Jet Airways has constrained the supply of air routes and that is showing in aviation numbers. In fact, India’s domestic air passenger growth slowed to just 3.1% in March 2019 according to the latest data published by IATA. This is all the starker at a time when the global domestic aviation industry grew by 4.1%. This India aviation growth is lower than 8.3% in February and sharply lower than an average of 16-18% in the previous months. The slowdown reflects the shutdown of Jet Airways and problems like the Boeing 737 Max and Pratt & Whitney engines. Markets have compressed rapidly since then.
The crude prices may have finally found some iota of support around the $70/bbl levels as Iran sanctions and huge drawdowns of US oil reserves offered support. The last few days have been volatile for oil prices but on Wednesday, the price of oil stayed firmly above the $70/bbl mark. It had earlier fallen as low as $68.50/bbl on trade concerns. However, the range has narrowed and Iran sanctions combined with US drawdowns have helped the oil to stabilize on Wednesday. But the trade war and the possible slowdown in global growth continues to be a major overhang for oil prices globally.
The total IBC collections this year may be slightly better than the previous year. In fact, ICRA expects banks to realize Rs.80,000 crore from insolvency in FY20, higher than the Rs.66,000 crore recorded in FY19. Of course, two of the big realizations could come from carrying forward cases of Essar Steel and Bhushan Steel & Power which could not be resolved in the previous fiscal. However, the number of cases is increasing with IL&FS and power sector still an open issue. Then there are also groups like the ADAG group, Essel Group and the Dewan Housing group which are under tremendous but with little hard assets.
RBI pulls out its circular on banks disclosing its NPAs in IL&FS exposure. The NCLAT had made an exception in the case of IL&FS and asked banks not to classify their exposures as NPAs. RBI had been unhappy with this decision as it made bank balance sheets opaque. RBI had issued a circular to banks in this regard. With the NCLAT now allowing banks to classify their IL&FS exposure as NPAs, RBI has withdrawn its original circular on the subject. The onus would now be on the individual banks on whether they want to make a clean show of their IL&FS exposure or not and who takes the lead.
The negative impact of Trump’s tweets on the Indian market continued as the Sensex lost close to 1200 points in 3 days of Trump accelerating the trade war with China. Trump is now keen to hike tariffs on Chinese imports; even as China has threatened retaliation. With the US planning to go ahead and hike Chinese tariffs from 10% to 25%, China has threatened to retaliate in multiple ways. China has been trying to delay the deal till the Democrats had bigger numbers but Trump is keen to thwart any further delay in the deal. China may resort to other measures like buying Iranian oil, selling dollar treasuries, reducing dollar holdings, etc. China runs a trade surplus of over $600 billion with the US and that has been a key driver of Chinese growth over the years. Of course, Indian markets may take a hit.
Nirav Modi, the diamond dream merchant, maybe having the toughest time of his life as his bail plea was rejected by a London Court for the third time. The bail application of Nirav Modi has been rejected for the third time by a London Judge on grounds that he may tamper with evidence if allowed to remain free. In the meanwhile, the Indian government has attached properties of Nirav Modi worth $860 million. In late 2017, Nirav Modi had fraudulently taken loans worth $2 billion from PNB and defaulted on the same. This had plunged PNB into prolonged losses.
