| News Announcement |
Impact Analysis |
| Nifty crashes by 165 points in week-end trade on Friday |
- The fall in the Nifty was largely triggered by political uncertainty after TDP withdrew support to NDA
- There is also an overhang of uncertainty after opposition parties proposed a no-confidence motion on Monday
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| Trade deficit for February 2018 came in lower at $12 billion |
- This is sharply lower than the trade deficit of $16.2 billion reported for the month of January 2018
- However, the concern could be imports which are likely to end at $450 billion for the year with just 11 months forex cover
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| The government may face a serious challenge on current account deficit |
- The CAD for the Oct-December quarter widened from 1.4% to 2% as CAD touched $13.5 billion
- While imports of goods has been on the rise, the export of services has also failed to keep pace
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| PSBs reported to have total of 41 loss making foreign branches last year |
- That is more than 25% of the 159 foreign branches that Indian PSBs currently have in other countries
- RBI has already issued instructions to PSBs to quickly restructure and consolidate their foreign branches
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| Government announced banning of LOUs and Letters of Comfort |
- Both these bans will be effective with prospective effect and all existing LOUs already issued will be honoured
- Exports will lose a source of easy finance while banks will lose an important source of fee income
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| ICICI Securities tones down its IPO valuation by nearly 35% |
- This was necessitated by bad market conditions and also due to the uncertainty surrounding the financial sector
- The IPO will be in the form of an OFS where ICICI Bank will hive off its 25% stake I-Sec to raise around Rs.4000 crore
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| Christian Lagarde of IMF warns nations against trade wars |
- Lagarde has claimed that trade wars could lead to currency wars where most of the nations are likely to lose
- The issue of trade war came up after EU threatened retaliation if the US imposed tariffs on steel and aluminium
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| Power Finance Corp warns of a sharp rise in NPAs from private sector |
- PFC expects nearly 6.5% of its loan book to go bad due to stress faced by private power companies
- PFC has a loan book of Rs.2.6 trillion and the stock has already corrected by 25% in the last 3 months on NPA worries
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| Flipkart sees a huge mark-up in valuation post Wal-Mart bid |
- From a low of $5.5 billion the valuation of Flipkart has been now marked up to the range of $11-19 billion
- Wal-Mart is looking to invest nearly $7 billion to become the single largest stakeholder in Flipkart
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| Government may impose curbs on 91 potential loan defaulters |
- This was necessitated after it was reported that nearly 31 defaulters had skipped and gone abroad leaving debts
- Banks have already started collecting passport details of all borrowers above Rs.50 crore
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| Kotak Institutional raises questions over Indian valuations |
- According to Kotak, even after factoring 25% growth next year, Indian markets are at 18X of 2019 earnings
- On a relative basis, markets like China have given over 50% returns in the last 1 year against India’s 20%
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| WPI inflation for February came in at 2.48% against 2.84% in January |
- This lower WPI inflation was led by lower food inflation and lower manufacturing inflation
- That is not good news for manufacturers as lower WPI means that companies are gradually losing pricing power
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| Urjit Patel calls for more powers to be conferred to the RBI |
- According to Patel, RBI does not have powers to change the bank’s directors, force mergers or trigger liquidations
- However, Yashwant Sinha of the BJP has dismissed these views and held RBI squarely responsible for the PNB fiasco
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| Ruling NDA lost key by-elections in Gorakhpur, Phulpur and Araria |
- This is seen as a sentimental setback for the NDA government as these were considered to be safe seats for the BJP
- It also opens up the field for a coalition experiment in 2019, something markets will not be too pleased with
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| World Bank projects India’s GDP growth at 7.3% in 2018-19 |
- This is likely to be sharply better than the sub-7% growth that India is likely to see in the fiscal year 2017-18
- World Bank has cautioned that 8% growth may not be possible without a big focus on structural reforms
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| Finance Bill gets passed in parliament without any discussion |
- The Finance Bill was passed amidst the din over the role of bureaucrats in the UP and Bihar by elections
- That meant that the status quo on LTCG tax was maintained despite requests for its toning down
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| HDFC AMC may be the second MF house to go public after Reliance |
- HDFC AMC is looking to sell 8.59 million shares with a face value of Rs.5 at a price to be decided later
- This will help HDFC partially monetize its holdings in HDFC Mutual Fund to finance its loan book
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| Ultratech persists with its aggressive bid for Binani Cements |
- The Ultratech bid for Binani Cement is nearly Rs.1000 crore higher than the bid made by Dalmia Cements
- This bid is considered reasonable if one also factors the limestone deposits and its use in Brownfield expansion
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| IIP growth came in at 7.5% while inflation came lower at 4.4% |
- Higher IIP was largely driven by the manufacturing sector with capital goods marking revival of the capital cycle
- Lower inflation was largely led by food prices although it is unlikely to persuade RBI to cut repo rates
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| Consortium led by Jet Airways is likely to bid for Air India |
- Apart from Jet Airways, the consortium will also include Air France, KLM and Delta Airlines as bidders
- Air India currently has a debt pile of Rs.50,000 crore but its value could increase post the 4-way split
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| Mundra proposes holding company model for state run banks |
- This model will let the government continue to maintain control over these banks
- One of the preconditions will be to complete the PSU bank consolidation before this move is undertaken
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