As trading commences in the final week of February, the data points to watch will be the Q4 GDP estimates, the PMI numbers for manufacturing, and core sector data for January and the auto sales data. Additionally, the rupee movement will also be closely watched after it cracked beyond the 65/$ mark on Friday. The week is shortened to four days as Friday markets are shut on account of Holi. There are expectations that the Q4 GDP will be better than Q3 and that is the picture that has emerged from the RBI policy too. Of course, the aftermath of PNB fiasco will continue to be an overhang.
The newly formed state of Andhra Pradesh has signed MOUs worth Rs.175,000 crore with RIL alone investing close to Rs.55,000 crore in the state. RIL is expected to generate over 25,000 jobs in areas such as hydrocarbons, retail and electronics. Reliance Jio will also be investing heavily in digital infrastructure in the state of Andhra Pradesh. Both RIL and BP will be jointly investing billions of dollars into the KG Basin. Over 60% of the investments will be in the area of energy alone. In addition there will be investments in healthcare, textiles and food processing too.
It appears to be the period of frauds and loan defaults with the CBI filing an Rs.97 crore loan default case against Simbhaoli Sugars. The complaint with the CBI was filed by one of the lenders, Oriental Bank of Commerce. Oriental Bank had sanctioned a loan of Rs.148 crore to the company in the year 2011. The bank had already intimated the RBI about the fraud in the year 2015 itself. The CBI has already undertaken a search of the premises of the company across Delhi, Hapur and Noida. It appears like the CBI is working overtime to sort out the rising instances of bank fraud cases.
Continuing with its largely protectionist policy, the government has imposed anti-dumping duty on ceramic ware and kitchenware imported from China. These products will attract a special anti-dumping duty of $1.04/kg with respect to Chinese imports. The local associations had complained that dumping of these products from China was impacting local manufacturers. Earlier the government had also put such duties on steel and radial tyres as China was selling at below cost with the support of the Chinese government. The WTO has taken a negative view on such duties in the past.
The legendary annual letter to shareholders from Warren Buffett continues to contain his incomparable pearls of wisdom. On the subject of acquisitions by Berkshire Hathaway, Buffett has pointed to the high valuations and the fear of leverage as reasons for not going aggressive on acquisitions in this year. Buffett also warned that safe looking bonds could be risky, especially considering that the Fed was like to hike rates by 100 basis points during the current calendar year. Some bond market analysts have already called the end of the secular multi-year bull rally in bonds. The new tax laws announced by Trump have given a big leg-up for Berkshire Hathaway. It may be recollected that Buffett had recently exited his IBM position almost entirely calling it a bad trade with bad timing.
One of the iconic pioneers of cloud storage and file sharing, Dropbox, has filed for an IPO. It is conservatively valued at $10 billion and the real value explosion could come post the IPO. The offer size is around $500 million. The proceeds of the issue are likely to be used to pay down the debt of the company. Not only does Drop boast of over 500 million registered users, but it is also a cash-flow positive company. The company’s total revenues have crossed $1.1 billion while its net losses have shrunk to just over $100 million. Goldman Sachs and JPM are likely to be the lead managers.
