Midnight News Update – Jul 17th 2017
With Axis Bank sounding out head-hunter, Egon Zhender, to find a new CEO, a new era post Shikha Sharma is set to begin at Axis Bank. Under Shikha, the bad loans of Axis Bank have jumped to the highest level in recent memory and also the bank is being investigated for the actions of some employees who had helped customers in laundering money during the demonetization exercise. There have also been rumours of Axis Bank being a likely acquisition of target for Kotak Bank, although both the bans have denied the same. Shikha had brought in a degree of aggression into Axis Bank.
SEBI is not too keen on clearing the extension for clearing the naked positions P-Notes. Naked P-Notes are those that are not backed by an underlying exposure and are therefore purely speculative in nature. FPIs had requested for an extension of this time period by 3 months, which SEBI now looks unwilling to offer. P-Notes are issued by FPIs to unregistered investors who want to participate in the Indian equity markets. SEBI has been regulating P-Notes more stringently in the past few months as there have been allegations that P-Notes were being used by Indians for round-tripping of funds.
July 24th 2017 will mark the introduction of global stock futures on the NSE, via its subsidiary NSE IFSC Ltd. They will start contracts in 15 global stocks which include some marquee names like Alphabet, Amazon, Microsoft, Apple, Facebook, AT&T, Exxon, Alibaba, China Mobile among others. The NSE IFSC started operations in Gandhinagar’s GIFT City’s special economic zone. The IFSC allows Indian investors to participate in the global market. This will allow Indian investors to hedge their risk by spreading their investments across various geographies to reduce the concentration risk.
Suzlon may be finally getting back into shape after being laden with too much debt over the last 8 years. Suzlon will be offloading its overseas loss-making subsidiaries to raise funds to defray some its debt. The company has debt to the tune of Rs.9900 crore in its books and its large capital base is making the stock performance absolutely languid. The company has a 32% market share in the wind energy segment and hopes to increase its market share to 40% by next year. In the past, Suzlon had offloaded its German RePower subsidiary for close to $1 billion to defray some of its outstanding debt.
For long, big oil companies were seeing Tesla’s electric car as a fringe addition to the automobile segment. But now oil companies are slowing waking up to the fact that electric cars lead to a structural shift in oil demand across the world. Bloomberg New Energy Finance based out of London estimates that by 2040 the daily demand for oil will be down by 8 million bpd. That is likely to have an unusually large impact on the demand for oil as well as oil prices. This will also have larger implications for the oil industry that attracts nearly $700 billion worth of investments each year. It is estimated that by 2040 the total demand for electric cars will outpace the demand for petrol and diesel cars. Most oil companies have been doubling their estimates of demand for electric cars in India.
LIC, India’s largest institutional investor, has reduced its stake in Mahindra & Mahindra by 2% to 10% of the outstanding equity. LIC sold over 1.2 crore shares of M&M through open market transactions. Over the last few years, LIC has been consistently churning its portfolio and capitalizing on the massive bull-run in the markets post 2014. LIC continues to be an influential voice in Indian markets due to its substantial exposure to top quality Indian stocks. Over the last couple of years, LIC has also been helping the government meet its disinvestments targets by investing in PSU stocks.
