For the coming week, there could be some interesting trading cues including the second round of Operation Twist worth Rs.10,000 crore. This is likely to benefit banks by pushing yields lower and bond prices higher. Additionally, PSU banks could be mixed during the week as the RBI report has not painted a rosy picture of the NPAs. Apart from the monthly auto numbers, the big other news for the week will be the core sector for November. This more as it comes on the back of 3 months of negative growth in core sector numbers. Current account deficit figure will also be out on 31st December.

A quick and cursory analysis of the top 50 corporates in India in terms of size and importance reveals that these mega and large companies have successfully reduced debt by Rs.60,000 crore in the first half of this fiscal ending on September 2019. That is truly some efficient deleveraging. This is part of a conscious strategy to reduce the debt in the balance sheet. The same companies had reduced their debt burden by about Rs.43,000 crore in the entire fiscal 2018-19, so it is a huge jump. This underlines that the large Indian companies have been quite aggressive in reducing debt and streamlining debt.

If you look at the previous week, then 6 out of the 10 most valuable companies by market cap in India suffered total value erosion of Rs.64,420 crore. In the aftermath of the Saudi Aramco stake sale bar, it was Reliance Industries taking the biggest knock for the week. Other blue chip stocks like TCS, HDFC Bank, Kotak Bank, SBI and ITC also witnessed a sharp fall in their market capitalisation. However, select stocks like HDFC, Hindustan Unilever, ICICI Bank and Infosys were the gainers. RIL lost Rs.36,292 crore in market cap, HDFC Bank lost Rs.11,666 crore and TCS lost Rs.9,156 crore during the week gone by.

Coal India looks all set to fall short of its 660 million tonne (MT) production target for the fiscal year 2019-20. Coal India has made urgent plans to ramp up daily output to get closer to the goal. Till the end of December, Coal India is expected to produce 390 MT of coal and needs to produce another 270 MT in the Jan-Mar 2020 quarter to be able to meet production targets. Coal India currently produces 1.8 MT per day while the run rate needed is 2.9 MT in the last quarter. That will be a challenge although Coal India has planned to raise its production to 3 MT per day in February and March to get closer to target.

In the aftermath of the IL&FS default, the RBI has come down heavily on the credit rating agencies for laxity in doing its job. The regulator has already fined the two rating agencies, ICRA and CARE, Rs.25 lakhs each for not doing discharging their responsibility in forewarning on the IL&FS issue. Apart from this penalty, the regulator also came down heavily on the rating agencies for allowing rating shopping by these companies being rated. Rating shopping is when the company in question is allowed to approach another rating agency when it does not get a rating of its choice. In such case, the details of the other rating need not be disclosed and rating agencies have encouraged this practice. SEBI has called out the practice of companies getting a good rating from another agency within 3 months of a low rating.

FPIs infused a total of Rs.120,000 crore into the Indian markets during the calendar year 2019. This has come in tranches of bullishness. For example, there was heavy FII inflow into equity prior to the election result announcement in May and then from October after the finance minister cut the rates of corporate taxes. However, in the period between July and September, FIIs were selling heavily on the back of a negative budget for global investors. On the debt front, FIIs were buyers in the second half of the year after the rupee carry trades clearly favoured inflows into Indian debt despite low real rates.