In a surprise move, Jet Airways deferred its announcement of Q1 results. This decision was taken after the conclusion of the AGM. The stated reason was the unwillingness of the audit committee of Jet Airways to recommend the accounts to the board. Over the last few weeks there have been consistent market rumours of the company coming under severe financial pressure. Revenues have taken a hit due to the sharp rise in ATF prices combined with tight competition in the fast-growing Indian aviation market. The stock has already lost 70% of its value in the last 1 year and is a major underperformer.
IMD records 39% rain shortfall across 681 districts of India. This was an outcome of weak rainfall in the first week of August. The rain shortfall was more pronounced in the states of Uttar Pradesh, Odisha and Bihar. Final impact is yet to be measured. However, domestic traders are building in higher inflation and continue to remain cautious on government 10-year bonds. Despite global investors finding Indian benchmark bonds attractive at current levels, domestic players are still wary and expect the 10-year yields to go above 8%. Domestic investors fear that rising oil prices and fiscal slippages.
The results of Aurobindo may not have been bad had it not been for the one-time hit that the company took on its product portfolio. Aurobindo disappoints the street with 12% fall in profits at Rs.455 crore.
This fall in profits was despite a healthy 16% growth in revenues. Markets could be neutral considering that the profit fell more due to one-off product related provisions. This comes at a time when the market sentiments pertaining to the pharma sector were just about beginning to show signs of a turnaround. Aurobindo has been among the laggards in the stock market in last 1 year.
SFIO arrested former Bhushan CEO, Neeraj Singal, for siphoning of funds out of the company. The Serious Frauds Investigations Office (SFIO) has accused Singal of siphoning funds to the tune of Rs.2000 crore. The arrest becomes significant since Bhushan has just been sold to Tata Steel with bankers taking 37% haircut on their Rs.56,000 outstanding loan portfolios. The government and the investigative agencies have taken a tough stand in the case of NCLT cases where the bankruptcy has happened due to the promoter group siphoning shareholder funds out of the company.
The US-China spat may soon manifest in the form of trade slowdown; or so the WTO believes. WTO warned of global trade slowdown due to US-China trade war. WTO has warned that the sudden dip in exports orders could just be the tip of the iceberg. Trade growth in agriculture, raw materials and electrical components are likely to be worst affected. One of the best indicators of the pressures of the trade war is visible in the price of Brent Crude. It has come under pressure as US-China trade war intensifies. With US and China in no mood to relent and WTO warning of a slowdown in global trade, crude oil prices are weakening on weak demand expectations. That now matters more than Iran sanctions, which was supposed to keep oil prices on a higher plane.
SEBI panel under former Law Secretary, T K Viswanathan, had recommended phone tapping powers for SEBI. While SEBI is empowered to call for detailed call records, phone tapping powers are not yet given to SEBI. The panel feels that such powers will enable SEBI to take more preventive measures to prevent frauds and market disruptions. This could better serve the interests of small and retail investors, believes Mr. Viswanathan. It remains to be seen how brokers and the stock market reach to this suggestion as serious issues of privacy are likely to come up in this case.
