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Weekly Capsule (Oct 02 – Oct 06) and Impact Analysis

Posted on 06-Oct-2017 Comments  0

Major News Item

Impact Analysis

  • RBI policy maintains status quo on repo rates and holds them at 6%

  • This was largely along expected lines after the inflation went up by 190 basis points in the last 2 months

  • The RBI did cut the SLR to 19% but that is unlikely to make a difference with most banks overexposed to G-Secs

  • RBI downgrades full year GDP growth to 6.7% from 7.3%

  • The RBI has downgraded the full year growth after the 5.7% growth in GDP reported in the June quarter

  • The lower growth in GDP has been the outcome of the demonetization exercise and GST teething troubles

  • Euro region shows a sharp rebound in the PMI manufacturing for Sept-17

  • PMI Manufacturing in the Euro region came in at a 6-year high of 58.1 on the back of higher staffing and stocking

  • The spurt in PMI was led by Germany at 60.6 with the Euro region benefiting from a weaker Euro

  • RCOM lenders may be in a spot of bother on payment delays

  • RCOM has called off its merger deal with Aircel and now wants a better deal for its towers sale from Brook field

  • RCOM has debt to the tune of Rs.47,000 crore and these 2 deals were expected to halve the debt of RCOM

  • IPO market raises over $4 billion in the current fiscal year till date

  • The IPO market is likely to overshoot its full year target of $5 billion with major insurance IPOs still in the pipeline

  • The IPO market raised $2 billion in the whole of last year and solid post-listing performance has been the key

  • Cut in excise on petrol and diesel may cost the government Rs.26,000 crore

  • Increased levy of excise on petrol and diesel has been one of the major revenue sources for the government

  • With crude prices rising and elections approaching, the government wants to tread cautiously on price issues

  • CRISIL reported 817 rating upgrades versus 434 downgrades in H1

  • The quantum of funds raised by downgrades is much larger than the quantum of funds raised by upgrades

  • ICRA has been a little more circumspect with just about 304 upgrades compared to 261 downgrades for H1

  • August core sector output came in sharply higher at 4.9%

  • This compares very favourably with July core sector output at 2.6%, despite weaknessin cement and steel

  • The big boost to core sector output came from the coal sector and logically the thermal electricity production too

  • Focus Pharma of China acquired a 74% stake in Gland Pharma for $1.09 bn

  • This represents the first major Chinese investment in Indian via the FDI route and had been in limbo for some time

  • The delay in approvals had been due to the Dok l am standoff which at least appears to be receding now

  • Russia hints at extending oil supply cuts through the end of 2018

  • This is a clear indication that oil prices could remain stable to strong as the daily cut of $1.8 million bpd, could be hiked

  • The demand / supply equation is already favouring the price which has now moved closer to the $60/bblmark

  • High powered Uday Kotak committee submits report on governance

  • The committee has suggested increasing independent directors and the number ofwomen directors

  • The companies will also be required to quantify the impact of the auditor qualifications of the statement of accounts

  • New SBI MD to continue the bank’s focus on NPA reduction

  • Rajnish Kumar has promised to continue the effort started by Ms. Bhattacharya to reduce and also sell NPAs

  • Apart from NPA focus, Ms. Bhattacharya had also focused on a digital push to the bank

  • J P Morgan has cautioned the government against fiscal laxity

  • The concern is over applying a demand-related strategy for a supply related problem

  • The issue was not so much about demand but constraints on supply due to demonetization and GST launch

  • KKR bets heavily on distressed assets of PSU banks and realty lending

  • With SBI taking the lead, KKR expects a multi-billion dollar opportunity in bank distressed assets

  • KKR has also been active in lending to realty projects in the post-RERA scenario which has drastically reduced risk

  • India may be in the midst of a multi-year structural slow down

  • Economists are of the view that the weak GDP may not just be an outcome of GST and note ban but structural in nature

  • The structural slowdown has been driven more by weak demand for consumer and capital goods

  • GST Council makes some concessions for the export sector

  • GST Council to ensure early disbursement of refunds and also allow exporters to use a notional e-wallet for credits

  • However, all exports will attract a nominal GST of 0.1% effective from April 01, 2018

  • GST Council also goes a little easy on SMEs and traders

  • Threshold for applicability of Composition Scheme increased from Rs.75 lakhs to Rs.1 crore

  • Businesses with annual turnover less than Rs.1.50 crore will be allowed to file quarterly returns

  • SEBI restricts MF schemes to just five categories from now on

  • Schemes to be grouped under equity, debt, hybrid, solution oriented schemes and others

  • SEBI will allow each AMC to launch only one scheme under each category

  • As the US stays tentative on its Middle East policy, Saudi leans towards Russia

  • Saudi is likely to depend heavily on Russia for oil pricing deals and for weapons purchase from Russia

  • US has been trying to balance Saudi interests with Iran leading to Saudi exploring alternate options

  • Indian OMCs still undecided on taking a hit on profit margins

  • The government had hoped that with the excise cut, the oil marketers will also chip in and take some of the losses

  • Every since free pricing of oil was introduced, stocks like HPCL, BPCL and IOC have been out performers on the bourses

  • US payrolls down by 33,000 with jobless rate up at 4.2%

  • The sharp fall in jobs was largely an outcome of the storms that stuck the US coast, leading to lower job creation

  • In the US 5% unemployment is considered to be full employment and a fit case for rate hikes by the Fed



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