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WEEKLY CAPSULE & IMPACT ANALYSIS


Posted on 08-Mar-2019 Comments  0

Weekly Capsule (Mar 04– Mar 08) and Impact Analysis




News Announcement Impact Analysis


Mutual funds see outflows of Rs.20,000 crore in the month of February Liquid funds saw the bulk of the outflows to the tune of Rs.24,509 crore during the month

Income funds and balanced funds also saw outflows even as equity fund inflows were nearly 20% lower


European Central Bank maintains dovish stance and rates status quo The ECB decision was largely based on expectations that EU GDP growth and inflation would falter this year

Most global markets corrected in the aftermath of the ECB announcement as it pointed to growth pangs


Forex reserves in March get past the $400 billion market after a long time Forex reserves had fallen from $428 billion to a low of $392 billion as RBI had intervened to defend the rupee

Forex reserves in excess of $400 billion are a must considering that imports are likely to cross $500 billion this fiscal


Oil drops more than 1.50% on Friday after holding steady through the weak On the one hand there was the US data coming in of rising shale production and higher inventories

But the real worry for oil came from weak EU outlook. EU being a major oil importer is likely to dampen oil prices


Arcelor Mittal finally gets approval to take over Essar Steel for Rs.42,000 cr The NCLT resolution had run into rough weather after Essar promoters made a much higher bid for the company

However, the final ruling of the NCLT has come in favour of the highest bidder at NCLT (Arcelor Mittal)


Nifty closed the week above the 11,000 mark after a long break The Nifty rally was driven by aggressive buying in index heavyweights like banks and autos

Markets ignored the Trump GSP threat and the MSCI down-grade to focus more on positive cues from PMI numbers


The $1 trillion Norwegian Wealth Fund is going underweight on oil explorers This sounds a tad ironic considering that Norway created the wealth fund corpus out of its oil earnings

The Norwegian Pension Fund will remove a total of 134 exploration companies from its overall portfolio


Government sells its entire stake in Dredging to 4 state owned ports This could be a new method of divesting where government raises funds without diluting indirect control

The government has set a very aggressive target of Rs.90,000 crore disinvestment in the coming fiscal 2019-20


NCLT admits ICICI Bank’s insolvency plea against Punj Lloyd The insolvency plea was filed with the NCLT after Punj Lloyd had defaulted on a Rs.854 crore loan

With the provisioning norms being tightened, the room for error is almost nil for banks and for borrowers


US dollar sank on Friday after jobs data came out disappointing The weak jobs data was one more signal that the slowdown is spreading across China, EU and also the US

However, the US economy has been at close to full employment for a long time with record low unemployment


Markets are veering around to the view of a decisive win for BJP in 2019 The sentiments on politics seems to have changed with the decisive tactics adopted by India after the Pulwama attack

If the current NDA government comes back, the markets would see that as a vote for tough reforms


Reuters poll estimates CPI inflation to have picked up in February The CPI inflation has been on a consistent downtrend over the last few months on weak food prices

However, the Reuters poll still estimates the inflation rate to be well within the RBI range of 4%


FIIs pumped in nearly $2.8 billion into Indian equities in 10 days This infusion was largely led by expectations that a stable government may continue at the centre post elections

Also, the Indian markets had underperformed other Asian EMs in the last six months making it undervalued


Power companies likely to add $25 billion to bank NPAs this year This is likely to be an outcome of the stringent NPA provisioning in the light of the slightest delay in payment

The government has, meanwhile, announced a slew of measures to bail out the power sector from this mess


India may get continuation of Iranian concessions for oil imports The government is likely to consider letting India, China, Japan and South Korea to continue imports of oil from Iran

The concessions expire on May 04th and India may be allowed to continue import of its 300,000 bpd from Iran


Women are still a small portion of the fund management industry According to a report by Morningstar, women in India comprise just 8% of the fund management industry

This is sharply lower than the number in other countries across Asia, Europe and the US


India may move the WTO over US withdrawal of concessions on trade The US withdrawal of GSP for India may impact exports to the US to the tune of nearly $5.6 billion annually

However, the WTO complaint may not be successfully unless India has been specifically discriminated against


According to a Knight Frank report, rich Indians prefer equity and debt Equity and debt together accounts for nearly 60% of the asset allocation by wealthy Indians versus 23% for realty

In the calendar y ear 2019, Knight Frank expects the wealthy segment to get involved in private equity in a big way


Liquid funds take it on their chin as SEBI cuts provision cut off Now liquid funds will have to make MTM provisions for any holding above 30 days as against 60 days in the past

In addition, SEBI also compressed the peak spread between fair value and actual value. Yields may drop by 15 bps


Former IL&FS board members charged with criminal conspiracy This move came a day after the Grant Thornton report found that nearly Rs.13,000 crore had been round tripped

The former management has 7 days to response failing which criminal action will be initiated against them


Benchmark bond yields refuse to fall despite RBI rate cuts One reason for this static yields could be that the banks have not transmitted rate cuts to the end borrowers

Bond markets are also wary of the fact that fiscal deficit this year could cross $100 billion putting pressure on yields



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