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Posted on 29-Mar-2019 Comments  0

Weekly Capsule (Mar 25– Mar 29) and Impact Analysis

News Announcement Impact Analysis

Nifty closes the fiscal year at above the 11,620 mark on Friday The sharp rally was largely driven by the banking stocks that carry the highest weightage in the indices

A more favourable macro environment and robust FII flows also helped the markets close stronger

FPIs infuse nearly Rs.50,000 crore in equity and debt in March 2019 March has been one of the best months in terms of FII flows, with money coming into equity and debt instruments

While liquidity was one factor, a strong rupee and hopes of an earnings revival in PSU banks also spurred FII flows

ICRA downgrades Reliance Capital rating to A2 status The downgrade was on the back of weak earnings trajectory and questions over asset portfolio mix

The management of the Anil Ambani led Reliance Capital has termed the downgrade entirely unjustified

Crude oil posts its biggest quarterly gain in more than 10 years The rally in crude prices was largely led by OPEC decision to cut supply further if required and Iran sanctions

While the crude has managed to cross $68/bbl in the Brent market, upsides could be capped by growth worries

Government of India to borrow Rs.4,42,000 crore in first half This would translate into weekly borrowing calendar of Rs.17,000 crore, slightly lower than last time

This should reduce the pressure on yields and help nudge the yields lower

BREXIT deal vote gets rejected by UK Parliament for the third time Despite Theresa May agreeing to resign if the vote went through, the BREXIT deal was defeated by a big margin

Now there are not too many options available except to postpone BREXIT or seek a re-poll or accept chaos

Pledging of shares again on the rise as the fund taps start running dry With mutual funds reducing their pledged holdings, there has been a sharp rise in demand for pledged loans from NBFCs

Out of the 1900 companies listed on the, a record number of 509 companies have pledged shares for loans

Current account deficit narrows to 2.5% of GDP in third quarter This is sharply lower than the 2.9% CAD reported in the second quarter of the current fiscal

On a YOY basis, the CAD was higher but that was largely driven by a wider trade deficit in physical goods

Kerala Infrastructure Board raises Rs.2150 crore via Masala Bonds This marks the first ever issue of Masala Bonds by a state level agency at a time when the market was running dry

Masala bonds are rupee denominated bonds issued abroad which does away with the currency risk for borrowers

India again postpones imposition of higher import duties on US goods The punitive tariffs on 29 US products has now been extended to May 02nd and includes almonds, walnuts and pulses

The US has been supporting India in its fight with China on getting Masood Azhar declared a global terrorist

India’s 11-month fiscal deficit ends up at 134% of full year target This opens up the possibility of the fiscal deficit getting stretched beyond 3.4% as stipulated in the budget

Fiscal deficit could also put pressure on the yields on bonds with negative implications for bond and equity markets

US yield curve inverting is back to spook the global equity markets The US 10 year bond yield has moved lower than the 3 month treasury yield

This is not great news since in the past every yield curve inversion has been followed by a steep recession

RBI has put off external benchmarking for floating rate loans This idea was first mooted in the December monetary policy to base all retail and small business loans on such benchmarks

However, banks had protested that any benchmarking without reference to cost of funds will be pointless

Russia a little way of extending supply cuts to end of the year Currently, OPEC and Russia are jointly cutting supply to the extent of 1.2 million bpd till June 2019

While Russia is willing to extend these cuts till the end of September, they are not willing to commit for December

CRISIL downgrades revenue growth of Indian companies for Q4 CRISIL expects the maximum pressure on materials and commodities with IT and Pharma most immune

This survey is based on an analysis of 354 companies outside of financials and oil companies

CBDT raises an alarm over 15% shortfall in direct tax collections With less than 1 week to go, the direct collections have only met 85% of the target and is likely to fall short

The bigger worry for the government is the across board fall, especially when GST collections are already under pressure

The Met Department has predicted a robust monsoon this year With the chances of an El Nino reducing, the monsoon could be either at par or above the long term average

This is good news for farm incomes and also for keeping food inflation under control

SEBI bars over 600 FPIs from Indian market participation These FPIs had failed to disclose full details of eventual beneficiaries, a necessity under the KYC norms

FPIs has complained in the past that in most cases, they are not aware of the final beneficiaries

Analysts have downgraded nearly 8 out of 10 sectors in the next year Industrials and technology are the only two sectors that have seen more upgrades for the next year

The pressure is likely to be quite high in case of sectors like autos, materials and even many PSU banks

RBI makes a success of its first Dollar Swap auction issue Against the targeted $5 billion, RBI managed to get bids worth $16.3 billion, raising hopes of more such issues

Dollar swap bonds infuse rupee liquidity in the Indian markets and also prevent the rupee from appreciating beyond a point

Dr. Raghuram Rajan raises doubts over the sustainability of 7% GDP growth According to Rajan, 7% growth sustenance will be difficult in the absence of adequate jobs created

Rajan had also expressed concerns over the quality and integrity of the macro data put out by the government



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