Core sector growth for the month of November 2018 came in at a 16-month low of 3.5% after reporting 4.8% growth in the previous month. The core sector growth is the collective average of 8 key infrastructure sectors are considered to be critical because core sector accounts for nearly 42% of the IIP growth. For the month of November, a sudden slowdown in the growth of cement output and electricity generation was the major reasons for the muted core sector growth. This was due to the base effect on a YOY basis. Core sector growth continues to be driven by government spending on infrastructure.
SEBI has instructed the stock exchanges to move stock derivatives in a phased manner into a physical delivery mechanism based on the average market capitalization of the stock in December 2018. SEBI plans to do it in a phased manner. This is how it will work. All the stocks that are now physically settled in F&O will be moved ranked on market and the bottom 50 will be transferred into physical delivery in April. This process will be repeated in June. By October 2019, SEBI plans to move all the F&O stocks into physical settlement to reduce the chances of rampant speculation and price manipulation.
Axis Bank CEO, Shikha Sharma, stepped down on 31st December with immediate effect. This is a full one month before her scheduled departure date from the bank. As a result, the bank announced that the new CEO, Amitabh Chaudhry, will take charge of the bank from Jan 01st 2019 itself. The bank, in its statement, just mentioned that Shikha Sharma had opted to retire with effect from December 31st itself but not specific reasons were assigned. The RBI had refused to give an extension to Shikha beyond Jan 31st due to the sharp rise in NPAs and under-reporting of NPAs during her tenure.
Even as US treasuries rose on the back of falling yields, the US stocks had one of their worst years since the financial crisis of 2008 in the after math of the Lehman crisis. While the NASDAQ continued to show optimism that the trade with China may be concluded soon, there was caution as the NASDAQ index gave up value after a 4 day rally. In the month of December 2018 alone the US markets lost over 9.2% making it one of the most volatile years for the market in recent memory. The full year fall was nearly 16% even as the German DAX also lost close to 13% during the year gone by.
Even as the MSME loans have shown a sharp rise, the RBI has come out and cautioned the banks about this sharp rise. MSME loans to the tune of 2% of the PCA banks had gone bad and that was the reason the RBI was extremely wary about the same. The government had promised 60 minute loan to these MSMEs and that had resulted in rapid growth in demand for credit. These details were brought out by the RBI in its periodic Financial Stability Report (FSR). Most of the PCA banks managed to grow their MSME loan books by over 160% as that was the one lending segment that did not pose too many restrictions. On a YOY basis, the volume of MSME loans grew from Rs.22,680 crore to 60,280 crore leading to the RBI getting concerned about the standards of credit assessment and review.
IL&FS has finally decided to put its commercial and residential properties up for sale as it is struggling to repay billions of dollars of loans in the midst of a looming liquidity crisis. It has already invited bids for properties located in Mumbai and Kolkata. The IL&FS group currently has an outstanding debt of Rs.91,000 crore and it has been regularly defaulted on its ICDs and CP dues each month. The government had earlier dismissed the entire board and constituted a new board under the chairmanship of Mr. Uday Kotak. These properties may fetch the company Rs.200 crore.
