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Weekly Capsule (Oct 23 – Oct 27) and Impact Analysis


Posted on 27-Oct-2017 Comments  0

Major News Item

Impact Analysis



  • The government announced a mega Rs.2.11 trillion bank rescue plan

  • The plan will be amix of funding support, capital raising and recapitalizationbonds

  • This will helpbanks to convert their ample liquidity into core capital to meetup with the Basel III norms


  • Fitch raises concerns over ability to keep fiscal deficit at 3.2%

  • The total recapitalization will add to the effective fiscal deficit by 0.9% to a level of 4.1% for the current fiscal

  • While bank lending will pick up, the question is whether this move will impact the external ratings of the Indian economy


  • Domestic MFs pump in nearly $12 billion into equities in H1

  • Equity mutual funds are seeing record inflows from retail and from HNI investors, mainly through SIPs

  • This has been largely instrumental in holding up mid-cap stocks and supporting markets when FIIs are selling


  • Nomura expects GDP growth for Q2 at around 6.3%

  • This will be more comfortable than the 5.7% GDP growth seen in the first quarter ended June 2017

  • However, the full year estimates have been retained at 6.7% which is likely to be lower than China’s 6.8% this year


  • EPFO to start crediting ETF units directly into EPF accounts

  • EPF holders will have to take the 10% proportionate share of ETF units instead of cash

  • While this is a good long term wealth creation move, it raises worries of what US pensioners faced in Plan 401 K


  • Janet Yellen may not get another term as the Fed chairperson

  • According to inside sources, Taylor and Powell could be the front runners for the top job at the Fed

  • Yellen has had strong differences with Trump on the direction of monetary policy and the name may be known in November


  • RCOM plans to finally wind up its loss making 2G business

  • The 2G business accounts for nearly 4 crore out of its total 8 crore customers and a chunk of its employees

  • Triggered by competition from Jio, existing 2G customers will be asked to migrate to 4G and employees may have to go


  • Jaypee Group plans to hive off its Yamuna Expressway assets

  • The company is likely to raise Rs.2500 crore from this stake sale and use it to reduce part of its debt

  • IDBI Bank, one of the lenders, has objected to the sale on the grounds that Jaypee may not have the locus standi


  • Shinzo Abe returns as Japanese PM with a thumping vote

  • Shinzo brought in a sharp right-wing economic approach which has bought Japan out of the lost decade

  • His election was largely welcomed across the world considering his strongly reformist credentials


  • Yes Bank and Axis Bank get pulled up by the RBI for under-reporting NPAs

  • Popularly referred to as divergence, the problem has become quite a cute among a handful of private banks

  • This has been one of the key reasons that the valuation gap between private and PSU banks narrowed during the week



  • Government approves a massive $100 billion highway plan

  • This is the largest infrastructure allocation since Vajpayee’s Golden Quadrilateral in 2003

  • This is likely to include the much-talked about Bharatmala project which is an all-India interlinking project


  • Infosys meets estimates but goes conservative on guidance

  • Nilekani appears to have adopted a clear shift from Vishal Sikka’s aggressive methods of growth

  • Growth guidance at just around 6.5% may be closer to pragmatism considering the situation on the ground


  • FMCG company, Hindustan Unilever, report strong volume growth in Q2

  • The 4 % volumegrowth and the 6% benefit from cost cuts shows that the positiveimpact of GST is trickling in

  • HUVR is the second largest market for Unilever after the US and hence its criticality cannot be underestimated


  • BJP facing a tougher challenge in the Gujarat Elections this time

  • Pre-poll estimates still put the BJP ahead in the race but the popularity of theopposition is catch up in Gujarat

  • A lot will depend on how the floating votes of the Patidars led by Hardik Patel finally decide to vote


  • Nifty closed the November F&O series at an all-time high

  • The sharp rise in Nifty beyond the 10,300 level was largely driven by the PSU banks

  • Going ahead, the banks will continue to play a key role supported by capital goods and FMCG


  • ECB gradually plans to cut down on its stimulus to markets

  • The stimulus over the last few years has resulted in a bond portfolio worth $2.5trillion with the ECB

  • While the ECB proposes to slow down on its purchase of bonds, the actual end-date could be extended


  • Saudi Crown Prince hints that oil supply cuts could continue for much longer

  • The oil supply curbs likely to expire in March 2018 may now extend much beyond that date

  • OPEC curbs have brought oil closer to $60/bbl and that is making a huge difference to the demand/supply equation


  • Indian Railways has finally opened its doors to private steel makers

  • This virtually ends the monopoly that SAIL enjoyed in supplying rails to the Indian Railways

  • This is good news for JSPL as the Railways is likely to buy 700,000 MT of steel for track upgrades


  • IRDA may require PE funds for longer equity commitment in insurance

  • The IRDA has suggested a 10-year lock in for PE funds that are holding in excess of 10% in the insurance company

  • With a surge in insurance IPOs, the IRDA is trying to balance investor returns with investor interests


  • SGX may win the deal for listing of the Saudi oil giant, Aramco

  • There are atleast 12 exchanges across the world that are vying for getting Aramcolisted on their bourses

  • The sale of 5% stake in Aramco could value the company at a little over $2 trillion


  • Gold imports in the second quarter doubled despite GST and PMLA

  • This was largely driven by a last consignment of gold imported from South Korea,where the FTA proved to be the loop hole

  • The gold import bill for Q2 was at $17 billion against $7.9 billion in the corresponding quarter last year

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