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Posted on 22-Feb-2019 Comments  0

Weekly Capsule (Feb 18– Feb 22) and Impact Analysis

News Announcement Impact Analysis

Sensex bounces over 550 points from lower levels in two days The bounce in the Sensex came after a nearly 1620 points correction in the Sensex over 9 days of selling

The bounce can be largely attributed to short covering in sectors like auto, financials and metals

Trump may extend trade talks deadline beyond the March 01st limit This is important because in the absence of a solution, the higher tariffs of 25% would kick in from March 01st

While US and China have been talking, it is getting stuck at intellectual property rights and structural issues

Economic Offences Wing (EOW) to question 100 brokers in NSEL scam The Rs.5600 crore NSEL scam had erupted in 2013 and had eventually led to the winding up of the exchange

EOW is investigating cases of laundering of money and other breach of client trust plus mis-selling by brokers

India trying to crystallize its response to Pakistan post Pulwama India has already withdrawn MFN status to Pakistan and also started applying diplomatic pressure

India has also been talking about cutting water supply from the Indus to Pakistan before a frontal response

MPC minutes underline the growth worry over inflation concerns MPC broadly hinted at another possible rate cut in the April monetary policy on the back of growth concerns

The MPC had expressed concerns over manufacturing growth but expressed confidence that inflation was under check

UBS upgrades SBI from Neutral rating to Buy rating UBS is betting on the NPA cycle bottoming out and the NCLT recoveries reflecting during the year

UBS is also positive on the distribution franchise of SBI, which is nearly 3 times the size of the second largest bank

Jet Airways shareholders approve conversion of loan into shares SBI, the largest lender to Jet Airways, will convert its loans into equity to hold a 51% stake in Jet Airways

While Goyal will lose majority control of Jet, it remains to be seen what Jet does with an airline in its portfolio

Brent Crude touched a high of $67.73/bbl during the week The rise in oil prices was driven by OPEC supply cuts despite the US touching crude production of 12 million bpd

The economic sanctions on Venezuela and Iran are also taking its toll on the oil prices

Adani Group eyes stakes in 6 AAI airports up for sale With GMR throwing in the towel on airports business, Adani could stand to be the big beneficiary in its expansion

Adani would be look at airports in Ahmadabad, Jaipur, Lucknow, Guwahati, Trivandrum and Mangalore

Lenders may refuse to release Rs.260 crore to RCOM against tax refunds RCOM urgently needs to deposit Rs.450 crore with the court for payment to Ericsson or it invites contempt of court

RCOM has been asking the banks to fund them against the Rs.260 crore tax refund that is due from the government

China agrees to buy US goods worth $1.2 trillion as a peace measure This will help the US to reduce its trade deficit to zero, which had been the bone of contention in world trade

However, China is unlikely to budget on structural changes and on the issue of intellectual property protection

RBI to merge 3 categories of NBFCs under a single head for simplicity Asset finance, loan and investment companies will now be merged under a single head of NBFC-ICC category

As per the last policy, risk weights will now be assigned to NBFC loans by banks based on credit rating

Gold prices get closer to $1350/oz on the back of global uncertainty Gold has been one asset class that has been doing extremely well in the back of the trade uncertainty

In addition, the consistent weakness in the dollar is also taking the prices of gold higher denominated in dollar terms

India overhauls oil and gas exploration policy to reduce oil dependence The new policy envisages more financial and marketing freedom to oil exploration companies

In addition, there will also be fiscal incentives for early production and also for production above targets

Government to recapitalize PCA banks to the tune of Rs.48,239 crore Prompt Corrective Action (PCA) banks are likely to exit by June and this move will enable them to built their credit books

However, Moody’s has raised doubts on credit pick up as the lag effect of NPAs is likely to continue for another 2 years

January witnessed slowdown in air traffic to just 9.1% growth This is sharply slower than the 16-18% growth exhibited by aviation companies in the last 2 years

The fall in growth was largely on the back of flight delays and cancellations leading to reduced flight capacity creation

The rate of interest on EPF has been raised to 8.65% for this quarter This is likely to further distort the yield structure in India due to front ending of yields on safe government debt

On the downside, PF investors may end up with losses on the EPF investments in IL&FS bonds

Captive coal mines can now sell 25% of their coal output in open market This will create some genuine competition to Coal India and its subsidiaries in terms of domestic coal supply

Earlier the government had permitted companies to bid for coal mines purely for the purpose of selling in open market

Indian API manufacturers show positive growth in business metrics APIs are the active ingredients or raw materials that go into the preparation of drugs and medicines

Chinese competition has taken a hit due to stringent anti pollution measures in China and that has taken prices up

RBI agrees to pay the government an interim dividend of Rs.28,000 crore This will be used to predominantly fund the Rs.20,000 outlay this year on assured income to farmers

The government had budgeted a total payout of Rs.74.100 crore from the RBI and other financial institutions this year

Saudi prince pledges $20 billion to Pakistan; $100 billion to India The Saudi prince almost came to Pakistan and India with a blank cheque book

However, India may not have been too successful in using the offices of the prince to isolate Pakistan diplomatically



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