The level of 12,000 continues to be a major resistance for the Nifty as is it struggled to breach that level on the back of US markets correct on trade deal worries. A day after the US passed a resolution demanding human rights must be protected in Hong Kong, markets corrected once again. Assurances from China that the deal was on track did not really help sentiments. The trade deal had run into rough weather after China warned the US against interfering in Hong Kong affairs. US had set the ball rolling with a license extension to Huawei, but have been silent on revocation of all additional tariffs.
Despite the generous 2 year moratorium offered by the government to telecom companies, experts are of the view that the spectrum moratorium was unlikely to help the telecom companies. According to a report in the Hindu, the 2 year moratorium on spectrum may have a limited positive impact. Their real challenge was the AGR charges and that has left a big hole in their books in the second quarter. The telecom minister has already underscored that there will be no waiver of interest or penalty and no moratorium on the 3-month time frame for AGR. This is as per the Supreme Court order.
After HDFC AMC and Nippon AMC we could soon see the next listed mutual fund house. SBI Mutual fund is expected to be listed on the exchanges within the next two years. The CEO of SBI MF averred that SBI would also list its MF business as a separate listed entity on the bourses. The two listed AMCs in India; HDFC AMC and Nippon AMC have seen a sharp rally in the last few days. SBI MF has an AUM that is closing in on HDFC and ICICI Pru while the equity AUM is already the largest for SBI. Normally MF valuations are based on equity AUM. SBI MF is a JV between SBI and Amundi of France.
All the loan melas appear to have worked wonders as bank lending by the PSU banks stood at Rs.250,000 crore in the month of October. The big push given by the finance minister to bank lending appears to have paid dividends in the month of October. Nearly half the total disbursement was to the corporate sector and out of that nearly 1/3rd was to the MSME segment across India. This should come as a major boost for industrial activity as it indicates that the credit wheels have once again started churning and that is a positive development at a time when IIP and GDP are faltering.
Crude oil prices spurted by 189 bps to $63.58/bbl as political risks got accentuated in the OPEC region. The OPEC is a collection of predominantly Middle East, African and Latin American nations. The sharp spurt in the crude oil prices on Thursday had a more localized reason. Political tensions appear to be simmering in key OPEC nations like Iran and Iraq where a financial crunch is taking its toll. In fact, political analysts are already talking about the return of an Arab Spring in these Arab nations. Venezuela and Algeria are already volatile and have been politically and economically unstable. The recent drone attacks on Saudi Arabia only add to the instability in the region with the Saudi government once again blaming Iran for these actions. Prices moved up on expected supply shocks in crude oil.
Continuing on the oil front, the IPO of the world’s largest company appears to be getting a good response. In fact, Saudi Aramco institutional portion of the IPO got oversubscribed. According to a Reuters report, the institutional portion of the IPO received $17.1 billion worth of bids, giving Aramco an opportunity to exercise the greenshoe option. The response to the retail portion is still quite tepid but that is expected to gradually pick up. The current valuation pegs the overall market cap of Saudi Aramco at $1.71 trillion, making it the world’s most valuable company in the world at this point of time.
