 10m jobs

  • SEBI may now permit F&O trading at the IFSC in GIFT city, Gandhinagar

  • To begin with, F&O trading will be permitted in only those companies that already have a global ADR/FCCB presence

  • While currency options will have to wait for further approvals, commodity futures will follow after local participation

  • Government may permit 100 % FDI in insurance broking industry

  • Currently, only 49% FDI is allowed although other broking businesses are permitted to go up to 100% FDI

  • Insurance broking requires massive investments in networks, distribution and education and FDI will be a big help

  • Shares of Divi crashed on the bourses afteran import alert sounded by FDA

  • An import alert is more serious than a Form 483 as it entails a ban on imports ofthe product into the US

  • The import alert pertains to the Vizag plant of Divi which accounts for nearly 60% of its total annual production

  • MFIs face the heat with rating cuts by creditrating agencies

  • After Satin Creditcare, it is now the turn of Janalakshmi Financial Servicesto face a rating down grade

  • MFIs are facing ac ollection crunch after the demonetization and that has substantially delayed payment cycles

  • Hindustan Zinc announced a special interim dividend of Rs.13,985 crore

  • This is the largest dividend by an Indian company and nearly 30% of the dividend will go to the government

  • Other PSU companies like BPCL, HPCL, IOCL, Coal India and PFC are among the PSUs in line for high dividend payouts

  • Brent Crude slips below the $50/bbl mark on supply pressure

  • With oil prices moving up post November 30th,many US shale wells became viable leading to higher oil supply

  • The US stock piles are also rising and there are serious doubts if the OPEC will continue with quotas after June

  • Morgan Stanley and Goldman Sachs signal a move out of London

  • With London certain to leave the EU, it will no longer be the preferred gateway to Europe as in the past

  • Large financial players are already looking to shift their EU operations from London to Frank furt, Dublin or Paris

  • India’s Q3 Current account deficit more than doubles on sequential basis

  • The sharp rise in the Q3 CAD was largely on account of portfolio out flows and NRI FCNR redemptions

  • With both the cases likely to reverse in the coming quarter, Q4 may see a much better CAD performance

  • Yes Bank launched an international share sale to fund its rapid growth

  • The $750 million will be the second attempt by Yes Bank after the previous attempt to raise $1 billion failed

  • With India again showing signs of growth and more reasonable valuations, Yes Bank issue could sail through

  • RBI puts 4 PSU banks in the Credit Watch List

  • The list includes IDBI Bank, IOB and UCO Bank while the name of the fourth bank could not be known

  • If their financials do not improve, the RBI may look to either merging these banks or eventually winding the mup

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