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Weekly Capsule (Dec 11 – Dec 15) and Impact Analysis

Posted on 15-Dec-2017 Comments  1

Major News Item

Impact Analysis

  • Mutual fund AUM touches an all-time record high during November 2017

  • November saw MF inflows of Rs.126,000 crore taking the total AUM of the MF industry to Rs.21,80,000 crore

  • The strong flows into equity funds has been driven by low-interest rates on debt and restrictions on gold and realty

  • The exit polls are betting firmly in favour of BJP in 2 key states

  • The final results of HP and Gujarat state elections are expected on 18th December but exit polls favour BJP

  • The stock markets are hoping for a BJP victory as Gujarat is expected to be a referendum on 2019 elections

  • Supreme court upholds Unitech plea on management takeover of Unitech

  • The order for the government to take over management of Unitech was passed by the NCLT to protect home owners

  • However, the Supreme Court did not see any purpose for this NCLT order when the matter was already sub-judice

  • Bankers expect Rs.1.80 trillion worth of write-offs in Phase II

  • A total of 29 corporate accounts have been referred to NCLT in the second round of dissolution proceedings

  • The list includes some of the erstwhile marquee names like IVRCL Group, Videocon group and Jaypee group

  • Supreme Court lifts ban on use of pet-coke by cement companies

  • Pet coke is a substitute for expensive imported coal and reduces cost of cement by 4-5%

  • The ban on pet-coke had been imposed for environmental reasons after the massive smog problem in Delhi and NCR

  • CPI inflation comes in sharply higher for November at 4.88%

  • This is well above the RBI comfort level of 4% and is indicative of pressure on food prices and fuel prices

  • This basically means that rate cuts are now out of question in this fiscal and probably the rate cycle may be over for now

  • WPI inflation for November 2017 came in higher at 3.93%

  • This is broadly in line with the rise in CPI inflation during the same period, although lower due to IIP issues

  • Like in case of the CPI inflation, the WPI inflation was also been largely driven by food and fuel inflation

  • IIP growth for October came in lower at just 2.2%

  • While manufacturing and electricity stayed tepid, the sharp fall in growth came in the mining sector

  • There is no real sign of any bounce back in capital spending which is a necessary precursor to an economic revival

  • Reliance Jio plans its IPO by the last quarter of 2018

  • It is expected to be the largest IPO ever in terms of size, even larger than the Coal India IPO in 2010

  • The company is already making operating profits although the capital spending of $30 billion needs to be defrayed

  • SEBI chief focuses on crunching the listing time still further

  • Ajay Tyagi has admitted that the proposal now is to crunch the listing time from 7 days further to about 4 days

  • This will mean that investor funds will get blocked for a shorter time enabling greater churning

  • Airtel sells 20% stake in its DTH business for $350 million to Warburg

  • Airtel DTH business has a strong presence in the Tier-3 and Tier-4 cities and will be used to reduce the company’s debt

  • In terms of EV/EBITDA valuations, this $1.75 billion valuation is at a steep premium to what Dish TV quotes at

  • Abu Dhabi based NOV Fund is to invest $2 billion into India

  • This investment will be made predominantly in the semiconductors industry in India

  • This will be the right step towards India’s plans to attract investments to make in India, which is yet to take off

  • Tata Communications to hive off its real estate holdings

  • TCOM holds nearly 700 acres of land that was allotted to it as part of the deal when it took over VSNL in 2002

  • This will be hived off into a separate company and proportionate shares issued to TCOM shareholders

  • India could better its divestment targets of Rs.72,500 crore this fiscal

  • Government has already achieved over 70% of its full-year target with over 3 months to go

  • The sale of HPCL stake to ONGC will be the key if the government has to better its divestment target this year

  • States have suffered Rs.40,000 crore revenue shortfall in first 4 months

  • The GST has resulted in this shortfall for which the government needs to compensate the states

  • Dr. Mitra fears that this shortfall to states could touch Rs.80,000 crore by the fiscal year end

  • CRISIL warns against rising NPAs for HFCs and NBFCs in India

  • The rating agency fears that this rise in NPAs could actually come from loan against property (LAP)

  • LAP is likely to see delinquencies rise by 70 basis points and on a base of Rs.1.70 trillion that is quite a bit

  • Supreme Court extends all Aadhar deadlines till March 31st

  • In what could come as a major boost for the people, the SC extended linking of bank accounts and investments

  • Apart from the issue of privacy that has not been addressed, this had also opened up a gargantuan logistical problem

  • SEBI has sought details on the alleged WhatsApp earnings leak

  • SEBI suspects that some companies had used WhatsApp to leak quarterly earnings, which is not permitted

  • If SEBI is able to come down heavily on such companies, it will be a major boost for transparency and governance

  • Sensex drops two drug makers in favour of new private banks

  • Sensex has included Yes Bank and IndusInd Bank in Sensex and has excluded Cipla and Lupin

  • The concern is that this making the indices a little too driven by financials and almost a proxy for the banking index

  • US Federal Reserve hikes Fed rates by 25 bps along expected lines

  • Interestingly, this was followed by the PBOC of China also hiking its short-term rates. Other central banks may follow

  • It provides a new predicament to India and virtually rules out a further rate cut at least until middle of 2018

  • Theresa May likely to have a tough job negotiating post-BREXIT deals

  • The EU members, in a rare show of solidarity, stood up against giving any concessions to the UK without prior commitments

  • That only means that May’s task of pushing deals with individual EU nations is going to be a lot more difficult


Ripples Advisory

Posted on 12/26/2017 4:48:02 PM

Thanks for sharing with us. Keep up the great work.




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