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Posted on 12-Apr-2019 Comments  0

Weekly Capsule (Apr 08 – Apr 12) and Impact Analysis

News Announcement Impact Analysis

India becomes a net steel importer for the fiscal year 2018-19 Indian steel exports fell by nearly 34% during the last fiscal year on the back of penal duties from the US and EU

This has led to India becoming a net importer of steel putting further pressure on the trade deficit and the currency

LVB Board approves merger terms with Indiabulls Housing Finance Under the terms of the deal, LVB shareholders will get 14 shares of Indiabulls Housing for 100 shares held

The merger will give Indiabulls Housing a bigger balance sheet as well as footprint in South India

Russia and OPEC may get back to fighting for market share With Russia not willing to extend supply cuts beyond September, the supply cuts may stop after that

With higher prices, both Russia and OPEC will be keen to ensure that the US does not take away the cream of price rise

SFIO has arrested the former CEO of IL&FS Financial, Ramesh Bawa Bawa had come under fire after IL&FS Financial ended up showing nearly 90% of the loans as NPAs

The SFIO is also investigating the angle of money laundering by the senior managers of the IL&FS group

TCS and Infosys announce better than street expectations Fourth quarter results showed better growth and margins than what the street had anticipated

The only challenge for Infosys is the attrition, which at over 18%, remains far above that of TCS

CPI inflation for March comes in sharply higher at 2.8% The food inflation has now rallied by nearly 120 basis points in the last couple of months and is getting close to 3%

The bounce was quite sharp in food inflation but the worrying aspect was the sharp rise in core inflation for March

IIP for February grows at a paltry rate of just 0.1%, a recent low The weak IIP was driven by negative growth in manufacturing, which has a 74% weightage in the IIP

Combined with higher inflation, the low IIP makes another growth case for the RBI to cut rates

Several FMPs of mutual funds express intent to delay payments This has been necessitated due to their exposure to the Zee group bonds, which is in the midst of a liquidity crunch

Zee chairman had met fund managers and asked time till September to clear all the dues to the funds

IMF cuts global growth forecast for 2019 by 20 bps to 3.3% According to IMF, the lower growth would be triggered by the ongoing trade war and BREXIT uncertainty

In fact, IMF has also called for fiscal stimulus for weak economies like China, Japan, Germany and Australia

Naresh Goyal may end up being one of the bidders for Jet Airways With the dates for bids for Jet Airways extended by SBI, Goyal may also bid to re-enter his airline company

Jet has not been referred to the NCLT and those rules will not apply but it is not clear if lenders will allow that

Brent Crude got closer to $72/bbl on supply shortfall concerns With the strife in Libya, sanctions on Iran and a 33% cut in production in Venezuela, oil prices are shooting up

Even the US has seen draw downs of its inventory and anything above $70/bbl is not good news for India

Supreme Court stays Arcelor Mittal payment for Essar Steel The Supreme Court has sought greater clarity on the break up between financial creditors and operational creditors

Since the $6 billion from Arcelor will not be coming now, the rupee weakened sharply on Friday

Star hedge fund manager, David Einhorn calls Tesla a bankruptcy case Einhorn has been unhappy with the absence of positive cash flows at Tesla, despite promises made by Elon Musk

According to Einhorn, the layoffs, product delays and elusive cash flows point to a failing company

First phase of Indian elections kicks off on 11th April The first phase of the elections concluded on 11th April where voting for 91 out of 543 seats were sealed

However, the voter turnout in terms of vote percentage was lower than previous years in most districts

Sugar mills owe $4.38 billion to sugar farmers in terms of farm dues The dues to sugarcane farmers has been rising as a supply glut is forcing producers to sell at below cost

The government had promised to settle all dues within one month but there has been no progress on the same

Indian banks close FY2019-20 with credit growth of 13.2% India got back to double digit credit and deposit growth after a long time with deposits growing at nearly 11%

The year 2017 saw credit growth at a 50-year low of 4.6%, which happened in the immediate aftermath of note ban

The India VIX spurted higher to above the 21 levels showing high fear This kind of rise in volatility is normal when it comes ahead of general elections, but has been elevated for long

Normally, an elevated VIX level of above 20 puts a upside limit on stock market appreciation

UK gets 6 months breather to finalize approval for BREXIT The EU has decided to give UK time till 30th September for obtaining Parliament approval for BREXIT deal

In the absence of a deal, UK will be ejected out of the EU and the BOE expects GDP growth to compress by nearly 7%

BJP manifesto made some generous promises for infra and farm incomes The BJP manifesto has promised to infuse an unprecedented $1.44 trillion into infrastructure in the next 5 years

The manifesto is also allocating a whopping Rs.25 trillion for doubling farm incomes by the target date of FY22

Indian government met its fiscal deficit target of 3.4% for fiscal 2018-19 The revised target of 3.4% was achieved as divestments partially compensated for lower tax revenues

The government has also cut the allocations to welfare expenditure to meet the target

DGCA calls upon aviation companies to increase flights to cut fares The sharp drop in flight supply has resulted in a sharp rise in air fares in the last few weeks

This is due to the combination of problems at Jet, Pratt & Whitney engine problems and the Boeing 737 Max updates



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