Even as India moves towards becoming a net steel importer after a span of 3 years, Japan and South Korea have tightened their grip over the Indian steel import market. Currently, Japan and Korea have started to dominate nearly 60% of Indian steel imports, according to Reuters. Experts anticipate that this could impel the government to take protectionist measures. India imported 0.63 million tonnes of steel in April. The combined share of Japan and Korea has gone up from 45% to 58% over the last one year. In the past, the government had protected Indian steel through tariff and through quotas.
Even as Brent prices cracked lower to the $66.87/bbl mark, the US warned countries that are still buying Brent Crude from Iran even. America issued a stern warning that countries that buy crude from Iran after May 02nd would also be subjected to sanctions. In an indirect hint at India and China, the US Special Representative for Iran, Brian Hook, averred that these sanctions would also apply for buying crude within the previously negotiated caps. India and China were originally allowed to buy up to the cap even after the concessions expired. Brent Crude cracked 3.71% on Thursday to $66.87/bbl.
Telecom companies in India finally saw their ARPUs bottoming out and move up as low-paying customers are gradually being eased out. Over the last few months, Airtel and Vodafone have been making a consistent effort to weed out the low revenue customers where the cost of servicing exceeds the revenues. This has led to a sharp rise in the Average Revenue per User (ARPU). Airtel and Vodafone have seen their ARPUs go up sharply by 18-20% in the last few months, as per a report in the Business Standard. Jio has overtaken Airtel to become the second largest in terms of subscriber base.
With a new government in place, it is likely to adopt the BOB model for merger of PSU banks and to expand their balance sheet. The idea is to make them more competitive in the market place. One of the first priorities for the new NDA government will be to address the unfinished agenda of bank restructuring. According to a report in the Business Standard, the government may adopt a BOB like model of merging up to 3 banks. Discussions have already been initiated between the Financial Services Secretary and the RBI Deputy Governor, MK Jain. Banks have continued to be under stress in Q4.
Nifty and Sensex closed at new highs ahead of cabinet formation by Modi 2.0 but stopped short of their psychological levels of 12,000 and 40,000 respectively. While the complete portfolio allocations are yet to be announced the markets had built in expectations of a reformist thrust by the new cabinet. The VIX also stabilized around the 15 levels while short positions covered aggressively in banks and IT stocks. While final portfolios are expected on Friday, there have been some interesting shifts in the new cabinet. Amit Shah and S Jayshankar will be new entrants in the Cabinet while former ministers like Rajnath Singh, Nitin Gadkari, Nirmala Sitharaman, Piyush Goyal and Smriti Irani have also been sworn in. Sushma Swaraj and Arun Jaitley had opted out of portfolios on health grounds.
NBFCs may need a risk management recast to turnaround, according to ICRA. Even as NBFCs continued to face problems of liquidity availability and cost of funds, ICRA has called for a rethink of their funding strategy. It may be recollected that RBI had mandated that all NBFCs with AUM more than Rs.5000 crore must appoint a Chief Risk Officer (CRO). ICRA has also suggested an enterprise risk management approach as well as better disclosure practices in the future. Most NBFCs have been under stress after the IL&FS fiasco broke out in August last year leading to the liquidity crisis.
