Indian markets have been profitable and global investors have skimmed nearly $50 billion out of India in the last year. FPIs and MNCs took out $49 billion out of India in the year 2018 via dividends and interest. This is double the amount of money that went out of India in the year 2011. This includes dividends on FPI and FDI investments in equity as well as interest paid on FPI bond investments as well as on NRI deposits. Experts consider this a part of normal asset re-allocation. However, such a heavy pullout of returns from India negatively impacts the current account deficit for India.

There is a new complication for pledging of shares by promoters in the form of the new insider trading norms which became effective from April 01st as it has redefined the cooling period for insiders from the close of the quarter rather than 2 days prior to the results; as is the practice now. More importantly, pledging has also been added to this definition. That means; promoters will now not be able to pledge their shares for funding for nearly 4-5 months every year. While the clarity is awaited, most promoters of mid cap companies are already jittery as this would put them at a disadvantage.

There is some good news on the US macroeconomic front. The US consumer spending posted the sharpest rise since year 2009. There were some positive cues coming from the US spending numbers although the inflation continued to remain muted. The surge in consumer spending sets the base for greater consumption demand in the coming quarters. The US Fed meets on Tuesday and Wednesday and will announce its rate decision late on Wednesday. The CME Fed Watch Tool is hinting at a status quo on rates as the Fed had clearly hinted at a dovish stance for the rest of 2019.

The world’s largest democracy completed the fourth phase of Lok Sabha polling on 29th April 2019. With the financial capital of Mumbai going to vote on 29th April, all banking and financial market establishments were shut. However, voting in North Mumbai and South Mumbai was disappointing at just above 50%. The all-India voter turnout in the fourth phase was 62.5%. With this phase, polling has been completed for nearly 375 out of 543 seats with 3 more rounds remaining. The markets have been betting on a stable government so that the reforms process is not constrained.

There is not so encouraging news for Debt funds in India, which are already under pressure over the FMP issue. Debt funds may have more write offs in the offing with another downgrade. After the fiasco with respect to IL&FS and Zee, rating agencies have downgraded two financial companies of the ADGA group to default status. This brings the focus back on the issue of exposure of mutual funds. Close to Rs.17,000 crore of debt has been reduced to default status. Mutual fund exposure to these companies is to the tune of Rs.5,000 crore. In these default cases, the rating agencies do not specify the quantum of write offs to be taken by the fund but the decision has to be taken by the Investment Committee. Reliance AMC has already decided to write off its exposure to the downgraded companies.

H1-B visa holders in the US may have a problem switching jobs in the US and the visa woes are only compounding under Trump. The US Immigration Service has repeatedly denied applications from employers for employees to switch jobs as it does not constitute high skill recruitment and is purely a lateral move. Additionally, such job hoppers may also be denied a US visa for a period ranging from 3 to 10 years. Trump has consistently made life difficult for Indian IT companies through tightening of visa rules.  It remains to be seen how the IT companies react to this announcement.