Weekly Capsule (Dec 11 – Dec 15) and Impact Analysis
| Major News Item | Impact Analysis |
| Ø Mutual fund AUM touches an all time record high during November 2017 | Ø November saw MF inflows of Rs.126,000 crore taking the total AUM of the MF industry to Rs.21,80,000 crore
Ø The strong flows into equity funds has been driven by low interest rates on debt and restrictions on gold and realty
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| Ø The exit polls are betting firmly in favour of BJP in 2 key states | Ø The final results of HP and Gujarat state elections are expected on 18th December but exit polls favour BJP
Ø The stock markets are hoping for a BJP victory as Gujarat is expected to be a referendum on 2019 elections
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| Ø Supreme court upholds Unitech plea on management takeover of Unitech | Ø The order for the government to take over management of Unitech was passed by the NCLT to protect home owners
Ø However, the Supreme Court did not see any purpose for this NCLT order when the matter was already sub-judice
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| Ø Bankers expect Rs.1.80 trillion worth of write-offs in Phase II | Ø A total of 29 corporate accounts have been referred to NCLT in the second round for dissolution proceedings
Ø The list includes some of the erstwhile marquee names like IVRCL Group, Videocon group and Jaypee group
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| Ø Supreme Court lifts ban on use of pet-coke by cement companies | Ø Pet coke is a substitute for expensive imported coal and reduces cost of cement by 4-5%
Ø The ban on pet-coke had been imposed for environmental reasons after the massive smog problem in Delhi and NCR
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| Ø CPI inflation comes in sharply higher for November at 4.88% | Ø This is well above the RBI comfort level of 4% and is indicative of pressure on food prices and fuel prices
Ø This basically means that rate cuts are now out of question in this fiscal and probably the rate cycle may be over for now
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| Ø WPI inflation for November 2017 came in higher at 3.93% | Ø This is broadly in line with the rise in CPI inflation during the same period, although lower due to IIP issues
Ø Like in case of the CPI inflation, the WPI inflation was also been largely driven by food and fuel inflation
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| Ø IIP growth for October came in lower at just 2.2% | Ø While manufacturing and electricity stayed tepid, the sharp fall in growth came in the mining sector
Ø There is no real sign of any bounce back in capital spending which is a necessary precursor to an economic revival
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| Ø Reliance Jio plans its IPO by the last quarter of 2018 | Ø It is expected to be the largest IPO ever in terms of size, even larger than the Coal India IPO in 2010
Ø The company is already making operating profits although the capital spending of $30 billion needs to be defrayed
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| Ø SEBI chief focuses on crunching the listing time still further | Ø Ajay Tyagi has admitted that the proposal now is to crunch the listing time from 7 days further to about 4 days
Ø This will mean that investor funds will get blocked for a shorter time enabling greater churning |
| Ø Airtel sells 20% stake in its DTH business for $350 million to Warburg | Ø 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
Ø In terms of EV/EBITDA valuations, this $1.75 billion valuation is at a steep premium to what Dish TV quotes at
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| Ø Abu Dhabi based NOV Fund is to invest $2 billion into India | Ø This investment will be made predominantly in the semiconductors industry in India
Ø This will be the right step towards India’s plans to attract investments to make in India, which is yet to take off
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| Ø Tata Communications to hive off its real estate holdings | Ø TCOM holds nearly 700 acres of land that was allotted to it as part of the deal when it took over VSNL in 2002
Ø This will be hived off into a separate company and proportionate shares issued to TCOM shareholders
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| Ø India could better its divestment targets of Rs.72,500 crore this fiscal | Ø Government has already achieved over 70% of its full year target with over 3 months to go
Ø The sale of HPCL stake to ONGC will be the key if the government has to better its divestment target this year
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| Ø States have suffered Rs.40,000 crore revenue shortfall in first 4 months | Ø The GST has resulted in this shortfall for which the government needs to compensate the states
Ø Dr. Mitra fears that this shortfall to states could touch Rs.80,000 crore by the fiscal year end
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| Ø CRISIL warns against rising NPAs for HFCs and NBFCs in India | Ø The rating agency fears that this rise in NPAs could actually come from loan against property (LAP)
Ø 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
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| Ø Supreme Court extends all Aadhar deadlines till March 31st | Ø In what could come as a major boost for the people, the SC extended linking of bank accounts and investments
Ø Apart from the issue of privacy that has not been addressed, this had also opened up a gargantuan logistical problem
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| Ø SEBI has sought details on the alleged WhatsApp earnings leak | Ø SEBI suspects that some companies had used WhatsApp to leak quarterly earnings, which is not permitted
Ø If SEBI is able to come down heavily on such companies, it will be a major boost for transparency and governance
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| Ø Sensex drops two drug makers in favour of new private banks | Ø Sensex has included Yes Bank and IndusInd Bank in Sensex and has excluded Cipla and Lupin
Ø The concern is that this making the indices a little too driven by financials and almost a proxy for the banking index
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| Ø US Federal Reserve hikes Fed rates by 25 bps along expected lines | Ø Interestingly, this was followed by the PBOC of China also hiking its short term rates. Other central banks may follow
Ø It provides a new predicament to India and virtually rules out an further rate cuts at least till middle of 2018
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| Ø Theresa May likely to have a tough job negotiating post-BREXIT deals | Ø The EU members, in a rare show of solidarity, stood up against giving any concessions to UK without prior commitments
Ø That only means that May’s task of pushing deals with individual EU nations is going to be a lot more difficult |
