Shortly after the US China trade talks ended, China has placed an order to buy 2 million tonnes of soybeans from the US. The sharply higher purchase of soybeans from the US has come immediately after the trade talks between the US and China concluded. According to Bloomberg, Chinese officials just confirmed that these purchases were in line with the consensus, but did not divulge details. Trade experts are expecting that this could be a sign of cooling of the trade war. If the trade war recedes, it will be positive for global markets sentiments as well as for the price of crude oil.
At a time when Piyush Goyal spoke at length on energy security, Oil PSUs have seen their capital expenditure drop to a 5-year low in fiscal 2019-20. PSUs like ONGC and IOC have laid out plans to invest a sum of Rs.93,693 crore in exploration and refining during the fiscal year 2019-20. This is the lowest in the last 5 years and the capex had crossed Rs.100,000 crore in 2 out of these 4 years. This is critical because the FM spoke about a thrust on energy security and India will import crude worth $109 billion in this fiscal. Weak investments could be due to oil price uncertainty.
Election uncertainty and the global flux seem to be taking its toll on the FPI inflows into India. Foreign portfolio investors pull out Rs.5361 crore in January 2019. According to the latest NSDL data, FPIs pulled out Rs.5264 crore from equity and Rs.97 crore from the debt markets on a net basis. FPIs had infused Rs.17,000 crore in the months of November and December 2018. FPIs were adopting a wait-and-watch approach ahead of the General Elections scheduled in the middle of the current year. The debt flows may now come back since it appears that the US has adopted a dovish policy stance.
With the government standing firm on the launch of its new FDI rules effective 01st February, thousands of products have suddenly vanished from the ecommerce websites of Flipkart and Amazon. According to a report, this new legislation prevents global ecommerce players like Wal-Mart and Amazon from either owning equity stake in vendors or having exclusive sales arrangements for products. This tightening was following strident protests from small traders and businessmen who have been trying hard to protect their competitive turf in the light of the deep pockets of the global players.
The government appears to moving on its Universal Basic Income plan with speed. After announcing the direct transfer of funds to farmers, the government has announced that Feb 01st will be the cut off date for eligibility under PM-KISAN plan announced in the Budget. The PM-KISAN scheme will provide supplementary income support of Rs.6,000 per year to marginal farmers holding up to 2 hectares of land. This is expected to benefit 12 crore farmers and will entail a cost of Rs.75,000 crore to the government each year. Government has instructed all states and union territories to prepare the list of eligible farmers using February 01st 2019 as the applicable cut off date. It is based on this cut-off date that the assured transfer to marginal farmers will be done effective from the 01st of December 2018.
The problems for Chanda Kochhar, former CEO of ICICI Bank appears to be mounting. The ED has launched a money laundering probe against Chanda Kochhar and Venugopal Dhoot. As per a report, the Enforcement Directorate will probe the money trail to determine if there was any laundering of funds, as alleged. It may be recollected that the ICICI Bank board had terminated Kochhar’s services with retrospective effect following the Justice Srikrishna report. According to the board, Kochhar had not adhered to the internal code of conduct of the bank leading to conflict of interest.
