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Weekly Capsule (Oct 30 – Nov 03) and Impact Analysis


Posted on 03-Nov-2017 Comments  0

Major News Item

Impact Analysis



  • PMI Manufacturing comes in sharply lower at50.5 for September 2017

  • The pressure onthe PMI Manufacturing came from the lull after the aggressivere-stocking post GST launch

  • For PMI, 50 is thecut-off and a level of below 50 indicates that the manufacturingexpansion is faltering


  • Core sector growth came in sharply higher at5.2% for September

  • This is sharplyhigher than the level of 4.5% for the last month and takes the6-month core sector growth to 3.3%

  • Core sectoraccounts for 40% of IIP and the September core number was drivenby coal production and refining


  • Auto data presented a mixed picture for themonth of September

  • While Maruticontinued to flatter, Tata Motors was flat while Honda, Hyundaiand M&M saw negative growth

  • Among the twowheelers, TVS Motors continues to outperform but Honda salesfaltered in the month


  • ONGC reported 32% jump in net profits largelydriven by other income

  • Although OPMexpanded by 190 bps, the total revenues were lower despite higheroil prices

  • ONGC has taken ahit on realizations with its net realization being lower thanglobal benchmark by $2/bbl


  • LIC may participate aggressively in the bankrecapitalization

  • LIC is most likelyto be called upon by the government to subscribe to the shares ofbank follow-on offers

  • LIC may also helpthe government float an SPV to issue recapitalization bonds toavoid the fiscal deficit spiking


  • The merger of IDFC and Shriram Group wasofficially called off

  • Both the groupscould not arrive at a reasonable valuation common-point resultingin cancellation of the deal

  • IDFC shareholderswere demanding a steep premium, which Shriram felt was notobviously justified


  • RCOM has called upon banks to convert itsdebt into 51% equity

  • If banks acceptthis proposal, then it will lead to a total of Rs.7000 crore ofdebt being extinguished

  • Combined by thesale of its towers business, the overall debt may come downsharply to just about Rs.6000 crore


  • Brent Crude crossed the psychological $60/bblmark this week

  • This represents a27-month high for oil prices and indicates that oil demand isback in the market

  • With oilinventories dwindling to 2012 levels and OPEC extending itsproduction cuts, prices may remain high


  • Donald Trump indicates Jerome Powell as hischoice for Fed chairperson

  • This was alreadyexpected after most media houses virtually ruled out a secondterm for Janet Yellen

  • Compared toYellen, Mr. Powell is regarded as more dovish and global marketsshould welcome this move


  • The Bank of England raised its rates by 25bps for the first time in 10 years

  • This takes therate of interest in the UK to 0.50%, largely due to higher GDPgrowth and more job creation

  • However, the governor of the Bank of Englandhas indicated that further rate hikes may be ruled out for now

  • The NTT DoCoMo versus Tata Sons tusslefinally comes to an end

  • The tussle endedwith the promised $1.2 billion payout by Tata Sons to NTT DoCoMoin the light of the Tata Tele deal

  • Tata Sons, underCyrus Mistry, had refused to honour the commitment leading to therift with the Tata family


  • Bharti Airtel profits falls by 77% to Rs.343crore in the 2ndquarter

  • The pressure ontop-line and bottom-line came largely from the pricing pressureexerted by Reliance Jio

  • Going ahead,tighter competition and the gradual removal of IUC charges willalso work against Bharti Airtel


  • Euro Zone records 2.5% GDP growth, the bestin last 7 years

  • A weaker Euro hasled to an exports-led growth in GDP across most parts of the Euroregion with positive PMI growth

  • This will impelthe ECB to slow down on its bond repurchases as higher inflationis likely to follow growth


  • Indigo Airlines records 4-fold jump inprofits to Rs.551 crore

  • There was a sharpspike in the Revenue per seat compared to a flat growth in thecost per seat

  • Very importantly,there was also a strong element of credits from Pratt &Whitney which boosted profits in Q2


  • India jumps 30 notches in the World Bank“Ease of Doing Business Index”

  • This has been oneof the sharpest improvements in the index largely on the back ofreforms and Make in India initiative

  • However, thisranking may not be comparable with last year as this year onlyconsiders Mumbai and Delhi


  • Fed maintained status quo on Fed rates in itsNovember meet

  • That was largelyalong expected lines but the indication of a rate hike inDecember are all over the place

  • The futuretrajectory of rates in 2018 will largely depend on the trajectorypresented by Jerome Powell


  • Glenmark reports a stellar performance inIndia and EU markets

  • The companyreported 4.25% higher profits for the quarter, sharply betterthan street expectations

  • While India and USgrew by 5%, the real thrust for Glenmark came from Europe whichgrew by 48%


  • Vedanta put up a sterling performance in itsmetals business in the quarter

  • The real boost toEBIT came from zinc and copper even as oil contributed negativelyto the EBIT

  • Nearly 80% of theprofits came from better realizations in copper and zinc due torobust demand from China


  • The price of Bitcoin crossed the $7200 markfor the first time in its history

  • Over the last 1year the Bitcoin value has rallied many times over as a seriousalternative non-fiat currency

  • However, majorBitcoin bulls like Tim Lee are now seeing the Bitcoin in bubbleterritory after the sharp rally


  • Tax woes are holding up shipments of solarpanels

  • There have beendemands for higher import duties classifying them as motors whichattract 7.5% duty

  • This is likely tobe a blow for the nascent alternate energy industry, which is abig focus area of Mr. Modi


  • The much awaited I-Phone X hit the Indianmarkets in November

  • Priced atRs.89,000 this is likely to be one of the most expensive phonesin India

  • While pre-orders began last week, experts donot see this is a great improvement over the I-Phone 8-plus

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