The all important meeting between the Finance Minister and the new RBI governor, Shaktikanta Das, is scheduled on the Friday. The meeting assumes importance in the light of the abrupt exit of Dr. Urjit Patel and has a few important items on the agenda. One of the primary ideas is to relax the Prompt Correction Action (PCA) for PSU banks and also to ensure that the pace of liquidity infusion into the financial markets is increased. Of course, the big debate will be over the issue of autonomy of RBI and the payout by the RBI to the government out of its core capital, which was the bone of contention.
The Yes Bank stock took a sharp 6.5% cut in price on Thursday after it announced its decision to submit the prospective names of CEOs to RBI after the January 09th meeting. Yes Bank was supposed to submit the approval list to RBI on Thursday. However, it needs to be remembered that Rana Kapoor will have to demit office by 31st January since the RBI has rejected the extension request. While not much is known about the prospective candidates for the top job at Yes Bank, some of the well known names have been doing the rounds in banking circles. Greater clarity may emerge only on 09th January.
With the government keen to bridge the budget deficit for this year, IOCL has lent a helping hand via a buyback of shares to the tune of Rs.4435 crore. The government currently holds a 54.06% stake in IOCL and will be participating in the buyback offer. IOCL will buy back a total of 297 billion shares for Rs.4435 crore and will pay out another Rs.6556 crore as dividends to shareholders. The buyback is priced at Rs.149/share and represents 3.06% of the capital of the company. With its divestment targets way off the mark, the government has been pressuring PSUs for higher dividends and for buybacks.
The Congress has got down to the job of fructifying its 3-0 victory in the state hustings. Unlike in Karnataka or Goa, the BJP this time did not attempt to form a government in Madhya Pradesh. The Congress has a battle between the old and the new guards in the states of Rajasthan and MP. While Rajasthan is a tussle between Pilot and Gehlot, MP has seen a battle for supremacy between Scindia and Kamal Nath. Decisions are expected on both the states very soon and it could be the litmus test for Rahul Gandhi. The big ask could be balancing the old and new.
In a rather surprising move, the European Central Bank (ECB) decided to halt its $3 trillion bond buying program. This bond buying program had been at the heart of the ECB’s endeavour to get the European economies out of the economic mess post the Lehmann crisis. The US has stopped its stimulus more than 5 years back although it is still to start unwinding its bond portfolio. In the case of ECB, Draghi is of the opinion that growth and inflation may be finally back in the EU region and that may obviate the need to continue with the stimulus. However, Draghi has confirmed that while fresh purchases will be stopped, EU was still a long away from unwinding its asset program. The bull market globally was built on liquidity and hence it remains to be seen how the sudden limits to liquidity will impact global stocks.
In a setback for the ADAG group, the Supreme Court has rejected RCOM’s plea seeking more time to pay its dues to Ericsson. As per the agreement, RCOM needs to pay Rs.550 crore to Ericsson before it can proceed with its spectrum sale to Reliance Jio. The payment is due on December 15th and Anil Ambani had sought more time for the same. Apart from attracting interest, the delayed payment will also amount to contempt of court. The SC struck down the RCOM argument that they had yet not received the NOC from DOT enabling it to proceed with the spectrum sale.
