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Posted on 07-Feb-2020 Comments  0

Weekly Capsule (Feb 03 – Feb 07) and Impact Analysis

News AnnouncementImpact Analysis

RBI holds repo rates at 5.15% largely along expected linesHigh inflation at 7.35% forced the RBI to maintain status quo on repo rates and therefore on reverse repo and MSF

However, the stance of the monetary policy has been kept at “Accommodative” hinting at a dovish monetary stance

CRR exemptions extended to loans given to autos, realty and MSMEsBanks will be allowed to deduct incremental loans to these sectors for the calculation of NDTL for CRR purposes

The idea is to reduce the idling cost of CRR funds and give an incentive to banks to lend to these sectors

RBI proposes to launch a digital payment index (DPI) this yearThis index will track the spread and flow of digital payments in India and provide a reliable and veritable benchmark

To boost digital payments, the government has also decided to extent CTS facility pan-India by September this year

RBI gives a boost to commercial realty sector via loan extensionNow loans to commercial realty cannot the classified as bad loans if the reason for default is genuine cash problem

This will stall the cascading effect of bad ratings having an impact on fund raising and on cash flows of the company

Tata Steel records a loss of Rs.1229 crore in the December quarterThe loss was largely driven by a sharp rise in provisioning for impairment of the European operations of the company

In addition, the top line was also under pressure due to weakening demand from the Chinese markets

Delhi goes to polls on 08th February to decide the next governmentKejriwal has been fighting for a thumping return while the BJP is trying hard to recover the state they lost 20 years ago

During the last 2015 elections, the AAP party under Kejriwal had won more than 92% of the seats in Delhi

Coronavirus may have subsided but is far from gone; Chinese authoritiesThere was some respite to global markets after news that a cure for the virus had been found; despite WHO advisory

Chinese authorities have conceded that the impact could be deeper than SARS in 2003 due to the pivotal role of China

Yes Bank gets shareholder nod to raise Rs.10,000 crore from the marketThis is almost becoming absurd after the banks had committed to raise money, but failed, in the past too

Yes Bank needs to urgently raise equity money as its core capital has gotten close to the statutory 8% mark

Oil continues to be weak after Russia refuses to commit on supply cutsThe OPEC, not being the swing producer any longer, needs the support of Russia to make a dent on global oil supply

However, Russia has a major reliance on oil and gas revenues and hence wants to go slow on further supply cuts

Byju’s raises a sum of $200 million from General Atlantic PartnersOnline tuition courses offered by Byju’s have become a major hit among the venture capital and P/E crowd

The latest round of funding values Byju’s at closer to $8.2 billion making it among the expensive Indian unicorns

FM agrees to review LTCG tax on equities after markets stabilizeFM was worried that there was too much of a hype created by the non abolition of the LTCG tax on equities

Since the LTCT tax was only introduced in 2018, FM wants to wait for a stable year before taking a final call

PFRDA doubles net worth of pension fund managersThe net worth requirement of pension fund managers has been raised from Rs.25 crore to Rs.50 crore

This shift will ensure that only serious players will enter the pension fund management business

Indian rupee slips by 22 bps to Rs.71.40 during the weekThe rupee weakness has been on fears of a sell-off in debt by the foreign portfolio investors

The dollar has also been showing some strength in the last few days and that is adding to the rupee weakness

GST Compensation Fund to fall short of target by Rs.25,000 croreICRA has estimated that the losses to the state between Oct-19 and Jan 20 would be close to Rs.70,000 crore

Based on current run rate the shortage will be hard to make up and the government has to either delay or bridge the gap

Fitch expects the RBI to cut rates by up to 40 bps in fiscal 2020-21According to Fitch, this would be necessitated after the Budget failed to give any relief to boost consumption

RBI has maintained status quo in the last few policies due to the rising impact of inflation on the real rates of return

SBI has reduced its lending rates across various term categoriesThis cut in rates was undertaken by SBI in various phases across various maturities despite status quo on rates

SBI has responded to the sharp surge in liquidity as promised in the monetary policy by the RBI

LIC valuation yet to be decided as per the Chairman of LICThe chairman of LIC has confirmed that the staff and the unions will also be involved in the LIC IPO pricing process

Informal estimates have placed the value of the LIC at around $150 billion with stake sale via IPO planned at 10%

Lakshmi Vilas Bank moves up sharply on stake sale newsBig names like DBS Bank of Singapore, Indostar of India and Capri Global are said to be in the race to buy LVB

While LVB is badly starved for cash and prices had crashed, the management has denied any stake sale confirmation

Cash rich companies could pay out a dividend bonanza in March 2020This would be designed to escape the steep promoter dividend tax imposed in Budget 2020

The top 60 companies are expected to pay out a dividend bonanza of nearly Rs.89,000 crore in March this year

Sensex and Nifty correct on Friday but end the week in the greenThe markets appear to have put the damage of the post budget reaction behind them during the week

Apart from hopes from China stimulus, Indian markets also celebrated the sharp fall in Brent Crude oil prices

Emami sells its cement business for Rs.5500 crore to NuvocoNuvoco is the arm of Nirma and had beaten larger names like Ambuja and Ultratech Cements to the deal

The deal will allow the Emami Group to substantially reduce its outstanding debt, which had swelled in last few years



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