The bullish sentiments continued during the week with the Nifty and the Sensex scaling new highs. HDFC became the third stock in India after RIL and TCS to touch the $100 billion market level. During the week, the market cap accretion in 8 out of the top 10 stocks was to the tune of Rs.113,000 crore. More than 50% of this surge in market cap was accounted for by TCS alone. Apart from positive sentiments on the global trade deal and BREXIT, Indian markets were also building in expectations of a Big Bang Union Budget. The MSCI revamp kept the FPIs flows in positive territory during the week.
The counting for the Jharkhand polls will start on 23 December and the final outcome will be clear by around mid-day. With just about 81 seats, the Jharkhand assembly may not be very large but it holds a special place for the ruling NDA to consolidate their position in the Hindi Belt. The ruling NDA would be looking at a good performance after the recent outcome of the Maharashtra elections. It will also be seen as a referendum on the economic policies of the current government. Exit polls by some of the major outfits have projected a hung house favouring the JMM-INC alliance.
As year 2019 comes to an end, there are some positive trends that are visible in the FPI flows front. According to NSDL data, FPIs have infused more than Rs.100,000 crore during the year making it one of the best years for the Indian market. During the year, the equity flows were much better than the debt flows. Apart from the return of a stable NDA coalition, the FPIs also celebrated the generous corporate tax cuts offered by the government. The inflows could have been much higher had it not been for some specific announcements made in the last budget. Rupee carry trade also helped FPI flows.
The Department of Telecommunications (DOT) appears to be on a penalizing spree. After making the huge demand on Bharti Airtel and Vodafone over outstanding AGR charges, the DOT has now made a demand of Rs.172,000 crore on GAIL. Apart from the regular telecom companies, GAIL and RailTel also had some spectrum allocations made to them. This demand from DOT refers to past amounts due from GAIL. However, the irony is that this demand is nearly 3 times the net worth of GAIL and a multiple of their annual revenues. It is unclear how DOT expects GAIL to shell out this kind of money as dues.
As many as 377 projects with a project value of over Rs.150 crore each have seen cost overruns to the tune of Rs.3.94 trillion. This is based on a report prepared by MOSPI on infrastructure projects with value in excess of Rs.150 crore. Smaller projects are not covered in this report, so the actual figure could be much higher. The total cost of all these projects worked out to nearly Rs.19.23 trillion so this amounts to a cost overrun of more than 20%. The average time overrun in these projects is to the tune of nearly 38 months. The delay in projects not only means cost overruns but also implies that precious capital is locked up for longer and IRR starts later than originally anticipated. CMIE has also been constantly warning that there appears to be no respite on this front since 2015.
Reliance Industries has come out strongly against the government petition in the court, blocking the proposed $15 billion stake in the RIL refining business to Saudi Aramco. The government contention was that a sum of $3.5 billion was owed to the government by RIL and British Gas over the Panna Mukta and Tapti basin fees. Hence the government would approve this sale only after the dues were cleared by RIL. RIL has opined that the calculation of dues by the government was based on extrapolation and hence not acceptable. The case is already under a dispute in an international tribunal.
