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Weekly Capsule

Posted on 17-May-2019 Comments  0

Weekly Capsule (May 13 – May 17) and Impact Analysis

News Announcement Impact Analysis

US China trade war took a turn for the worse during the week A day after Trump imposed punitive tariffs, China also responded with tariffs on $60 billion of US goods

In the meanwhile, Trump also expanded the scale by black listing Huawei from selling products in the US

Senior officials of Jet resign putting the Jet stake sale in peril The CEO, CFO and the head of HR at Jet Airways resigned on the same day raising doubts on the sustainability of Jet

In the meanwhile, Etihad has also decided to withdraw its board members from Jet, in what could be the last nail

India goes to the last round of polling on 19th of May With the completion of the 7th round, the exit polls will be telecast from 19th evening onwards

The final counting will happen on 23rd of May which will determine the nature of the next government

CPI inflation came in at 2.92% for April and WPI inflation at 3.07% Both CPI and WPI inflation hinted at sharply higher food inflation and lower fuel inflation in the basket

Although, the inflation is still below the RBI 4% comfort zone, it does pave the way for another rate cut in June

Indian markets bounced back sharply on Thursday and Friday The bounce was largely ahead of the exit polls on Sunday, which is expected to suggest a stable government

However, the global reality of the trade war and geopolitical risk in the Middle East will be an overhang

Tata chemicals to sell its consumer business to Tata Global This is part of the restructuring of the Tata group to bring like businesses under one banner for better synergies

Shareholders of Tata Chemicals will get 1.14 shares of TGBL for every share of Tata Chemicals held

Bajaj Finance reports 57% growth in net profits in a tough quarter In a bad quarter for NBFCs, Bajaj has maintained growth due to its focus on consumer financing

With low NPAs and no risk of maturity mismatch, the stock is back to its all time high price levels

NSE to appeal against the SEBI order in terms of severity and penalty amount SEBI had imposed a total penalty of Rs.1000 crore on NSE for its role in the co-location fiasco for preferential access

Key investors of NSE have been insisting that NSE pay the penalty and proceed with its IPO in 6 months

VIX continues to remain above the 28 mark despite 2 day rally VIX is also the fear index and shows the amount of panic in the markets. Currently it is high ahead of election outcome

However, VIX staying at around 28 sharply limits any sustained upside in the market from current levels

Indigo price cracks on perceived promoter differences The crash came after promoters confirmed appointing law firms to help redraft the shareholder agreement

One promoter group had a much bigger say in the operations of the airline and that had become the bone of contention

Tensions in the Middle East mounted after alleged attacks by Iran Saudi Arabia has alleged attacks by Iran on its vessels and its facilities in clear aggression outside Hormuz

The attacks were an outcome of the sanctions imposed by the US on export of Iranian oil to Asia and Europe

RBI exercises greater control over NBFC operations As a first step, the RBI has asked all NBFCs with AUM more than Rs.5000 crore to appoint Chief Risk Officers

The CRO will have a fixed tenure and cannot be removed without the sanction of the board

The big ecommerce sale may finally coming to an end in India Large players like Amazon and Wal-Mart have confirmed that they are not selling below cost price any longer

Ecommerce players are wary about the new ecommerce rules of selling and local data maintenance

Trade deficit comes in sharply higher at $15.4 billion for April While exports were flat, the imports were up by 4%, with the sharpest rise seen in gold

The trade deficit is extremely vulnerable to the rise in oil prices as it puts pressure on import bill

IL&FS independent directors could come under the MCA radar The MCA is now investigating lapses by the independent directors of IL&FS, apart from auditors and rating agencies

This could be a template for other companies to look closely at the role of independent directors

Investment banks rule out devaluation of Yuan beyond 6.60/$ Both UBS and Morgan Stanley expect only a calibrated attempt by China to weaken the Yuan

There were fears that China may weaken the Yuan to give a bigger boost to its exports

Monsoons may be delayed and both IMD and SKYMET concur Both the agencies have pegged a 6 day delay in the onset of Southwest Monsoons in Kerala

That is likely to delay the onward movement of the rains and impact the sowing cycle in the month of June

NCLAT may have collected nearly Rs.70,000 crore in fiscal 2018-19 This translates into a recovery percentage of 43%, which is at par with the global best practices

Another Rs.1 trillion is expected to be recovered via the NCLT process in the current fiscal year boosting bank profits

Japan drags India to WTO over mobile import duties Japan’s contention is that India charges effective duties much higher than the WTO mandated rates

However, Japan continues to be a small player with China and Korea taking the bulk of the Indian market

Pharma stocks cracked sharply in the markets this week The fall was triggered by the US filing a lawsuit against Indian pharma companies for inflating prices of generics

The US government has consistently expressed reservations about profiteering on generics and this could be serious

Vinita Bali points to multiple indicators of a consumption slowdown Bali underlined that the signs of consumption were always there in the macros and growth numbers

In fact, the slowdown in durables has been more acute than in consumer staples



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