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Posted on 19-Apr-2019 Comments  0

Weekly Capsule (Apr 15 – Apr 19) and Impact Analysis

News Announcement Impact Analysis

Nifty and Sensex touch new highs in a truncated week of trading The Nifty and the Sensex touched all time highs on Tuesday despite 2 trading holidays during the week

The Nifty did close lower on Thursday after the shut down announced by Jet Airways spooked financials

Jet Airways announced suspension of all operations as of Wednesday With the latest tranche of funds not coming in from the banks, Jet had to shut down all operations on Wednesday night

With most of the key staff of Jet joining competing airlines, it now looks extremely unlikely that Jet would be revived

Crude oil got closer to the $72/bbl mark during the week Supply cuts from the OPEC and supply constraints from Libya, Iran and Venezuela took its toll on crude output

Oil prices also got a boost after US inventories also showed signs of tapering in the last few weeks

FPI flows continued during the week, being net buyers on all days FPIs have now infused over $8.5 billion into Indian markets since the end of February when flows started

The largest chunk of the flows are into equity as FPIs are betting on the return of a stable and reformist government

Reliance fourth quarter profits higher but Jio ARPUs under pressure Reliance saw growth in its refining and petchem business with GRMs coming in at $8.2/bbl

The fall in ARPUs was more due to its Rs.99 plan but at an ARPU of Rs.126, it is by far the best in the industry

Spice Jet hires most of the displaced pilots of Jet Airways With the government literally selling off the parking lots and planes of Jet, the revival appears highly unlikely

The sharp exodus of pilots indicates that the government may not be too keen to revive Jet as a going concern

India completed its second round of Lok Sabha Polling on 18th April With the second round, nearly 33% of the voting is done and the fate of nearly 170 Look Sabha seats is closed

The final counting will happen on 23rd of May and the results are expected to be out by late afternoon on the same day

HDFC MF gives two options to its investors to choose from HDFC has around 9 FMPs maturing in April and has given the option to roll over or opt out of the scheme

Opting out will be at a discount to the NAV and investors also lose their access to any recoveries from the Zee group

Bharti Airtel Rs.25,000 crore rights issue to open on May 03rd In an aggressive bid to raise funds, Bharti will raise Rs.25,000 crore through dilution via rights

This fund raising will help the company bring down its debt from 1.5 times to just about 0.9 times

RBI may have been split over cut in interest rates While Viral Acharya was against a rate cut, Das wanted the rate cut to give a boost to the sluggish industrial growth

This became evident when the minutes of the MPC meet were published by the RBI during the week

RBI’s Rs.3000 crore 3-year bond issue gets undersubscribed on yield worries Against the Rs.3000 crore issue, the RBI accepted only bids worth Rs.1620 crore at a yield of 6.72%

The market was demanding much higher yields from the government bonds, leading to the devolvement on PDs

GVK group looks to sell stake in the Airports business GVK is the operator of the highly lucrative Mumbai Airport and has been looking for a buyer for quite some time

GVK group had incurred large debts to finance their forays in the mid-2000s and the idea is to defray the debt now

Government calls upon airlines to increase supply to cut fares Air fares have gone up sharply after the shutdown of Jet and the Boeing 737 Max engine problems

Jet had a market share of 13% in the aviation market and this leaves a huge gap that could be hard to fill

CRISIL expects telecom sector to show positive growth in 2018-19 This will be the first year of positive growth in telecom after 2 successive years of negative growth

Telecom sector has been under pressure since September 2016 when Reliance hit the market with its Jio offerings

IMD feels India could get good rainfall despite El Nino effect If that were to come true then it will only be the second occasion after 1997 when we had good rains despite El Nino

Most El Nino years in the past have been years of deficit rainfall, though not necessarily drought years

P-Notes make a recovery to Rs.78,110 crore in the month of March 2019 P-Notes represent the FII flows where the investments are routed through offshore derivative instruments (ODI)

The P-Note volumes have dipped in the last few years due to stringent SEBI oversight

Germany downsizes growth while China does better than expected Germany downsized its full year growth for the second time in 1 year. It is now down from 1.8% to just 0.5%

China reported GDP growth of 6.4% in the first quarter, better than the 6.3% anticipated by the market consensus

India trade deficit narrowed to just $10.89 billion in March Interestingly, this was led by a sharp growth in exports led by chemicals, pharma and textiles

While imports growth was much lower, the sharp rise in gold imports is a cause for worry

WPI inflation came in higher at 3.18% in line with higher CPI inflation The higher WPI inflation was also led by higher prices of food and fuel baskets

A sharp rise in inflation may force the RBI to rethink on the subject of further rate cuts in June

US businesses protest the withdrawal of GSP benefits for India The US had recently decided to withdraw the GSP benefits which will impact Indian exports to the tune of $5.7 billion

US businesses had remonstrated that such a move would lead to spurt in imported inflation in the United States

Shaktikanta Das hints at greater use of fiscal tools in future The RBI governor statement came in the light of weak transmission which defeated the purpose of rate cuts

Das chose to focus on the need to synchronize the rate cuts with fiscal stimulus on the tax and public spending front



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