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Weekly Capsule (Jul 10 – Jul 14) and Impact Analysis

Posted on 14-Jul-2017 Comments  0

Major News Item

Impact Analysis

  • TCS disappointed the street with 10% fall innet profits in Q1

  • While revenues were flat for TCS, Q1 profits were down by 10% on the back of margin pressures in global markets

  • This is likely to further dampen the sentiments surrounding the tech stocks in the Indian markets

  • The CPI inflation for the month came in sharply lower at 1.54% for June

  • Lower CPI inflation was largely led by negative food inflation at (-2.12%) as pulses and vegetables stayed negative

  • However, the RBI may not be inclined to cut rates despite lower inflation due to upside risks to inflation

  • IIP for May came in lower at 1.7% led by manufacturing

  • While manufacturing was flat and mining was negative, only electricity showed positive 8.5% growth in May

  • Weak growth in IIP raises questions about the sustain ability of GDP growth and the revival in capital spending in India

  • IDFC and Shriram Capital announced a merger over the weekend

  • While SCUF will merge into IDFC Bank, Shriram Transport will become a fully owned subsidiary of parent IDFC

  • While Shriram gets access to a stronger balance sheet, IDFC gets direct access to a market size of 10 million customers

  • Government likely to give out defence orders worth Rs.27,000 crore

  • Big beneficiaries are likely to be companies like BEL, BHEL, Bharat Forge, Tata Power, L&T and RDEL

  • The government has been making efforts towards greater self-sufficiency in defence manufacturing

  • NSE witnessed one of the biggest downtimes on Monday

  • The downtime was due to a software bug which resulted in price feeds not getting updated

  • Despite 3 attempts to resume trading, actual trading could only commence on the NSE around 1 pm

  • Rolta offers to swap its defaulted bonds with 5-year PIK bonds

  • Payment in Kind(PIK) bonds will entail payment of interest via additional bonds and not in cash

  • Rolt a has total debt to the tune of $1 billion and has nearly $500 million of bonds maturing in next 2 years.

  • India’s forex reserves saw a jump of $100 billion in last 4 years

  • This rise in the forex reserves has been largely led by healthy FII/FDI inflows and tepid imports

  • The forex reserves is currently enough to cover 10 months of imports, down from 13 months cover last year

  • The UP government to make provision of Rs.36,000 crore for farm waivers

  • This provision is good news for lending banks and the NBFCs who are last mile service providers in such cases

  • UP is the first state to make a provision for this in its official budget and other states like Maharashtra may follow suit

  • IndusInd Bank saws a marginal rise in Gross and Net NPAs

  • IndusInd maintained its consistent 27% growth in profits for the first quarter of the fiscal year

  • While gross NPAs were up by 16 bps, the net NPAs were up by 5 bps, which is not exactly a major worry for the bank

  • Jamie Dimon of JP Morgan warns of the larger collateral damage of Fed taper

  • Fed is sitting on a bond portfolio of $4.5 trillion and will be shortly commencing the taper of this portfolio

  • The taper is likely to result in liquidity tightening in EMs leading to FPI out flows in search of risk-off pastures

  • Goldman Sachs predicts oil dipping below the $40/bbl mark

  • With the US,Nigeria and Libya pumping oil at record levels, any OPEC cut will be ineffective at the current rate

  • According to Goldman, unless OPEC undertakes a massive supply cut, oil is likely to dip below the $40/bbl mark

  • Yellen Congressional testimony hints at a slight back-ending of rate hikes

  • Janet Yellen has admitted that despite a robust labour market, the impact on inflation is just not visible

  • Due to consistently low inflation, Yellen hinted that Fed may look to back-ending rate hikes, bringing cheer to markets.

  • India looking at oil investments to the tune of nearly $300 billion

  • India’s percapita fuel consumption is 1/4th of the global average leaving a huge room for demand expansion

  • India will require massive investments across upstream and downstream segments of oil

  • HPCL may become a subsidiary of ONGC in July itself

  • The government proposes to sell its 51.11% stake in HPCL to ONGC so that state control over oil and gas remains

  • While this will surely help the government meet its divestment target of Rs.72500 crore, it also aids consolidation

  • Citi cautions against building earnings growth expectations

  • According to Citi,the earnings growth in next two quarters may be muted due to the downstream effect of GST

  • In fact, Citi expects the earnings for the first quarter to be lower by 12% compared to the year ago period

  • China reports a sharp growth in imports and exports for month of June

  • A pick up in Chinese trade is good news as China remains the world’s largest exporter and importer

  • A pick up in Chinese trade is positive for commodity prices and for commodity driven economies

  • Axis Bank appoints Egon Zhender for finding a new CEO

  • Shikha Sharma’s term is likely to get over next year and she is unlikely to get an extension

  • Axis Bank has been in the midst of controversies pertaining to illegal cash deposits and rising NPAs

  • Tata Steel seeks shareholders nod to raise Rs.10,000 crore

  • Tata Steel has drawn up ambitious expansion plans as government policy has been favourable for steel

  • Tata Steel has total debt of just about Rs,.28,000 crore leaving enough room to leverage the balance sheet further

  • WPI inflation for June slides to below the 1% mark from 5.5% early this year

  • The weak WPI inflation has been largely a mirror of the sharp fall in the levels of retail inflation, especially food inflation

  • While the fuel index fell by 1% on cheaper crude, vegetable inflation at -21% was the key trigger

  • GVK has sold its residual stake in Bengaluru airport to Fair fax

  • The sale for Rs.1300 crore is part of the GVK group’s larger deleveraging initiative to put its balance sheet in order

  • GVK will now focus on its Mumbai airport and also on the upcoming Navi Mumbai airport project



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