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WEEKLY CAPSULE AND IMPACT ANALYSIS


Posted on 09-Nov-2018 Comments  0

Weekly Capsule (Nov 05 – Nov 09) and Impact Analysis


News Announcement Impact Analysis
  • Asian markets lose nearly $4.3 trillion in market cap as dollar strengthens
  • Energy and new technology companies like Tencent have been the major losers in the Asian sell-off
  • With most currencies vulnerable to a weak dollar and a weak Yuan, the market correction just got exacerbated
  • NBFC CP repayment comes back to haunt as the year comes to a close
  • Indian NBFCs have billions of dollars of CP to be repaid by the end of December and defaults are a clear possibility
  • While NBFCs like Edelweiss and India Infoline have bought back some of their CPs, bank funding is the big question
  • Rupee showed a sharp appreciation to 72.50/$ on Friday
  • The jump in the rupee was largely driven by weak prices of Brent Crude which dipped below the $70/bbl mark
  • Dollar also weakened after the Democrats put in a better than expected show in the mid-term elections in the US
  • Equity mutual fund collections touch a record Rs.12,622 crore in October
  • Out of the total flows, nearly Rs.7,965 crore came in via the systematic investment plan (SIP) route alone
  • These smart inflows, despite the sharp correction in the markets is surely a gratifying sign for markets
  • Sobha becomes one more realty company to show healthy profits
  • Net profits at Sobha, a South based realtor, was up by 21% at Rs.61.30 crore in the second quarter
  • Growth in top line and bottom line was driven by higher sales off take in the southern region
  • Bharti Airtel International begins buy back of $1.5 billion of its bonds
  • The company is making use of the proceeds from anchor investors to repay its global debt
  • These bonds were due only in 2023 but Bharti is trying to deleverage its balance sheet for its India price war
  • India’s growth held back by note ban and GST, says Raghuram Rajan
  • Rajan has underscored that the adjustment may take time and the 7% growth in GDP may just not be enough
  • Rajan has called 7% growth the new Hindu Rate of Growth, which was defined as 3.5% in the past
  • Nifty and Sensex post first weekly gain in the last two months
  • The Nifty and the Sensex benefited from weak global crude prices and from a return of stability in domestic markets
  • However, global headwinds and the domestic liquidity challenge still remain concerns
  • Saudi Arabia and Iraq may coordinate supplies ahead of OPEC meet
  • With Brent Crude falling sharply below the $70/bbl mark, OPEC members have been debating another supply cut
  • OPEC members are wary that the current rate of production could again lead to an oil surplus in 2019
  • Digital transactions soar to Rs.245 crore in the month of August 2018
  • This roughly reflects a three-fold rise from the corresponding period in Oct 2016 when demonetization was launched
  • These exclude credit and debit card transactions and are those done on the BHIM and the UPI app
  • Finance Ministry seeks review of central bank balance sheet
  • Finance ministry officials have denied seeking capital support from the RBI to shore up government resources
  • It is feared that if the government insists on RBI funding then the RBI governor may be forced to resign
  • Farmers don’t bite bait to sell their produce in the open market
  • The government permission to sell farm produce outside the APMC has not found too many takers among farmers
  • This hesitation was due to lack of awareness and APMC still being the most profitable avenue for small farmers
  • Dr. Reddy Labs gets 5 repeat observations for its Duvvada plant
  • Repeat observations are normally taken by the FDA very seriously as it shows wilful lack of compliance
  • The Duvvada plant accounts for nearly 20% of all future filings of Reddy Labs and will impact its profitability
  • Titan profit misses estimates even as margins show shrinkage
  • Net profits rose by a mere 3% at Rs.314 crore, representing its lowest quarterly profit in the last 2 years
  • The weak growth in profits despite healthy growth in revenues reflects a clear case of margin compression
  • TCS to go on trial in the US over racial discrimination
  • The company will have to answer to court on cases of discrimination of local American employees
  • TCS and Infosys had aggressively recruited local Americans to subdue the furore over H1-B visas to the US
  • SBI reported Rs.945 crore net profit during the week
  • The SBI profit was a major boost to the banking sector as SBI returned to profits after four quarters
  • Not only did the gross NPAs fall below 10%, but the provisions halved and the NIMs expanded during the quarter.
  • S&P placed Tata Motors on “Credit Watch” during the week
  • The Credit Watch status could actually impact the borrowing costs of JLR and Tata Motors in global markets
  • JLR has taken a serious hit on the back of a distinct weakness in Chinese demand, a key market for JLR
  • Iran sanctions go live but in a largely diluted manner
  • A total of 8 countries including India, China, Japan and Korea have been exempted from ban on buying oil from China
  • With exemptions also given to Iraq to source gas from Iran, the original intent of sanctions are largely diluted
  • Services sector reported a PMI of 52.2%, a three month high
  • This comes in the aftermath of the better than expected surge in PMI manufacturing too
  • Services sector has seen a distinct pick up in order inflows and also in pricing power
  • FPIs sell nearly Rs.39,000 crore in the month of October
  • Selling was dominated in equities with nearly Rs.29,000 crore of selling and the balance in debt
  • Apart from valuation concerns, domestic problems with the rupee value also exacerbated the equity selling
  • Finance Ministry to finalize Rs.54,000 crore capital infusion for PSBs
  • This will be largely be designed to increase the credit growth to the MSME sector India
  • Government is also looking to free up funds by diluting the restrictions on credit creation by PCA banks
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