Weekly Capsule (Jul 31 – Aug 04) and Impact Analysis
| Major News Item | Impact Analysis |
| Ø RBI in its monetary policy cut repo rates by 25 basis points | Ø The 25 bps rate cut was already priced in and hence did not have any positive incremental impact on markets
Ø The RBI has retained its monetary stance as neutral and that means the RBI is keeping its options open if rates rise globally
|
| Ø Infosys to invest heavily in manpower in the European region | Ø Europe currently accounts for 22% of the total revenues of Infosys and is the second largest market after the US
Ø As US GDP lags and EU GDP picks up steam, Infosys is looking to capitalize on the growth in the region
|
| Ø Foreign portfolio investors (FPIs) pump in nearly $4 billion in July 2017 | Ø Nearly 70% came in the form of debt investments and the balance 30% in the form of equity
Ø Due to a strong rupee, most FPIs have earned higher returns in July due to rupee dividends
|
| Ø Tata Sons to focus more on the domestic business of Tata Motors | Ø Domestically, Tata Motors’ CV market share has fallen by 15% and passenger car market share has fallen by 8%
Ø One of the mandates for new Tata Sons boss Chandra is to reduce the dependence on JLR
|
| Ø Auto and FMCG companies saw a pick-up in demand in July | Ø This growth was the lag effect of consumer companies coming out of the GST blues in June
Ø Consumer sales saw a spurt as companies in both the sectors passed on most of their GST benefits to the end customer
|
| Ø SBI, in a surprise move, cut rates on savings deposits by 50 basis points | Ø While deposits under Rs.1 crore will earn only 3.5%, balances above Rs.1 crore will continue to earn 4% as before
Ø This will impact nearly 90% of the savings customers of SBI and will help improve its net profits by nearly 20%
|
| Ø Indigo reported 25% growth in revenues and profits | Ø The profit growth was largely driven by improved spread between the RASK and the CASK for Indigo
Ø Apart from lower fuel prices, Indigo also benefited largely from the sharp reduction in interest by cutting debt
|
| Ø HDFC Life has formally called off its proposed merger with Max Life | Ø The merger had run into problems after IRDA had objected to the merger of an insurance company with an NBFC
Ø HDFC Life now proposes to go ahead with its IPO in this fiscal and will revisit the merger proposal at a later date
|
| Ø Snapdeal called off the proposed merger with Flipkart | Ø The dispute over valuations was too wide with Snapdeal expecting an enterprise valuation of $1 billion
Ø While Softbank and Tiger Global had pushed for the merger, key investors like Azim Premji had opposed the deal
|
| Ø July witnessed a sharp fall in the PMI for manufacturing and Services | Ø Both manufacturing and Services PMI fell way below the 50 mark indicating a clear sign of contraction
Ø The sudden fall in PMI is largely attributed to the GST, which had focused companies on inventory rather than production |
| Ø Government relaxes rules for holdings in Sovereign Gold Bonds | Ø The SGB holding purchase limit per year has been increased from 500 grams to 4 KG per year; an 8-fold jump
Ø This is expected to rekindle interest in gold bonds, which is key to reducing dependence on gold imports
|
| Ø UDAY bonds may have saved Rs.14,000 crore power Discoms | Ø UDAY entailed states taking over 75% of the debt of state Discoms and issuing bonds against the same
Ø This move has managed to free up nearly Rs.22,000 crore worth of bank funds for further lending
|
| Ø Donald Trump unveils aggressive plan to cut down on legal immigration | Ø This is in line with Trump’s election promise to save more American jobs for local Americans
Ø Like Australia and Canada, the US will also focus more on encouraging immigrants in high-skilled roles
|
| Ø SEBI issues order against key members of FT group management | Ø This order pertains to the Rs.5600 crore default of obligation of the NSEL back in July 2013
Ø Apart from the promoters, key senior managers like Massey and Javalgekar have been found guilty of insider trading
|
| Ø Lupin disappoints the street with a 60% fall in net profits for Q1 | Ø The drop in profits was largely driven by weakness in US sales, which accounts for nearly 40% of the revenues of Lupin
Ø Lupin was also hit by the rupee strength even as the stock has dipped below the psychological 1000 mark
|
| Ø Murthy / Sikka stand-off comes back to haunt the Infosys stock | Ø Murthy has now demanded that the Gibson report on the Panaya deal be made public
Ø Apart from the Panaya deal, Murthy also has reservations to Sikka’s package and the severance package to Bansal
|
| Ø NSE indicates at a likely IPO and listing by the end of March 2018 | Ø Institutional investors continue to be worried over collocation revenues being directed towards an escrow account
Ø Limaye has been pitching for the consent mechanism wherein NSE can continue without admitting or denying the guilt
|
| Ø Titan flattered the street with a 97% growth in its net profits | Ø The profit growth was driven by the jewellery business that accounts for over 80% of the revenues of Titan
Ø Rising gold imports and pent-up festival demand have been driving demand at Titan’s jewellery division
|
| Ø BJP overtakes Congress as the largest party in the Rajya Sabha | Ø BJP now has 58 members in the Rajya Sabha compared to 57 for the Congress party
Ø A majority for BJP in the Upper House gives it a distinct edge in pushing through crucial bills in future
|
| Ø Baba Kalyani group ready to roll out missiles in this fiscal year | Ø The group is into missile manufacturing in JV with Rafael Advanced Defence Systems of Israel
Ø It has affirmed that they are in a position of readiness to supply missiles to the armed forces within weeks of the order
|
| Ø Cognizant reported a 86% growth in profits for June quarter | Ø The spurt in profits for Cognizant was largely driven by a sharp growth in key verticals like healthcare
Ø Cognizant also saw a 9% growth in revenues, which is very commendable in the tight market conditions |
