The RBI extended the single window enhanced borrowing limit facility for NBFCs till 31st March of 2019. The limit for NBFCS had also been enhanced from 10% to 15% of capital funds in October immediately after the NBFC liquidity crisis that cropped up after the default by IL&FS. This will enable banks to lend to NBFCs and HFCs so that the yearend liquidity concerns can be addressed. The defaults by IL&FS are still on and the RB fears that lenders may eventually have to take a huge haircut to close the IL&FS issue. As a precautionary measure, the RBI wanted to avoid any major serious liquidity concerns.
After oil prices corrected by 40% from the peak in October, there are hedge funds across the world that are betting on a revival in crude oil prices in the year 2019. In fact, 2008 was one of the most volatile years for oil since 2008 financial crisis period. Hedge funds are betting on the OPEC and its Russian partners following through on the supply cuts and gradually scaling it up. Also hedge funds are betting that the demand worries stemming from a likely global slowdown may not really materialize with the US and China apparently inching towards a deal on trade issues. Oil is expected to cross $70/bbl in 2019.
News flows from the auto channel checks is that despite heavy discounts offered by auto makers, the sales are not really picking up. This comes on the back of a poor festive season where a liquidity crunch in the markets and high fuel prices dampened the demand for autos. According to an initial survey by Bloomberg, sales on a YOY basis are likely to have declined by nearly 15% for most of the auto companies which is apparent from the huge pile up in inventories. Normally, buyers prefer a New Year registration date as it promises better value.
According to the WTO, the protracted trade war between the US and China caused losses worth billions of dollars on both sides in sectors ranging from autos, agri products and technology. The 3 month ceasefire between the two countries expires on March 02nd 2019 and this should spur both the governments to look for a quick solution to this impasse. Purdue University economists estimate that the agri tariffs alone have caused a loss of $3 billion on both the sides. From the time, the US started the tariff war; China has been predominantly buying soybeans from Brazil, pushing prices up sharply.
The chairman of United Insurance has admitted that the company may be in a deep financial mess. United Insurance had reported a huge loss of Rs.1900 crore in 2016-17 but had managed to report a profit of Rs.1010 crore in 2017-18. It is this huge loss swings that is causing consternation, more so considering that United Insurance is the second largest insurer in India. The chairman, in his year end letter to employees, has written that the situation was alarming and worrisome. But in the latest financial year, the losses for first six months are close to the loss it reported in 2016-17. These numbers are strange because the insurance sector is in the midst of frenetic growth. Market analysts are already worrying that this could be the next IL&FS, or worse, considering its huge balance sheet.
Zydus Cadila has secured US FDA permission to market the acne treatment drug and the same will be manufactured at Cadila’s Ahmadabad facility. The US FDA gave Cadila permission to market a combination of clindamycin phosphate and benzoyl peroxide gel. This combination is used to treat a specific inflammatory kind of acne which is medically known as Acne Vulgaris. This combination helps to reduce the intensity of acne pimples. This comes as a whiff of fresh air at a time when the pharma giants across India are facing some real challenges in convincing the US FDA.
