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Posted on 03-May-2019 Comments  0

Weekly Capsule (Apr 29 – May 03) and Impact Analysis

News Announcement Impact Analysis

US Fed maintains status quo on rates in its latest Fed meeting The US status quo on rates was already indicated by the CME Fed Watch tool and it was just an affirmation

While Powell hinted at status quo till end of 2019, markets were disappointed in the absence of any dovishness

Core sector output for March came in higher at 4.7% for 8 core sectors Cement and refining products were the major drivers while oil extractors disappointed on the lower side

However, the full year core sector growth for fiscal 2018-19 remained static at 4.3%; same as the previous year

GST collections touch a record of Rs.1.14 trillion for April 2019 The sharp rise in GST was driven by aggressive reporting of year-end sales and greater compliance

However, this is still way short of the monthly target of Rs.1.30 trillion that GST needs to touch in this fiscal

IT stocks correct sharply on the back of weak Cognizant numbers Cognizant reported 15% fall in profits and lower revenue guidance of 4% due to BFSI pressures

IT stocks also took a hit on the back of a weak dollar after the Fed maintained status quo on the rates front.

Brent Crude prices fell by nearly $5/bbl during the week on US pressure Brent fell to $70/bbl as US increased its daily production to 12.7 million barrels and inventory to 470 million barrels

However, the sanctions on Iran and Venezuela will continue to pose a strong support for the oil prices

SEBI imposes Rs.700 crore disgorgement order on NSE This is the profit that the NSE will have to repay to the IEPF for its role in the co-location fiasco

NSE has meanwhile moved the SAT to get a stay on the implementation of the SEBI order

Government to allot Jet overseas traffic rights to other airlines In the last couple of weeks since Jet was grounded, SBI has already sold aircraft and landing rights to competition

This virtually snuffs out any possibility of a revival in Jet Airways as it could soon be reduced to a shell company

Hindustan Unilever reports lowest volume growth in 6 quarters Top line growth at around 6% was sharply than the double digit growth that HUVR has seen recently

The weakness in revenues came from a slowdown in rural demand as rural distress continued to dominate

HDFC Life OFS gets oversubscribed by 3 times the issue size The OFS was used by Standard Life to sell 4.93% stake in the HDFC Standard Life joint venture

The OFS was priced at an attractive discount to the market price which led to the buoyant demand for the OFS

CRISIL pegs IBC recovery rate of around 43% for banks According to CRISIL, a recovery rate of over 40% is considered to be competitive even by global benchmarks

There are still some large cases like Bhushan Power, Amtek Auto and Essar Steel to be concluded this year

Forex Reserves up by nearly $4.3 billion in the week at $419 billion Forex reserves were boosted by the two rounds of dollar swap auctions done by the RBI in the last month

Forex reserves had fallen nearly 10% as the RBI supported the falling rupee last year. It is yet to touch peak levels

Insurance companies to make provisions for IL&FS default IRDA has asked insurers to provide for losses on their bond holdings of IL&FS and Reliance Capital

IL&FS has been consistently defaulting on its bonds but NCLT had given special leeway to banks not to write off

Iran oil exports come under US embargo effective 02nd of May After the expiry of 6 months waiver, the US had refused to extend the waiver on Iranian oil imports

While India has already made alternate arrangements for oil supply, China is yet to take a final call on Iran imports

Bharti Airtel could soon plan its $5 billion IPO of Bharti Africa Almost 10 years back, Bharti Airtel had acquired a strong African telecom franchise through Zain

Now Bharti is looking to monetize its African business through an IPO to use the funds for the Indian war chest

SEBI wants a 2% cap on royalty payment by Indian companies It may be recollected that the Kotak Committee had recommended a 5% cap on royalty payments

SEBI wants to permit higher levels of royalty transfers only in the event of technology transfers by the foreign company

Indian sugar output to again touch record levels in current cycle Indian sugar production is expected to cross 33 million tonnes a growth of 1.5% over the previous year

This means lower sugar prices and could worsen the problem of sugar cane dues for farmers

McLeod Russell stock tanks by over 40% in three days The stock came under pressure after reports that weak tea demand, supply glut and debt were hitting the stock

The sharp fall in the price of the stock came after the company announced the sale of some of its marquee assets

Finance Ministry hints at growth slowdown in the fourth quarter The Monthly Economic Report has hinted at a likely fall in Q4 GDP growth due to weak consumption demand

Full year growth is likely to be closer to 7% and Q4 surprises could impact the full year data

SEBI hints at decisive regulation on the FMPs front SEBI has been unhappy with the fact that mutual funds have been funding promoters through the NCD route

SEBI is worried about MFs acting like banks since MFs are not regulated by capital adequacy and NPA recognition norms

There may be a new complication for pledging of shares This came as part of the new insider trading regulations that came into effect from 01st of April

The longer trading block on insider trading will also include the pledging of shares by promoters

India completes four rounds of voting in its 2019 General Elections With four rounds of voting, the fate of nearly 65% of the seats are already sealed in ballot boxes

That still leaves 3 more rounds of voting before the final counting that is scheduled on 23rd of May



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