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Weekly Capsule (Jul 17 – Jul 21) and Impact Analysis

Posted on 22-Jul-2017 Comments  0

Major News Item

Impact Analysis

  • Reliance Industries announces 1:1 bonus issue at its 40th AGM

  • This is just the fourth bonus by RIL in the last 35 years and the first bonussince 2009

  • The stock has rallied nearly 50% since the launch of Jio and the bonus will bring the stock into a lower price range

  • Global stock futures are likely to start trading on NSE from July 24th

  • The global stock futures will be traded through the NSE GIFT exchange set up at Gandhinagar in Gujarat

  • Indian investors will now be able to diversify their India investment risk by buying global stocks in their portfolio

  • HDFC Life to go ahead with its IPO and put merger on the back burner

  • HDFC Life’s proposed merger with Max Life ran into trouble after IRDA did not approve merger with an NBFC

  • HDFC Life will plan its IPO during this year to be the third insurance IPO after ICICI Pru and SBI Life

  • RIL again flattered the street with a sharp rise in gross refining margins

  • RIL’s GRMs at $11.9/bbl was almost $1.5 better than the consensus street estimates

  • The stock has already crossed Rs.500,000 crore in market cap and has widened its value gap over TCS

  • RIL announces another telecom disruption in its 40th AGM

  • Reliance Jio announced its foray into mobile hardware with a smart phone that will just entail a deposit of Rs.1500

  • The idea is to bring the 50 crore mobile users who are outside the smart phone user list, also into the data usage ambit

  • Ram Nath Kovind was elected the 14th president of India

  • With a vote share of over 65%, Mr. Kovind comfortably sailed past the opposition presidential candidate, Meira Kumar

  • The outcome of the presidential elections was never in doubt after key non-NDA parties also decided to support Kovind

  • Chinese economy shows green-shoots of recovery once again

  • GDP growth in China for the second quarter ended June 2017 came in at a much healthier 6.9%

  • Additionally,China industrial growth came in at 7.6% while growth in retail sales came in higher at 11%

  • ITC cracked sharply after negative cues on the GST front

  • The stock almost lost 7 months of gains in a single day during the week after government imposed additional levy

  • The additional levy became necessary after cigarettes started enjoying concessional GST duty at just 28%

  • SEBI calls upon banks to disclose bad loan divergence to exchanges

  • Currently, the RBI requires banks to disclose the divergence only if it exceeds 15%of RBI approved NPAs

  • The SEBI move comes after the cases of ICICI Bank, Axis and Yes Bank, where divergence proved to be price sensitive

  • Trump faces a major embarrassment on his healthcare plan

  • With 2 more Republicans voting against Trump’s healthcare plan, his plan to scrap Obamacare is as good as gone

  • That also raises doubts over Trump’s ability to push through crucial tax reforms and on the infrastructure front

  • CRISIL warns of additional $37 billion hit on the 50 stressed accounts

  • Banks have only provided 40 % in case of IBC accounts and will have to provide for a minimum of 50% as per RBI

  • The big challenge will be to provide the requisite capital cushion for the PSU banks, whose CRAR is already weak

  • Tata Group to restructure technology and infrastructure business

  • All technology properties of the Tata Group may be merged under the TCS banner for better traction

  • Tata Sons head,Chandrasekharan, has a clear mandate to focus the group more on ROI and value creation

  • ONGC finalizes its stake purchase in HPCL fornearly $4.5 billion

  • The Rs.30,000 crore deal will entail ONGC buying the government’s 51.11% stake in HPCL

  • HPCL will continue to operate as a subsidiary of ONGC and there will be no open offer made to shareholders of HPCL

  • Domestic air traffic showed a growth of 20% in June 2017

  • The growth was driven by lower fares and greater demand from retail and business consumers across India

  • India is now approaching the 1 crore passengers per month mark which is a tipping point for big aviation growth

  • NSE has filed a consent application with respect to aldo investigations

  • A consent pallows NSE to continue with its business without accepting ordenying the allegations

  • The preferential algo issue at NSE has been under investigation for some time holding up the IPO

  • Reliance expands its media interests with a25% buy into Balaji Telefilms

  • This is the second big content acquisition for Reliance after the stake in Network 18, which owned CNBC India

  • For RIL, this perfectly gels with its larger plan to integrate platforms,content and access via Jio

  • Foreign investors pump in $7.6 billion into real estate in 3 years

  • This infusion in the 3 years to 2016 is more than 2.5 times the amount infused in the 3 years prior to that

  • Most foreign investors have shown keen interest in buying commercial properties with strong rental potential

  • Aggressive put writing in Nifty 9900 and 9850 strikes cushions downsides

  • There has been heavy demand from institutions to sell put options of strikes between 9800 and 9900

  • Writing puts aggressively indicates that traders do not visualize the markets falling below that level

  • Trade deficit in June widened largely due to spurt in gold imports

  • This is a worry as 100% growth in gold imports means using precious forex reserves for an unproductive import

  • In fact, the gold imports for the Q1 FY 2017 was almost double of last year at $ 11.25 billion

  • ECB hawkish talk rallies the Euro versus the US Dollar

  • Mario Draghi had hinted at possible unwinding of the bond portfolio by next year which strengthened the Euro

  • The dollar also weakened after doubts over Trump’s ability to push through reforms and his secret Russia meeting

  • Russia and OPEC to stand by supply deal at the weekend OPEC meet

  • Russia and OPEC have cut daily supply of oil by 1.8 million bpd but prices of crude have continued to crash

  • Despite a glut of supply from the US, Nigeria and Libya, OPEC and Russia will continue to constrain supply in the oil market



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