Market Capsule

Posted on 13-Jan-2017 Comments  0

Highlights of the Week (Jan 09 – Jan 13) and Impact Analysis

Major News Item

Impact Analysis

  • Much awaited Trump Speech fails to cheer global markets

  • Trump’s conference did not contain any references to the tax cuts or to the infrastructure spending of $1 trillion

  • In a negative move for IT and Pharma, Trump spoke about border tax on outsourcing and penalties for drug makers

  • Auro bindo acquires Portugal based Generis Farmaceutica for €135 mn

  • This gives Aurobindo seamless access to the entire Europe market which already accounts for 23% of revenues

  • The deal helps Aurobindo largely de-risk its exposure to the US, where FDA problems are likely to increase

  • Mohammed El Erian warns global markets of strong dollar

  • According to Erian, a strong dollar could make US companies uncompetitive in global markets depressing equity values

  • A strong dollar will also force the Chinese Yuan to weaken setting off a price war among emerging markets.

  • Definition of Long Term Capital Gains may be changed to 3 years

  • Currently LTCG for equities is fixed at 1 year, which is the cut-off for deciding whether gains are long term or short term

  • To put equities at par with other assets, this budget may change definition of LTC Gon equities to 3 years

  • Brokerages downgrade India GDP after advance estimates numbers

  • Advance estimates for the fiscal year 2016-17 has been cut from 7.6% to 7.1% by the CSO

  • Citigroup has downgraded India’s full-year GDP from 7.2% to 6.8% to factor the impact of demonetization

  • Sharp increase in collection of direct and indirect taxes for Jan-Dec period

  • Direct tax collections for Jan-Dec period up by 12% and indirect tax collections up by 25% in the same period

  • High levels of buoyancy was visible in collections of service tax, excise duty and personal income taxes

  • BSE to start trading India index and stock utures at INX from 16th Jan

  • INX is an international exchange situated at the GIFT city in Gandhi nagar in Gujarat

  • The idea is to avoid losing to global exchanges like Nifty trading to SGX and currency trading to DGCX

  • Indus Ind Bank flattered the street with better than expected results for Q3

  • Net profits were up by 29% in Q3 while the net interest income (NII) expanded by 34%

  • Gross NPAs and Net NPAs of the bank were marginally up at 0.94% and 0.39%respectively, but well in control

  • Steel stocks in India to benefit from Chinese supply cuts

  • China has decided to cut its steel capacity by nearly 10%, especially in the lower and mid-grade steel segment

  • This will reduce the dumping of steel from China into India and also keep steel prices higher globally.

  • Mega merger in the online Housing space leads to consolidation

  • Proptiger, and Maka an have decided to merge to form a single unified entity,

  • It will be an all-stock deal where the 3 brands will hold on to their distinct brands and have clear niches

  • Demonetization takes the sheen out of retail real estate; Knight Frank

  • According to Knight Frank, year 2016 will see the lowest levels of sales and new launches since 2010

  • This is a direct outcome of the liquidity crunch caused by the demonetization drive and may persist for 2 more quarters

  • Auto numbers in Dec 2016 put up the worst performance in 16 years

  • Auto numbers fell by 18.66% for Dec 2016, a level last seen in late 2000 at the peak of the dotcom crisis.

  • While the LCV segment saw a marginal 1.5% growth, two-wheelers were the worst hit in the auto space

  • RBI may impose uniform withholding tax on foreign currency borrowings

  • Currently different currency borrowings have different rates of with holding taxes. These will be made uniformly lower

  • The with holding tax on rupee denominated bonds (Masala bonds) may be entirely scrapped

  • Currency in circulation compresses to just 50% of pre demonetization levels

  • Against Rs.16,00,000 crore of currency demonetized, the RBI has only issued fresh currency of Rs.8,00,000 crore

  • The government may retain the final cash levels at much lower levels to reduce black money and encourage digitization

  • The race is heating up for the top job at the National Stock Exchange

  • Key contenders for the top job include Ashish Chauhan of BSE and former BSE CEO,Madhu Kannan

  • Former CEO, Chitra Ramakrishnan, had put in her papers ahead of the NSE indict menton preferential access to brokers

  • Dr. Urjit Patel cautions the government on its rising debt burden

  • Dr. Patel’s warning came at the Vibrant Gujarat Summit to caution the government from expanding fiscal deficit

  • He has also cautioned the government on off-balance-sheet items like guarantees and interest subvention schemes

  • TCS announces on par results and a major management reshuffle

  • TCS revenues were up by 1.5% and profits up by 2.9% for Q3. Digital business grew by 30% and was for 16.8% of revenues

  • Rajesh Gopinath an takes over as CEO of TCS as Chandra moves on as Chairman of the powerful Tata Sons

  • CPI inflation comes in at 3.41% for December lower than 3.63% in Nov

  • Fall in retail inflation was largely driven by lower food inflation which fell sharply to the 1.98% mark

  • Despite negative inflation in pulses and vegetables, RBI may be cautious on rate cuts in the Feb policy

  • IIP for November 2016 surprises on the higher side at 5.7%

  • In terms of user industries classification, IIP growth has been led by the capital goods sector

  • This is paradoxical since the demonetization was supposed to lead to a slow down in IIP growth, which is not the case

  • Oil & Gas companies to benefit in Q3 on oil prices and refining margins

  • Crude oil prices are up by 9% and GRMs are up by 31% in the third quarter on a comparative basis

  • This will result in higher realizations for upstream and for downstream companies in India

  • FPIs may prefer the Netherlands route rather than Singapore or Mauritius

  • India has already renegotiated tax treaties with Mauritius and Singapore to tax capital gains in India

  • Since Netherlands still runs on the old treaty, FPIs may prefer Netherlands to route money into India, at least for now

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