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Weekly Capsule (Aug 21 – Aug 25) and Impact Analysis

Posted on 25-Aug-2017 Comments  0

Major News Item

Impact Analysis

  • Nandan Nilekani takes over as non-executive Chairman of Infosys

  • This fills up the vacuum created at the top after the resignation of Vishal Sikka and the Board chair persons

  • After a brief 3 year stint for Sikka, Infosys now returns to being run by its original founding promoters

  • FIIs sold over $2 billion in Indian equities in August 2017

  • While Infosys selling was part of this, there are also overall concerns of growth not being in sync with valuations

  • The strong rupe eat around 64/$ is also proving to be a dis incentive for FIIs to commit to Indian equities

  • IOC plans to invest up to $8 billion in the Paradip refinery in Odisha

  • IOCL is now positioning as an end-to-end player with forward and backward integration of its business lines

  • Mr. Jaitley has already announced the intent to create a merged oil behemoth to take on global competition

  • Insurance companies to dominate the IPO market in coming months

  • A total of Rs.20,000 crore to be raised through IPOs of HDFC Life, GIC Re and New India Assurance

  • The sale of government stake in PSU insurance companies is a step towards the divestment targets for the fiscal year

  • ICRA expects micro finance institutions to report negative ROE this year

  • Most MFIs are still feeling the brunt of the business hit taken in the aftermath of the demonetization last year

  • MFIs have seen a sharp rise in credit cost and a larger degree of delinquencies in their cash-focused markets

  • Government moves fast on curbing imports of food

  • After curbing the import of pulses, the government has also put curbs on the import of green gram and black matpe

  • Farmers were feeling the heat of higher imports which were pushing down prices of most agri products

  • CARE has reported a 16% fall in net profits of India Inc for Q1

  • Lower profits were largely driven by a near 9% fall in the overall volumes and sales of Indian companies

  • The caution was also largely due to the launch of the GST effective from July 01st which encouraged de-stocking

  • Global investors caution Fed against an aggressive taper of bond portfolio

  • The taper is likely to begin in September and markets are worried about a liquidity crunch in global markets

  • Things could get much worse if US yields move up and other EMs see risk-off out flows

  • UK laid out a tentative road map for its exit from the EU

  • This is the first step in commencing the process of disengaging the UK from the EU over a 2-year period

  • A lot will depend on how the UK will compensate for its trade losses by exiting from the EU region

  • Option buyers may get an option on whether to exercise their options

  • This is more relevant on the expiry day when all ITM options are assumed tohave been exercised

  • However, this results in a very steep STT of0.125% on notional value of the contract and needs change

  • Reliance to enter power storage business in alliance with BP

  • Power storage is a natural extension for large companies globally that are exposed to old fossil fuels

  • The focus will be to leverage the fast-growing renewable space in India and offer storage solutions

  • The Cabinet gave in-principle approval for merger of PSU banks

  • The idea is to reduce duplication of banking services across India and help better sharing of resources

  • There will be national level banks with scale and also regional level banks formed through mergers

  • Bank ruptcy proceedings could lead to investment bank deals worth $ 80 bn

  • This is likely to be an outcome of nearly $180 billion of stressed assets that need to be restructured

  • Many large companies are likely to find good bargains especially in steel and power

  • Yellen speech at Jackson Hole spooks bond markets

  • At the gathering of global central bankers, Yellen emphasised on tapering and a hawkish rate scenario

  • That led to a hardening of yields in the US debt and led to a fall in bond prices across the board

  • Overseas Dollar borrowing of India Inc up by 57 % in July 2017

  • The sharp rise in dollar borrowings could be largely attributed to the SEBI imposed ban on rupee denominated bonds (RDB)

  • The borrowing market was largely dominated by large corporates like HPCL, Idea,Reliance and EXIM Bank

  • Nandan Nilekani outlines immediate goals for Infosys

  • A complete strategy report is expected to be in place by October which will outline the road ahead for Infy

  • Nilekani will also work on a long term corporate governance structure that will accommodate founder inputs

  • RBI Committee wants home loan rates linked to benchmark repo

  • This linking is essential to ensure that a proper transmission of rate cuts by the RBI actually happens in case of home loans

  • The committee wants banks to quote home loan rates based on the repo rate rather than their own MCLR rates

  • Cyclone Harvey sends US oil prices higher as Texas shuts down

  • The cyclone that will shut US refineries will curtain oil supply and that has pushed up crude oil prices

  • The cyclone has come as an unexpected support for oil prices at a time when they were struggling to sustain above $ 50/bbl

  • Violence erupted in North India after the conviction of the Dera chief

  • The violence has already left more than 30 dead and over 250 injured as the army has already been called in

  • The handling of the situation also raises grave concerns over the futures of Mr.Khattar as the CM of Haryana

  • POSCO of South Korea could be one of the contenders for Essar Steel

  • Essar Steel has debt to the tune of $40,000 crore and Tata Steel has already evinced interest in the company

  • For POSCO, this will be a return to India, after its failed bid to set up a $10 billion Greenfield steel project in Odisha

  • Infosys has appointed Eg on Zhender to hunt for the next Infosys CEO

  • It may be recollected that Pravin Rao is only standing in as a temporary CEO

  • The new CEO will have a tough task to balance the recent events with the future vision of Infosys



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