It appears to be farm loan waiver time across states. After the Congress stuck to its promise of approving all loan waivers within 10 days of assuming power in the three states, the BJP will not want to be left behind. The state governments of Assam and Gujarat have announced liberal waivers of farm loans as also power bills for residential consumers. The only worry is that from a macroeconomic perspective, it could put immense pressure on the fisc. The fiscal deficit has already exceeded the full year target in the first 8 months and it could overshoot even the expanded fiscal target of 3.5%.
The beleaguered Dewan Housing Financing is looking to exit its joint venture AMC with Pramerica in India. DHFL will sell out its stake in the JV which was constituted in 2014 and the stake will be purchased by its partner Pramerica. The 50:50 joint ventures between DHFL and Pramerica will now be fully owned by Pramerica and will be subject to regulatory approvals. DHFL has been looking to monetize its non-core assets and focus purely on its core business of home loans. The stock had seen a sharp correction on the back of its exposure to IL&FS as well as serious worries over its asset-liability mismatch.
The price of Brent Crude sank to a 1-year low as the markets that the sell-off in equities could be an outcome of the inverted yield curve in the US. In the past, an inverted US yield curve has been the lead indicator of an impending recession and it normally worked to perfection with a time lag of around 1 year. There are also worries that the 1.2 million bpd supply cut agreed by OPEC and Russia may not be sufficient to compensate for the supply increases in the last couple of years. Brent crude fell below the psychological $60/bbl mark to trade at around $58.60/bbl on the back of GDP growth concerns.
Titan may have achieved solid growth in the third quarter of the year on the back of strong wedding season demand, as confirmed by the Titan CFO, Mr. Subramanian. The stronger rupee also helped keep their gold costs low and pushed up sales post-Diwali. The company had seen some demand pressure coming in the previous quarter due to the flooding in Kerala but that is likely to be compensated in the third quarter. According to Subramanian, the third quarter has seen better sales traction with lower ad spending and that was likely to expand the margins of the company positively.
After the successful launch of the Weekly Bank Nifty options, NSE has secured approval from SEBI for launching weekly options on the Nifty index. This will not only enable short-term hedging in the Nifty but will also open up arbitrage opportunities between the weekly options and monthly options whenever there is mispricing. The idea of weekly options was to reduce the risk of small and retail investors. Most retail investors had been wary of selling options due to the unlimited downside risk. However, with weekly options, this risk should come down substantially. The Nifty 50 weekly options will have 7 consecutive weekly expiries, excluding the monthly expiries. The weekly Bank Nifty options have seen traction since its launch in 2016 and the NSE had also recently launched weekly currency options.
Saudi Arabia and the Reliance Group are in talks for a refinery cum petrochemical project. This was disclosed by the Saudi oil minister, Khalid al-Falih. Saudi Arabia is very keen to get a toehold in the world’s fastest-growing fuel market so as to get a captive customer for its crude oil. Saudi based ARAMCO and Abu Dhabi National Oil Company have already picked up a 50% stake in a proposed $44 billion refinery in Maharashtra, which is currently stuck on political wrangles. The facility will consist of a 60 mtpa refinery and 18 mtpa petrochemical complexes. Saudi will supply half the crude oil needs here.
