In a subtle way, Donald Trump put the onus of the trade deal on India. He hinted that the trade deal was more likely towards the end of the current year. However, he also underlined that Indian tariffs were among the highest in the world. It was a clear hint to the Indian government that India will have to seriously relook at its tariff structure to have a full fledged trade deal with the US. In the last one year, the US has emerged as the largest trading partner for India getting the better of China. The reason the deal is important to India is because India currently runs a trade surplus with the US.
The carnage in the US markets continued as the Dow and the S&P 500 fell by another 3% on Tuesday. The Dow fell by another 806 points on top of a 1031 points fall on Monday. The crash in the markets was largely driven by fears that the world economy could see a clear slowdown as a lag effect of the Chinese Coronavirus syndrome. The virus has already resulted in over 2700 deaths and over 80,000 people across the world are already afflicted in some form. Even the Japanese Nikken closed at a four-month low. The US economy is likely to be hit due to its deep trading ties with China.
Just a week after the Financial Action Task Force (FATF) had put Mauritius on the Grey List, the Indian government has moved in to assuage the fears of the FIIs. The foreign investors have apparent been assured that Mauritius registrations will not be affected in any manner. The grey list classification means that the country will be under observation and any delay or laxity in compliance could lead to a ban on further registrations. Since a large chunk of Indian FPIs are registered in Mauritius, it could prove to be a major impediment to their continuance in India. For now, that concern has been allayed.
The SBI Cards IPO will open on March 02nd and close on March 05th. The issue has been priced in the band of Rs.750-755 and the final price will be decided through the process of book building. The issue will raise Rs.10.354 crore of which Rs.500 crore will be way of fresh issue of shares and Rs.9,854 crore will be way of offer for sale. Post the IPO, the stake of SBI in SBI cards will reduce from 74% to 69.51%. The IPO values SBI Cards at Rs.70,000 crore at the IPO price and the markets are already expecting a strong listing on March 16th. This is also expected to improve SBI’s SOTP valuations in the market.
In a move that was long coming, SEBI has banned the transfer of shares from the client account to the broker account. This had become a major issue after Karvy Stock Broking was found guilty of having raised money from banks by pledging shares of clients without their knowledge. It may be recollected that in November SEBI had banned KSBL from taking on fresh clients and had subsequently deactivated its trading terminals. With effect from June 01st 2020, brokers will only be permitted to accept stock collateral as margin pledged created on the client demat account. The current system of transferring shares to the broker will be banned altogether. Power of attorney given by a client to the TCM (Trading cum clearing member) will not treated as equivalent to giving shares for margin account.
The Asian Development Bank (ADB) has listed its 10-year Masala Bonds worth Rs.850 crore on the INX. India INX is the debt listing platform provided by India. Masala bonds are rupee denominated bonds that are raised in a foreign market. The advantage of these bonds is that they save the current risk. These Masala bonds will be listed on the Indian INX and also on the Luxembourg Stock Exchange. This is an important move as it is the first that a reputed foreign entity is listing its bonds on the INX. This is part of the International GIFT City, which was created to compete with global financial markets.
