With the rising divergence between bank NPAs and RBI calculations, SEBI has tweaked disclosure norms for listed banks in India. The new disclosure norms for listed banks put out by SEBI pertains to divergence in provisioning for bad assets. This has been the bone of contention between banks and the RBI for quite some time. If the divergence is more than 10% then the same has to be intimated to the stock exchange. This threshold was 15% earlier. Disclosure will also be mandatory if Gross NPAs are higher by 15% as compared to the previous disclosure.
The Indigo Airlines group may finally see some resolution to its long standing dispute between the two principal promoter groups. Interglobe Board is likely to meet on Friday to sort out promoter differences. According to an ET report, Interglobe board will meet on Friday to sort out differences between the Bhatia camp and the Gangwal camp in the Interglobe management. The Gangwal camp has accused the Bhatia camp of related and inter-party transactions; against accepted governance norms. Rahul Bhatia has been managing day-to-day operations of Interglobe for the last many years single-handedly.
It may not be the time for equities but FPIs are certainly bullish on debt. In fact, international investors snapped up Rs.5,961 crore in debt since the budget. With global negative-yield debt crossing $10 trillion, there is a beeline for Indian debt which offers the best combination of attractive real interest rates and a stable currency. State-owned lenders have sold bonds worth Rs.14,500 crore since the budget and FPIs have been among the biggest buyers. Debt flows continue in the hope that a dovish RBI could sustain demand for Indian debt. RBI prefers FPI debt over sovereign bonds borrowings.
The cues coming from the IMD are not too encouraging after a rather dismal outlook for next two years given by private sector SKYMET. July rainfall was lower by 20% in the second week according to an IMD Release. According to the IMD, rainfall in the second week of July was 20% below the Long Term Average (LTA) with central, western and southern parts of India the worst hit. This could raise concerns over the progress of crop planting in these regions. The weak rainfall has hit rural demand in a big way with most of the FMCG updates mentioning a distinct slowdown in rural and semi-urban demand.
The FM has clarified that there will b no relief from Super-rich tax for FPIs structured as trusts. FPIs structured as trusts will have to pay the super-rich tax imposed in the Union Budget but she also suggested that such trusts may consider registering as companies to avoid this additional tax. This tax is likely to be applicable to nearly 40% of the FPIs registered in India. Meanwhile, the Sensex fell by 318 points as Rupee weakened close to the 69/$ mark. Fears of worsening trade war between China and the US as well as a tightening liquidity situation led to a sharp fall in the Sensex and the Nifty. The rupee also weakened on the back of FPI outflows and that had a cascading impact on market indices. FPIs have been consistently selling in equities in July and the FPI tax has only aggravated matters.
Wall Street opened lower as trade war and Netflix results dragged the index lower. The trade war appeared to be taking a turn for the worse as China has refused to relent to the pressure applied by Trump in the last few days. The sentiments in Wall Street were soured by Netflix announcing below target results and showing tepid growth in its global expansions. That was disappointing since Netflix is betting heavily on its global franchises. It is now over to FAANG stocks which include some of the marquee names of the technology sector in the US like Facebook, Apple, Amazon and Google.
