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WEEKLY CAPSULE AND IMPACT ANALYSIS


Posted on 30-Nov-2018 Comments  0

Weekly Capsule (Nov 26– Nov 30) and Impact Analysis
News Announcement Impact Analysis
India’s Q2 GDP disappoints at 7.1%, sharply lower than Q1
The lower GDP was largely driven by a fall in core sector growth, and weak consumption demand
Lower GDP growth also is indicative of an industrial slowdown in the quarter due to fears of a global trade war
Core sector growth recovers to a 3-month high of 4.8% in October
Five out of the eight sectors showed expansion with cement and electricity being the big gainers
Oil related sectors continued to disappoint as did steel. The core sector accounts for over 41% of the IIP basket
INR closed the week at a 4-month high level of 69.58 on Friday
This is a sharp recovery after the rupee had touched a low of Rs.75/$ at the height of the liquidity crisis in October
A dovish note from the Fed chief, Jerome Powell, also reduced the probability of steady Fed rate hikes in the future
Global fund managers reduced equity exposure by 2% to 47.7%
The global funds have seen their cash levels rise to a 20 month high on the back of global uncertainty over oil and trade wars
In addition, global fund managers are also worried about the likely fallout of the BREXIT deal not going through
A day after Yes Bank downgrade, CRISIL downgrades NCDs of Vodafone Idea
The downgrade pertains to the company’s outstanding NCDs to the tune of Rs.6000 crore.
The downgrade reflects the pricing pressure, huge debt burden and the gestation for the merger to deliver value
SEBI likely to reopen insider trading case against Sun Pharma
Some of these charges pertain to an FCCB issue and some to insider trading charges around the Ranbaxy acquisition
Apart from Dilip Shanghavi, the names of his brother-in-law, Sudhir Valia of Fortune Financials has also cropped up
Arun Jaitley admits to invoking Section 7 of the RBI Act
Section 7 pertains to the government directing the RBI on matters of public interest, which has been fairly debatable
Dr. Urjit Patel has hinted at resigning from his post if Section 7 was invoked. The last word may not have been said yet.
Marriott admits to major data hacking lapses in its Starwood unit
Marriott admitted that sustained hacking of its Starwood data may have compromised details of nearly 500 million guests
It is the second big data compromise after Yahoo and raises serious issues of cyber security and corporate governance
Fiscal deficit has crossed 104% of the full year target in October itself
This compares unfavourably with the 96% mark last year and was largely driven by increased government spending
There is likely to be a huge gap on divestment and GST revenues and that is likely to put further pressure
India’s forex reserves fell further to $392 billion on November 23rd
Indian forex reserves have fallen from a high of $428 billion as the RBI had to consistently intervene to defend the rupee
The RBI had been selling spot dollars at levels of 70, 72 and 74 to stem the fall in the rupee
Nifty and Sensex gain sharply on dovish comments from Jerome Powell
In a virtual U-turn from the previous month, Powell hinted that US may just be below its peak rate target
This led the dollar to weaken but took US equity markets and the Asian equity markets sharply higher
Private airlines may require capital infusion of Rs.35,000 crore
This is the total supported estimated by ICRA for Indigo Airlines, Jet Airways and Spice Jet
These airlines are losing nearly Rs.20 crore per day and they would require serious capital infusion to stay afloat
JLR to shut down UK engine plant for 2 weeks during Christmas
This move was necessitated by weak diesel sentiments, tepid demand in China and a general slowdown in off take
The impact was felt in Tata Motors which cracked further lower as JLR accounts for over 90% of its profits
Brent Crude dipped below the $60/bbl mark as US stockpiles put pressure
There is a lot at stake in the Trump-Xi meeting at G-20 as a trade war could slow down demand for fuel
There is also an all-important OPEC meeting coming up on December 06th when another supply cut is expected
Etihad may get a controlling stake in Jet Airways at the max level of 49%
The infusion by Etihad will mean that Naresh Goyal will have to give in and settle for a much lower stake
Apparently, Goyal had preferred Etihad to increase its stake over selling out to the Tata Group
Unilever edges out Nestle in the race for Glaxo Consumer unit in India
The GSK consumer unit is known for its famed brands like Horlicks and gives Unilever a big foothold in nutrition
Players like Horlicks and Complan have been struggling against newer products like Pediasure, manufactured by Abbott
Yes Bank cracks further on Moody’s downgrade to non-investment grade
This downgrade followed serious flaws pointed by RBI and likely exposure to NBFCs in India
RBI has also asked Rana Kapoor to demit office by end of January post which a new CEO is likely to be appointed
RBI reduces hedging requirements for ECBs to 70%
This reduction from 100% hedging to 70% hedging is intended to ease the pressure on dollar demand in India
However, this will only be allowed for ECBs with maturities between 3 and 5 years and not beyond that.
RCOM hints at asset sale to Jio being hit by government demand
Government had demanded Rs.2900 crore of spectrum charges before approving the asset sale
Government has insisted that the spectrum charges will have to be paid in cash or furnished as a bank guarantee
Standard Chartered Bank approaches NCLT to scrap the Arcelor bid for Essar
The deal was apparently made by a small syndicate of lenders without taking other lenders into confidence
Earlier, GAIL had also filed a complaint that operational creditors had been ignored in the process
SEBI urges mutual funds to seek more information before investing in CPs
This came in the light of mutual funds having to take a huge write off on their exposures to IL&FS
Mast of these CPs were issued by NBFCs with serious maturity mismatches in their balance sheets
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