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Weekly Capsule (Sep 25 – Sep 29) and Impact Analysis

Posted on 29-Sep-2017 Comments  0

Major News Item

Impact Analysis

  • CII has sought extension of GST filing deadlines for August

  • GST has been plagued by too many systemic and IT related issues leading to delays in filing GST returns

  • Additionally, the export credit system is not working seamlessly leaving exporters in a liquidity crunch

  • US Fed maintained status quo on rates in its September meet

  • While the status quo was anticipated, Janet Yellen has hinted at 25 bps hike in December and another 75 bps in 2018

  • The Fed meet also dwelt on the tapering of the $4.2 trillion bond portfolio which commences in October this year

  • Reliance Jio likely to deliver over 6 million phones in next 2 weeks

  • This is one more big step by Reliance towards dominating the hardware segment of the mobile market

  • Jio has already forced merges among telecom players and has unleashed an all-out price war in the industry

  • JLR is preparing for major buy-outs of luxury auto brands abroad

  • JLR has been contributing 80% of revenues and 100% of profits to the Tata Motors numbers

  • Tata Motors has readied a war chest of $6.2 billion to fund these acquisitions in the near future

  • Crude oil touches a multi-month high of $57/bbl in the Brent market

  • This sharp spike in crude oil prices has been largely driven by the OPEC sticking to supply cuts of 1.8 million bpd

  • Saudi Arabia is keen to hold prices higher as it will enhance the valuation of its Saudi Aramco IPO

  • Angel a Merkel returned for her fourth term in Germany

  • While the victory was expected, the margins have been much narrower than the previous occasions

  • The worry for Europe is the rise of the anti-immigration party (ADF), which has risen to 3rd position in the polls

  • GST collections marginally lower for the month of August 2017

  • The figure was lower than July by 5% and was also lower than the regular indirect collections every month prior to GST

  • There has been a major issue of technical glitches and absence of credits available to exporters on GST paid

  • IRDA to focus more on scrutiny of capital adequacy of insurers

  • IRDA has been of the view that most insurers are not assessing their current and potential liability transparently

  • IRDA will call for an independent actuarial assessment apart from the opinion of the in-house actuary of the insurer

  • India looking to re-negotiate its diesel engines contract with GE

  • The deal was to supply 1000 diesel engines but Piyush Goyal has shifted focus more towards electric engines

  • GE has warned that any such rethinking may impact FDI flows and global business confidence in India

  • Nifty cracks sharply below 9700 levels a head of F&O expiry

  • The sharp fall in Nifty was driven by North Korean tensions and the Fed decision to hike rates in December

  • This will not only force the RBI to put off any rate cuts for now but the INR could weaken further from current levels

  • Kotak Group has cautioned on the need to use fiscal stimulus cautiously

  • According to Kotak Group, fiscal stimulus could lead to a spike in inflation if productivity does not keep pace

  • There is the also the fear that global investors and rating agencies may look at this as a signal to downgrade

  • Ajay Piramal group has forayed into the lucrative home finance segment

  • Piramal expects this segment to be the big beneficiary of the government’s major thrust to affordable housing

  • The focus will be more on funding self-employed professionals in the key Indian cities

  • Lenders to Lavasa township invoke the SDR scheme

  • Invoking the SDR means the promoters could eventually lose control of the company due to equity dilution

  • The company has reported losses of Rs.166 crore and debt to the tune of Rs.3500 crore will be restructured

  • Indian institutional investors more than make up for FII selling

  • FIIs have sold $7 billion in equities in August and September while DFIs have invested $9 billion in the same period

  • Indian mutual funds have been flush with cash due to strong retail inflows into equity mutual funds

  • ONGC may finance its purchase of HPCL stake via sale of its IOC stake

  • ONGC may choose to conserve its cash balance and its $4 billion borrowing limit and resort to selling stake in IOC

  • The stake in IOC itself is worth $4 billion and will largely cover the proposed $4.5 billion buyout of 51.11% in HPCL

  • The INR has weakened sharply against the USD and is closer to 66/$

  • The INR weakened on concerns that fiscal deficit could spill over with the government’s $7.7 billion stimulus package

  • The weakening is also an outcome of dollar strength after Yellen hinted at a likely hike in December this year

  • Donald Trump proposes biggest tax cuts for all Americans

  • These tax cuts will encompass corporate tax and individual taxation, which will be reduced in a phased manner

  • This was part of the promise made by Trump to the American people to revive the flagging US economy

  • FPI investment limit in Indian bonds raised by Rs.14,200 crore

  • This will include a total of Rs.8,000 crore in central government bonds and Rs.6,200 crore in state loans

  • This takes the total investment cap in Government securities to a level of Rs.2.5 trillion

  • Indian internet firms bag $7.4 billion in the first 3 quarters of 2017

  • This is far better than the peak of $7.6 billion that Indian net companies had raised in the full year 2015

  • While valuations have tapered after Snap deal, there is still billions of dollars waiting in the sidelines

  • Lupin is looking at acquisitions in women’s health and paediatrics

  • Lupin is aggressively looking to cut its dependence on the US market, with too many concomitant FDI-related issues

  • Lupin has the balance sheet capacity to borrow up to $1 billion and will use that for these acquisitions

  • Analysts continue to be ultra-bullish on the profit projections of Nifty

  • The recent upgrading of earnings comes in the light of the proposed fiscal stimulus planned by the government

  • For the last 12 quarters, the actual corporate profits have failed to keep pace with the market expectations



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