With Donald Trump threatening to launch an attack on Syria, world markets were worried that the US and Russia may come into direct confrontation as Syria is an ally of Russia. Putin has already warned the US that any attack on Syria will invite counter attack from Russia. The US made this threat in the aftermath of a suspected Chemicals Weapon attack by Assad on his own people. Russia has stated that any US missile shot at Syria will be shot down by the Russians. This has not only led to US markets tumbling but also pushed Brent crude prices to well above the $71/bbl mark.
SEBI plans to make physical settlement in stock derivatives compulsory in a phased manner so as to curb speculation in stocks through the derivatives route. When stock futures were first lunched in India it was seen as a substitute for the Badla system that had been banned in the aftermath of the Ketan Parekh crisis in the stock markets. While the fine print is still awaited there appear to be two things that emanate from this move. Firstly, this may apply more to naked positions rather than to hedged positions. Secondly, this move may be restricted to speculative stocks to begin with.
Downstream oil companies like HPCL, BPCL and IOCL took a deep cut on Wednesday after the government asked these companies to absorb the Rs.1/litre hike in the price of petrol. It may be recollected that this government had introduced free pricing of oil in 2014 and that could be sustained because of weak oil prices. In the last 3 years, the government has managed to skim most of the benefits of lower crude prices in the form of excise duties. With little leeway left and key elections coming up, the government may be pushing these oil marketers back to the old subsidy situation.
As part of the restructuring of the Tata group being planned under Chandra, the defence and aerospace business of the group will be consolidated. Currently, the defence and aerospace business of the group is spread in bits and pieces across various Tata entities. Now all this will be consolidated under one single company, Tata A&D. Currently, the defence and aerospace franchise of the Tata group is spread of companies like the Tata Motors Defence division, TAL Manufacturing Solutions, Tata Advanced Materials, Tata Advanced Systems and Tata Power’s Strategic Engineering Division.
In what could be seen as a lead indicator of a revival in the corporate sector’s fortunes, office leasing has touched record highs in the top 3 cities in the quarter ended March 2018. According to a report brought out by CB Richard Ellis, nearly 11 million square feet of space was taken up by companies in the top 8 markets which is nearly a 25% jump on a YOY basis. Interestingly, the real spurt was led by leasing activity in the city of Bengaluru which accounted for more than the combined share of Mumbai Delhi-NCR and Hyderabad. Apart from Bengaluru, only Mumbai and Kochi saw a positive growth in office leasing activity. In terms of industry mix, Technology, banking and finance accounted for 50% of all office space taken up during the period. Bid deals include Flipkart, Accenture, Bosch and Covance.
The minutes of the March meeting that were put out indicated clearly that the Fed favoured quicker rate hikes considering the imminent trade war. The debate was whether the US Fed will restrict itself to 3 rate hikes during the year or stretch it to 4 hikes. The core inflation which had touched 1.8% in the previous quarter was likely to touch 2.1% a strong structural justification for quicker rate hikes. The Fed had hiked rates by 25 basis points in March. If rate hikes are more than anticipated then we could risk capital flight with risk-off money flowing out of India and other EMs.
