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Weekly Capsule (Jul 24 – Jul 28) and Impact Analysis


Posted on 01-Aug-2017 Comments  0

Major News Item

Impact Analysis



  • Tata group to integrate technology units under TCS

  • Most of the IT,technology and new age initiatives of the Tata Group will be integrated with the profitable TCS

  • This is part of Chandra’s larger plan to shift the focus of the group towards profitability, ROI and market leadership


  • CAG points at massive revenue under-reporting by telecom companies

  • According to CAG,under-reporting of revenues by Rs.61,000 crore had led to tax revenue loss of Rs.7700 crore

  • This was done through accounting adjustments for discounts and free talk-time as well as netting of infra revenues


  • IMF expects the US economy to drive growth to a lesser extent

  • As per the IMF,the world will be looking to China, Western Europe and Japan to actually drive growth in 2018

  • IMF expects the world economy to grow at around 3.5%, while the US will grow at just above 2% per annum


  • HDFC Bank saw a marginal rise in NPAs in the June quarter

  • Gross NPAs were up from 1.05% to 1.24%, which is still very healthy from overall banking asset stress standards

  • However, HDFC Bank feels that this more of a one-off impact and is likely to normalize from next quarter onwards


  • Goldman expects world oil demand to peak by around 2024

  • Goldman expects this demand peak to be the result of slower economic growth and higher oil prices

  • But the big game-changer for oil could be the demand for electric cars which is likely to grow 40-fold by 2030


  • Fed maintained status quo on rates at its July FOMC meeting

  • The decision was along expected likes after Janet Yellen’s testimony before Congress earlier in July

  • However, the Fed has emphasized that it will embark on debt unwinding as early as August this year


  • Nifty crossed the psychological 10,000 mark last week

  • The rally beyond10,000 was largely tentative as the Nifty is still to break thelevel convincingly with volumes

  • The key drivers ofthe Nifty scaling 10,000 were heavyweight stocks like RelianceIndustries, HDFC Bank and HUVR


  • Demonetization may have led to a massive shift to financial assets

  • According to RBI Deputy Governor, Dr. Viral Acharya, real assets were less in demand post demonetization

  • That also explains why banks and brokerage houses have done exceptionally well as the real beneficiaries of this shift


  • Axis Bank and ICICI Bank continued to disappoint on Q1 results

  • Both the banks saw a rise in their stressed assets and that has proved a drag on their profitability

  • Axis and ICICI are among the two most stressed private banks with others having NPAs less than 2% on an average


  • Vedanta saw its first quarter profits doubling to Rs.1525 crore

  • This was largely driven by higher price realizations across key Vedanta products like zinc and aluminium

  • Metal markets have also got a sentimental boost after China reported better GDP and industrial growth performance



  • Cochin Ship yards to launch IPO in the first week of August

  • The company proposes to raise Rs.1470 crore towards building a dry dock and aship repairing facility

  • The IPO will be a mix of fresh issue and an offer-for-sale with nearly 2/3rd going towards a fresh issue


  • A poll of economists has pointed towards an RBI rate cut in August

  • Lower inflation and weak IIP growth has already made a strong case for the RBI to cut rates

  • The Fed status quo could be an added advantage but the MPC will have to first change its monetary stance


  • HDFC has cleared a stake dilution of 9.57% in HDFC Life

  • HDFC Life will be the third life insurance IPO after ICICI Pru Life and SBI Life,with Pru already being listed

  • This will be the first step for HDFC Life before the merger with Max Life is once again considered


  • Wilmar raises stake in Renuka Sugars up to a total of 38%

  • This allotment of compulsorily convertible preference shares was approved by the Renuka Board this week

  • Renuka is saddled with debt of over Rs.6000 crore and this fund infusion will give the company a breather


  • Too much of rains may pose a problem this year

  • It is estimated that nearly 2.23 million hectares of cultivable land may have been lost due to excess rains in some parts

  • This could have a major impact on the supply of Kharif crops this year and consequently on food inflation too


  • L&T reported a 46% rise in net profits at Rs.893 crore in Q1

  • The bigger key take away for L&T could that the top-line has also grown at a healthy clip of 10% this quarter

  • A revival in the fortunes of L&T is crucial to the hopes of a revival of the capital cycle in India


  • Amazon global reported a 77% fall in net profits to $197 million

  • Amazon managed tobuy revenue growth of 25% in the quarter with its “Revenue First” policy

  • However, Jeff Bezos has stuck to his commitment of investing $5 billion into its India operations


  • Nitish Kumar won the confidence vote in Bihar after his resignation

  • Nitish decided to shift loyalties from Lalu Yadav to the BJP to overcome the corruption allegations against Lalu’s son

  • This move virtually gives the BJP full control over the Hindi Belt ahead of the central elections in 2019


  • Moody’s places Lodha Developers on a rating watch for its $200 million debt

  • The $200 million debt issued by Lodha Developers matures in the year 2020 and shows high probability of downgrade

  • The action was triggered by Lodha asking bondholders to grant a waiver of restrictive covenants on the loan


  • US economy reports 2.6% growth in GDP for the June quarter

  • The big thrust to growth came from consumer spending which was up by nearly 2.8% for the quarter

  • US economy also benefited from a sharper rise in exports as a weak dollar helped export competitiveness


  • India may look to reduce the import duty on gold

  • With a healthy current account deficit situation, there is a case to reduce the gold import duty lower from 10%

  • Industry has been demanding 2% duty on gold imports, but the RBI is wary of a surge in gold imports

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