Weekly Capsule (Jul 30 – Aug 03) and Impact Analysis

News Announcement Impact Analysis
Nifty closed the week at a historic level of 11,360 on Friday
  • The rally was driven largely by a bounce in banking stocks after a steep correction on Thursday
  • The Indian markets have touched a new peak despite global worries over crude oil prices and the trade war
The Met Department has projected a normal monsoon for this year
  • Despite a negative view by SKYMET, markets celebrated the IMD’s positive picture of the progress and spread of rains
  • Timely and adequate rains are the key to a good Kharif output and that impacts food inflation In a big way
Jet shares slumped sharply on Friday on the back of cash crunch rumours
  • Jet has been badly hit by a combination of higher ATF prices and consistently lower spreads in the business
  • Despite a 19% growth in the aviation volumes, airlines are not able hike prices due to the stiff competition in the industry
Uday Kotak pares his stake in the bank through preference issue
  • Being a perpetual non-convertible preference share, it is classified as equity for the purpose of dilution
  • This brings down Uday Kotak’s stake in Kotak Bank below the 20% mark as stipulated by the RBI guidelines
Apple becomes the first global firm to cross $1 trillion in market cap
  • In 2007, Petro China had briefly crossed $1 trillion after listing but currently quotes 80% below that price
  • This is Apple’s 7th year of leadership and only GE has topped the market cap charts for longer at 11 years
SAIL reported a Q1 profits of Rs.540 crore against a loss last year
  • SAIL profit growth was also helped by better cost control apart from 22% growth in the revenues for the quarter
  • SAIL is also making big bets in the steel space like Tata Steel and JSW to capitalize on the big demand surge in India
SEBI does away with the sub-broker category altogether in markets
  • Fresh registrations for sub-brokers have stopped in the light of the rapid spread of online trading facilities
  • All existing sub-broker will either have to migrate to become an authorized person or a trading member on the exchange
US Federal Reserve opted to maintain status quo on Fed rates
  • This was a tad surprising considering that the US GDP had grown at 4.1% in the last quarter
  • Donald Trump has been pushing for a more benign approach to rate setting considering the emerging growth in the US
GST Council to consider relief for small taxpayers  in its 04th August meeting
  • While quarterly filing of returns is already permitted, the Council may also permit them to pay quarterly
  • The 04th August meet is likely to have a single point agenda to prop up the MSME sector in particular
ONGC reports a stellar 61% growth in profits in the first quarter
  • The sharp surge in the first quarter was despite the overall oil extracted being lower than the previous year
  • ONGC actually benefited by its per barrel realization going up by over $22/bbl on a YOY basis
Pharma Index has outperformed the index touching a 6-month high
  • With IT looking stretched in valuation terms, defensive investors are looking to the safety of pharma stocks
  • Markets are also expecting the US FDA risks to bottom out making a case for pharma at relatively cheap valuations
Bank of England became the second central bank to embark on rate hikes
  • The 25 basis rate hike to 0.75% was the first hike by the BOE since the lows touched during the financial crisis
  • Markets are worried about the outcome of these rate hikes considering the BREXIT continues to be an overhang
Apollo Tyres reported a 200% growth in profits for the first quarter
  • Tyre companies have been benefiting substantially from the robust demand from growing auto sales
  • Additionally, the consistent fall in rubber prices and radial protection has also worked in favour of tyre companies
Rupee reverses and strengthens from the 69/$ levels
  • There was clear RBI support coming in at the 69/$ level as was evident from the depleting forex reserves with the RBI
  • In the latest monetary policy, the 25 basis points hike has also been instrumental in curbing the pressure on the rupee
LIC gets approval to buy majority stake in IDBI Bank
  • The Cabinet Committee approved dilution of government stake below the 50% mark in IDBI Bank
  • This paves the way for LIC to get access to a banking license indirectly through the acquisition of the bank
Eicher comes under pressure on Harley Davidson competition
  • Harley Davidson is planning to enter India in the 250-300 CC segment, which is the fastest growing segment
  • With US sales almost flat, Harley Davidson is seriously looking at India and Asia to boot its fortunes
Tata Motors reported a record Rs.1902 crore loss for the quarter
  • The sharp rise loss in the quarter was triggered by JLR taking a hit on its pound exposures and slowing sales in China
  • The probably explains the reason why the stock has been correcting so violently in the last few months
India may reduce Iran shipments by 12% to please Donald Trump
  • After the US imposed sanctions on Iran, India has been under pressure to stop doing business with Iran
  • India stands to lose as Iran has been a reliable and low-cost supplier of oil to India, especially to IOCL refineries
Suresh Prabhu expects investments of $500 billion in logistics
  • While we have heard these lofty numbers before, it looks more plausible in the backdrop of the infra thrust
  • Also logistics is likely to get a boost in the post-GST scenario as logistics networks get reworked
Reliance records 18% growth in profits to all time high of Rs.9459 crore
  • The sharp uptick in profits came from an extremely strong performance put up by the petchem margins
  • Both the consumer facing businesses, retail and telecom, did extremely well in the first quarter
SEBI looks to reduce the dependence of large corporates on banks
  • SEBI is now likely to mandate that all large corporates to borrow 25% of their debt form bond markets
  • This will reduce the pressure on the banking system that has seen maximum NPAs from large corporates

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