SEBI has returned NSE’s please for a plea bargain settlement of the algo trading case. It was alleged that NSE under Ravi Narain and Chitra Ramakrishnan had allowed preferential access to select brokers giving them an execution advantage in algo trading. A plea bargain allows a party to pay a penalty and get on with the course of business without either admitting or denying the charges. SEBI has asked NSE to file the consent plea fresh after the regulator completes the investigation of brokers who were allegedly involved in the high frequency case. The NSE IPO had got delayed for precisely this reason.
Tata Steel may have actually emerged as the highest bidder for Bhushan Steel pipping JSW Steel to the post. Bhushan is one of the major companies referred to the NCLT for bankruptcy resolution after it was left holding a debt of Rs.55,000 crore which the company had no capacity to service. Bhushan Steel creditors will take a haircut of Rs.20,000 crore and receive Rs.35,000 crore against their outstanding of Rs.55,000 crore. The acquisition of Bhushan Steel will enhance the company’s steel capacity to 21 million tonnes, making Tata Steel larger than SAIL and JSW Steel in terms of installed capacity.
Global markets continued to be weak and the Nifty corrected by nearly 100 points for the third day in a row. Since the trade war announced by Donald Trump, the Nifty has cracked from 10,450 levels to below the 10,150 levels in a span of just 3 days. Apart from the overhang of US imposed tariffs on steel and aluminium, Indian markets are also apprehensive of retaliatory tariffs from EU, Canada and China. This could eventually escalate into a currency war with nations competing to devalue their currencies. The spread tentacles of the PNB scam across banks is also a major worry for Indian markets.
The government today announced a relief package for the telecom sector. Players in the telecom services are already besieged with high spectrum charges on one side and intensifying competition post the advent of Reliance Jio. The package allows extending the time limit for payment of spectrum liabilities as well as relaxing spectrum holding limits. The deferred payment period has been extended from 10 years to 16 years. On the other hand, revising the limit for the spectrum cap holdings will facilitate the consolidation of telecom licensees. This will simplify M&A in the telecom sector.
The government has made it clear that they propose to re-evaluate their bank recapitalization plan in the aftermath of the PNB fiasco. The PNB scam is already worth Rs.12,700 crore and has been slowly inching up. There is also the possibility that more PSU banks may not be brought under the Prompt Corrective Action (PCA) mechanism with strict restrictions on top-level packages, dividends, branch expansion etc. The government feels that the PSU banks may find it really difficult to raise funds from the open market especially with the overhang of the PNB fiasco hanging over them. While there will be no change in the allocation for the current fiscal year, the government is likely to review its allocation to recapitalization for the fiscal year 2018-19. Government may need to take a call soon!
On the highly sensitive issue of “Special Status” to Andhra Pradesh, Arun Jaitley has affirmed that while the government may be willing to consider more fund for the state of AP, giving special status may not be feasible at this point of time due to the limits imposed by the 14th Finance Commission. Andhra Pradesh has been asking for a SPV created by NABARD with the centre repaying 90% of the loans and the state repaying only 10%. The 14th Finance Commission allows the centre to give special states only to the North Eastern States and to the hilly states. The political repercussions need to be watched.
