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Weekly Capsule (Jul 31 – Aug 04) and Impact Analysis

Posted on 07-Aug-2017 Comments  0

Major News Item

Impact Analysis

  • RBI in its monetary policy cut repo rates by 25 basis points

  • The 25 bps ratecut was already priced in and hence did not have any positive incremental impact on markets

  • The RBI has retained its monetary stance as neutral and that means the RBI is keeping its options open if rates rise globally

  • Infosys to invest heavily in manpower in the European region

  • Europe currently accounts for 22% of the total revenues of Infosys and is the second largest market after the US

  • As US GDP lags and EU GDP picks up steam, Infosys is looking to capitalize on the growth in the region

  • Foreign portfolio investors (FPIs) pump in nearly $4 billion in July 2017

  • Nearly 70% came in the form of debt investments and the balance 30% in the form of equity

  • Due to a strong rupee, most FPIs have earned higher returns in July due to rupee dividends

  • Tata Sons to focus more on the domestic business of Tata Motors

  • Domestically, Tata Motors’ CV market share has fallen by 15% and passenger car market share has fallen by 8%

  • One of the mandates for new Tata Sons boss Chandra is to reduce the dependence on JLR

  • Auto and FMCG companies saw a pick-up in demand in July

  • This growth was the lag effect of consumer companies coming out of the GST blue sin June

  • Consumer sales saw a spurt as companies in both the sectors passed on most of their GST benefits to the end customer

  • SBI, in a surprise move, cut rates on savings deposits by 50 basis points

  • While deposits under Rs.1 crore will earn only 3.5%, balances above Rs.1 crore will continue to earn 4% as before

  • This will impact nearly 90% of the savings customers of SBI and will help improve its net profits by nearly 20%

  • Indigo reported 25% growth in revenues and profits

  • The profit growth was largely driven by improved spread between the RASK and the CASK for Indigo

  • Apart from lower fuel prices, Indigo also benefited largely from the sharp reduction in interest by cutting debt

  • HDFC Life has formally called off its proposed merger with Max Life

  • The merger had run into problems after IRDA had objected to the merger of an insurance company with an NBFC

  • HDFC Life now proposes to go ahead with its IPO in this fiscal and will revisit the merger proposal at a later date

  • Snapdeal called off the proposed merger with Flipkart

  • The dispute over valuations was too wide with Snapdeal expecting an enterprise valuation of $1 billion

  • While Softbank and Tiger Global had pushed for the merger, key investors like Azim Premji had opposed the deal

  • July witnessed a sharp fall in the PMI for manufacturing and Services

  • Both manufacturing and Services PMI fell way below the 50 mark indicating a clear sign of contraction

  • The sudden fall in PMI is largely attributed to the GST, which had focused companies on inventory rather than production

  • Government relaxes rules for holdings in Sovereign Gold Bonds

  • The SGB holding purchase limit per year has been increased from 500 grams to 4 KG per year; an 8-fold jump

  • This is expected to rekindle interest in gold bonds, which is key to reducing dependence on gold imports

  • UDAY bonds may have saved Rs.14,000 crore power Discoms

  • UDAY entailed states taking over 75% of the debt of state Discoms and issuing bonds against the same

  • This move has managed to free up nearly Rs.22,000 crore worth of bank funds for further lending

  • Donald Trump unveils aggressive plan to cutdown on legal immigration

  • This is in line with Trump’s election promise to save more American jobs for local Americans

  • Like Australia and Canada, the US will also focus more on encouraging immigrants in high-skilled roles

  • SEBI issues order against key members of FTgroup management

  • This order pertains to the Rs.5600 crore default of obligation of the NSEL back in July 2013

  • Apart from the promoters, key senior managers like Massey and Javalgekar have been found guilty of insider trading

  • Lup in disappoints the street with a 60% fall in net profits for Q1

  • The drop in profits was largely driven by weakness in US sales, which accounts for nearly 40% of the revenues of Lupin

  • Lup in was also hit by the rupee strength even as the stock has dipped below the psychological 1000 mark

  • Murthy / Sikka stand-off comes back to haunt the Infosys stock

  • Murthy has now demanded that the Gibson report on the Panaya deal be made public

  • Apart from the Panaya deal, Murthy also has reservations to Sikka’s package and the severance package to Bansal

  • NSE indicates at a likely IPO and listing by the end of March 2018

  • Institutional investors continue to be worried over collocation revenues being directed towards an escrow account

  • Limaye has been pitching for the consent mechanism wherein NSE can continue without admitting or denying the guilt

  • Titan flattered the street with a 97% growth in its net profits

  • The profit growth was driven by the jewellery business that accounts for over 80%of the revenues of Titan

  • Rising gold imports and pent-up festival demand have been driving demand at Titan’s jewellery division

  • BJP overtakes Congress as the largest party in the Rajya Sabha

  • BJP now has 58 members in the Rajya Sabha compared to 57 for the Congress party

  • A majority for BJP in the Upper House gives it a distinct edge in pushing through crucial bills in future

  • Baba Kalyani group ready to roll out missiles in this fiscal year

  • The group is into missile manufacturing in JV with Rafael Advanced Defence Systems of Israel

  • It has affirmed that they are in a position of readiness to supply missiles to the armed forces within weeks of the order

  • Cognizant reported a 86% growth in profits for June quarter

  • The spurt in profits for Cognizant was largely driven by a sharp growth in key verticals like healthcare

  • Cognizant also saw a 9% growth in revenues,which is very commendable in the tight market conditions



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