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Posted on 08-Feb-2019 Comments  0

Weekly Capsule (Feb 04– Feb 08) and Impact Analysis

News Announcement Impact Analysis

Nifty and Sensex plunge on Friday led lower by Tata Motors The Tata Motors stock corrected nearly 18% in a single day after a record loss of Rs.27,000 crore in Q3

The markets were also roiled by the growth downgrade of EU economies and the ongoing trade war

Edelweiss and L&T Finance clarify to BSE after ADAG allegations ADAG group had alleged that Edelweiss and L&T Finance had deliberately dumped shares to depress prices

Both companies have clarified that the pledged shares were sold in the market only after repeated notices of default

RBI cuts repo rates by 25 bps in its February monetary policy The repo rates were cut by 25 bps to 6.25% taking the reverse repo to 6% and the bank rate to 6.5%

In addition, the RBI also changed the stance of the policy from “calibrated tightening” to “neutral”

RBI relaxes ECB borrowing rules for potential IBC bidders Now potential bidders will be permitted to fund their target company loan repayments using ECB borrowings

This will be an exception only for IBC since ECBs cannot be used to repay domestic loans currently

Banks can now lend to NBFCs based on variable risk weights Currently, all bank lending to NBFCs attracts mandatory 100% risk weight for capital adequacy purposes

Now the bank has the leeway to assign risk weights to the NBFC portfolio based on credit ratings

RBI now permits unlimited group exposure to FPI inflows into debt Currently, FPIs can only up to 20% of their total investment in Indian corporate bonds into a single business group

This relaxation will ensure that FPIs are not compelled to diversify their debt just for regulatory purposes

Vodafone idea reported record losses of Rs.5,005 crore in third quarter This is much higher than the Rs.4000 crores of losses reported by Vodafone idea in the previous quarter

With the lowest ARPU of Rs.84, Vodafone Idea is literally losing money on every new client acquired and serviced

Tata Motors reported net loss of Rs.27,000 crore in Dec quarter This was due to an extraordinary write-off due to asset impairment in the books of Jaguar Land Rover

JLR is under stress due to the impending BREXIT well as due to slowdown in demand in its core market of China

Telecom companies start shedding of low margin customers Bharti Airtel and Vodafone have cancelled over 10 crore customers with monthly billing of less than Rs.35

Jio is now the only company that is willing to offer absolutely bottom rates for low value customers

Global ecommerce giants restructure their vendor ownership There has been a rapid restructuring of the vendor relations with Amazon taking the lead in the process

Its JV with Catamaran has reduced its stake to below 25% as per the new ecommerce policy
Anil Ambani’s RCOM files for bankruptcy in NCLT With the process of sale to Reliance Jio taking longer than expected, the creditor pressure has been building up

The company still has 270 days time to work out a resolution and it could be done with Reliance Jio itself

RBI governor underlines government has full freedom on reserves The government has been demanding a higher share of RBI reserves this year to bridge the resource gap

The proposed RBI board meeting for interim dividend has been put off now to February 18th

Banks pressure Essar Power on personal guarantees given ICICI bank and IDBI have moved the DRT to cash the personal guarantees given by Ruias for the debt of Essar Power

If the guarantee is invoked then the Essar group could have trouble raising requisite resources for Essar Steel

Saudi Arabia pumped just 10.24 million bpd of crude in January This is lower than the eligible quote of 10.331 bpd that is allowed for Saudi Arabia under the OPEC agreement

Being the world’s largest oil exporters, Saudi actions still have a major bearing on the oil prices globally

Banks may fall short of deposit collections by $75 billion this year Banks need deposit inflows of $350 billion in next two years against the regular annual flow of $100 billion

This has been necessitated because the growth in deposits has not kept pace with loan growth in last few years

US reports a fall in trade deficit for the first time in 6 months The sharp 11.3% fall in trade deficit in January was largely driven by reduced imports of phones from China

Global markets have interpreted this as a sign of a slowdown in global trade with implications for GDP growth

Mutual funds make a request to SEBI to give more time to Zee to pay its debt Mutual funds have exposure to the tune of Rs.8000 crore to the Essel Group and this could be a setback for them

Subhash Chandra has agreed to restructure and repay all their debentures by September this year, subject to SEBI approval

Government may shift to pre paid power to reduce losses Currently, power suppliers owe close to $5.7 billion to power producers in the form of unpaid dues

In India, nearly 20-25% of the power gets lost in transmission due to theft and pilferage making the problem worse

Steel companies are again seeking protection of import duties Steel companies are caught between rising input costs and falling market price of steel in India due to the glut

Countries like China, Vietnam and Russia have been dumping cheap steel into India leading to this call for higher duties

Government puts greater onus on Public interest directors These pertain to the directors on the boards of exchanges, depositories and clearing corporations

Each PID will be nominated for 3 years and new assignments will entail a cooling period of 1 year

Vijay Mallya extradition finally signed by the UK Home secretary The legal options will have to be followed by an approval of the Secretary of State, who is the deciding authority

The entire process could take anywhere between a few months to a couple of years



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