The FMP problem appears to have acquired a new dimension after HDFC AMC has offered two choices to its Fixed Maturity Plan (FMP) investors. HDFC MF investors can either consent in writing to roll over the FMP or they can choose to take back the truncated proceeds on the redemption date. Those who opt out would lose on any recoveries from the Essel Group. However, the formula for valuation is not too clear at this point in time. Out of a total of 9 FMP redemptions in April, HDFC AMC had rolled over the first tranche of FMPs and the remaining 8 are due by end of the month. Most are opting for rolling over.
After more than 30 months of pressure on telecom company top lines, CRISIL expects telecom sector revenues to grow by 7% this fiscal. As per a report prepared by CRISIL, fiscal 2018-19 could see positive growth in telecom sector revenues after 2 years of negative growth. The rating agency attributes this expected growth to stable tariffs and the new minimum recharge plans. Most of the telecom players have been weeding out low paying subscribers aggressively and that is likely to help growth, as per CRISIL. However, profits are likely to remain under pressure this year too.
Could India get good rainfall despite the El Nino effect? That is what the IMD believes as it has suggested normal monsoons despite El Nino; for the first time since 1997. The IMD forecast of a normal monsoon could be indicative of the second occasion in the last fifty years when India has had a good monsoon despite the El Nino effect. In the last 50 years, there have been 9 El Nino situations in India and 1997 was the only occasion when India received normal rainfall despite El Nino. The timely onset of monsoon and distribution of rainfall across the cropping regions is the key to Kharif output.
While there was worrying news from Europe, China appears to have got back its growth mojo. Mixed cues from global markets on a day when Indian markets were closed. Indian markets had a holiday on 17th April but the global cues were coming in hard and fast. Germany cut its GDP growth forecast for 2019 to 0.5%, marking the second cut in 3 months. The original growth estimate was 1.8%. Meanwhile, China reported GDP growth of 6.4% in the first quarter, higher than the consensus of 6.3%. Asian analysts consider this a positive surprise since Chinese economy drives the fortunes of Asia in a big way.
Brent Crude hovered above the $72/bbl mark on Wednesday helped by growth in China and drawdown in US inventories. China, GDP growth for the first quarter came in at 6.4% against the consensus estimate of 6.3%. Positive statements from the US on the trade deal also helped. Additionally, refinery throughput in China grew by 3.2% even as the US saw rapid drawdowns of oil inventory levels, spurring oil prices higher. Meanwhile, the US is getting serious about Iran sanctions. After the 6 month moratorium to select countries, the US has underlined its intent to enforce sanctions in May. Indian refiners who depend on Iran supplies are already looking at alternate supply from OPEC nations and North America. State refiners have not placed any orders for oil from Iran for the month of May.
P-Notes, which peaked in 2007 has made a small comeback in the month of March. In fact, Participatory Notes (P-Notes) surged to Rs.78,110 crore in March 2019. The higher P-Note investments are in line with higher FII investments that came into India from February onwards. 70% of the P-Note allocation was in equity and the balance in debt. Now, P-Notes are more tightly regulated by SEBI. In fact, tight SEBI regulation had been the bane of the P-Note market in the last few years as it had made very stringent disclosure norms mandatory. FIIs have shown elevated interest in India since February.
