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Posted on 16-Nov-2018 Comments  0

Weekly Capsule (Nov 12 – Nov 16) and Impact Analysis

News Announcement Impact Analysis
Crude oil prices end with losses for the sixth straight week The first triggers for a fall in oil price came from global slowdown fears and later by dilution of Iran sanctions
Crude has lost nearly $20/bbl after touching a peak of $86/bbl in the first week of October
Andhra Pradesh and West Bengal revoke general consent for CBI probe CBI inquiries require state consent but states generally give a blanket consent as a standard practice
Fearing CBI raids ahead of elections, Mamata and Naidu have taken a surprising step in this direction
Tata Sons has confirmed it is yet to make a formal proposal to Jet Airways Markets have been rife with the possibility of Tatas taking over Jet to bail out the airline and expand its franchise
Tatas had apparently been approached by the government to help bail out Jet, which is in the midst of a financial crisis
Moody’s expects fall in credit available in India after NBFC crisis Moody’s has pointed out that the IL&FS crisis could pose a genuine problem for NBFCs trying to access credit
In its Global EM Outlook, Moody’s has also underlined the advantages for India due to low external debt
Morgan Stanley has a sell trade on the US dollar as it expects end of rally MS expects a weakening of the dollar as credit spreads rise and equity prices fall and bond yields also start falling
Dollar spot index has already gained 8% since April this year and that had led to weakness in other currencies
RBI forex reserves drop further to $393 billion for week ending Nov 09th The dip in currency assets has been marginal and can be attributed to routine currency management by the RBI
Over the last 4 months, the forex chest had declined from a high of $430 billion on dollar selling to hold rupee value
Government agencies may now get to use commodity derivatives platform Agencies who need to support the minimum support price (MSP) can now use derivatives to manage the same
This would also be useful for farmers who will be able to buy put options on the commodity and be relaxed
Rupee recovers sharply during the week to Rs.71.93/$ The sharp revival in the rupee was triggered by a sharp fall in crude oil prices and reduced fears of a trade war
Rupee had gone as low as 75/$ before recovering sharply in the last 6 weeks after crude started falling
GAIL could buy the wind energy assets of beleaguered IL&FS group This may be small but will be an important step in monetizing the assets of IL&FS
The company started defaulting on loans and ICDs in August and has been downgraded to Junk status by rating agencies
RBI meet on 19th Nov could ease transfer of surplus funds In the midst of the stand-off with the government, the RBI may agree to provide more funds to the government
Also, the RBI may be a little more lenient on fund of NBFCs and on allowing PCA banks to start lending
Government looks to PSU share buyback to meet divestment targets In the first seven months of the fiscal, the government has only mopped up 20% of its full year target of Rs.80,000 crore
Already PSU companies have announced buyback to the tune of Rs.4400 crore and one can watch for cash surplus PSUs
Tyre makers may benefit from multiple triggers Tyre makers are likely to benefit from lower prices of crude and rubber, both critical inputs for tyre companies
Rubber prices are down 11% from the peak and crude oil is down 20% from its peak prices
Trade deficit for October comes in higher at $17.13 billion This is sharply higher than the $13.98 billion trade deficit reported in the month of September
Despite higher exports growth and lower gold imports, crude oil continued to play the spoilsport
FPIs cut their stake in 123 Indian companies in the second quarter FPIs cut their stake in companies like Manpasand Beverages, PC Jewellers, Balrampur, PNB and Vodafone Idea
FPIs also increased their stake in AU Small Finance Bank, Greaves Cotton, Mahanagar Gas and Tejas Networks
Dalmia Bharat approaches Supreme Court after NCLAT order on Binani This was a day after the NCLAT order had ruled in favour of Ultratech taking over Binani Cements at Rs.7950 crore
Dalmia had emerged as the highest bidder but later Ultra-Tech had put in a higher bid, which Dalmia had objected to
IDBI Bank reports record net losses of Rs.3602 crore in second quarter Gross NPAs of the bank went up sharply from 24.98% last year to 31.78% in the current year
The bank’s capital adequacy has fallen to 6.22%, well below the statutory minimum of 9% for Indian banks.
Vodafone Idea reports Q2 losses of Rs.4973 crore on write offs Apart from depreciation of Rs.3005 crore, the merged entity also get hit by ARPUs falling to a low of Rs.88
The British parent, Vodafone PLC, had taken reported a loss of €7.8 billion, which includes an India write-off of €3.5 billion
Ministry of Company Affairs announces super regulator for auditors National Financial Reporting Authority will oversee the accounting and the audit activity in India
While ICAI will still make suggestions, the NFRA will formulate accounting policies, audit rules and audit oversight
SEBI tightens norms for credit rating agencies Rating agencies will have to explain upgrades and downgrades in much greater and elaborate detail
The onus will be on the rating agencies to evaluate all the primary and secondary variables for the rating
CPI inflation came in sharply lower at 3.31% for October The retail inflation was pushed lower by negative food inflation at -0.86% which is a concern for MSP
However, the non-core inflation is still above the 6% mark and that could be a concern for the RBI
Government plans to sell 149 small and medium oil fields of ONGC This will enable ONGC to concentrate on the large and mega fields that offer economies of scale
Auction will be based on government share assurance, and last time ONGC had stalled this auction


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