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Posted on 26-Apr-2019 Comments  0

Weekly Capsule (Apr 22 – Apr 26) and Impact Analysis

News Announcement Impact Analysis

US sanctions waiver for oil buying comes to an end on May 02nd 2019 Effective that day, most countries like India, China and Japan cannot import Iranian oil anymore

It is not clear whether China will abide by the sanctions but India has already cut its import orders with Iran

Reliance Home Finance debt downgraded to Default category Reliance Home Finance debt has been downgraded to Default status after group fund raising did not materialize

The entire group has been struggling due to liquidity constraints and this downgrade follows Reliance Capital

Crude corrects after touching a high of $75.60/bbl The crude spurt came during the week after Russia decided to cut exports and the Iran sanctions weighed on prices

However, after Trump coaxed the OPEC to increase supply and bring down the oil prices, Brent fell more than $3/bbl

Piramal Enterprises may look at taking a stake in the loan book of DHFL Piramal has clarified that it will only buy part of the portfolio of DHFL and not take a stake in Dewan Housing

Dewan has been struggling for last 6 months due to rising borrowing costs and a weak HFC market

Yes Bank logged a loss of Rs.1507 crore in the fourth quarter The big loss was an outcome of huge write offs as NPAs of IL&FS and Jet Airways and also write-offs on investments

The gross NPAS of the banks and the net NPAs have gone up sharply although loan growth has been robust

Hero Moto faces pressure on top line and bottom line Hero Moto faced pressure on sales volumes and pricing power as revenues and profits fell for the quarter

The entire auto sector has been hit by weak demand on the back of high fuel prices and willingness to postpone

RBI instructs banks to make provisions for loans to IL&FS As a special case, the NCLT had permitted banks to not provide for IL&FS bad loans as it was a restructuring case

RBI is of the view that such provision delays distorts the picture of the health of Indian banks

Reuters poll hints at end of the rate tightening cycle globally The poll has indicated that the US Fed may have set the tone and other central banks may follow to end hawkishness

That could be good news for the Indian markets as it gives the RBI scope to maintain a dovish stance

India goes into Phase 4 of general elections on Monday 29th April Phase 4 elections covers the financial capital of Mumbai and the financial markets will be shut on that day

Till now 3 phases of elections are already completed with more than 60% of the seats already being polled for

Indian home buyers unhappy with financial creditor status IBC gives home owners financial creditor status but there have been very few takers as buyers prefer to negotiate

To invoke the IBC, it will call for a class action, which home buyers are unwilling to commit to

Fitch warns that change in government could hit oil and gas reforms The current government has introduced a slew of oil sector reforms including free pricing of petrol and diesel

Fitch is of the view that sustained oil sector reforms would only be possible with continuity in policy

Microsoft touches $1 trillion market cap for the first time in history The move towards $1 trillion market cap was driven by better top line and bottom line growth in the March quarter

Last year, Apple and Amazon had crossed the $1 trillion market cap mark but have retreated to lower levels

RBI dollar swap happens at a premium of Rs.8.78 on the spot dollar This dollar swaps introduces rupee liquidity in the system and absorbs dollars putting pressure on the rupee

The higher premium expanded the forwarded premium and that was the key reason weakening the rupee

Nifty and Sensex extremely volatile during the week On most days during the week, the indices were sharply up or sharply down due to bouts of volatility

The VIX remains elevated above the 25 mark making the markets extremely volatile at current levels

Cash market volumes plummet sharply in the Indian broking industry Cash market volumes for Indian brokers has fallen from 7.7% in 2013 to just about 2.2% in 2019

This has been led by lower cash market volumes and sharply lower rates post the introduction of discount broking

US also likely to give positive surprises on the GDP growth front The US is expected by outperform its original estimates by nearly 10-20 basis points in terms of GDP growth

China was the first to report better than expected growth raising hopes of a turnaround in global growth

RBI may relent on relaxing of the February 12th circular In line with the SC order, the RBI may relent on giving 30 days time before initiating NCLT proceedings

Feb 12th circular had tried to constrict the time to just 1 day which the SC ruled was impractical for banks to implement

India makes alternative plans for oil import ready post Iran sanctions Sanctions will matter to India because India remains Iran’s second largest customer or crude oil

India has lined up alternate oil supply from Saudi Arabia, the US and also from Mexico

Asian bond inflows in March 2019, the best month since Jan 2018 Foreign investors infused $5 billion into Asian bonds with India and Indonesia being the major recipients

The flows quickened after the currencies in these economies stabilized. Thailand saw outflows on political uncertainty

Terror strikes in Lanka brought back the spectre of terror in South Asia It was a horrific terror attack in Sri Lanka in which over 350 were killed and much larger number injured

Terror spreading is never good news, more so considering that Sri Lanka is an immediate neighbour for India

SIPs on equity funds yielded 10.26% CAGR in the last five years This return was still better than gold and realty but lower than the average returns of Nifty around 11.4% in last 20 years

SIPs have been the backbone of retail appetite for equities and India has seen record flows into equity funds via SIPs



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