Midnight News Update – Sep 11th 2017
The big triggers in the coming week are likely to be the inflation data and the IIP data. The market is already expecting a sharp uptick in inflation to above the 3% mark. Additionally, the geopolitical risk of North Korea will continue to weigh on the markets. The IIP and the CPI data will be specifically important as it will drive the stance of the RBI monetary policy when it meets in early October. In the last policy, the MPC had cut rates by 25 basis points without changing the stance of monetary policy to accommodative. IIP remains a worry with GDP and PMI manufacturing continuing to be weak.
P-Note investments as at the end of July 2017 slumped to a 5-year low of Rs.1.35 trillion after the stringent P-Note norms introduced by SEBI. Normally, P-Notes are used by foreign investors who do not want to directly come through the FII route. SEBI has made it mandatory that all P-Note positions should be necessarily backed by underlying exposures. Speculative positions will not be permitted in P-Notes any longer. This move has led to a major shift of the Nifty volumes from the Indian bourses to the SGX Nifty. SEBI now also levies a fee of $1000 on each instrument, which makes the cost prohibitive.
Three mega issues are expected to raise nearly Rs.6600 crore in the coming week in the IPO market. These issues include Matrimony.com, Capacite Infraprojects and ICICI Lombard. Of course, ICICI Lombard will be the largest issue among these with total fund raising to the tune of nearly Rs.5700 crore. The IPO market is likely to see issues to the tune of $5 billion in the current financial year. Some marquee names like Bharat Road Networks, Dixon Technologies, Avenue Supermart, CDSL and HUDCO have already hit the market and there are many more such reputed names to follow.
Century may be looking at a merger with group company Grasim after it completes the sale of its paper division. The Birla group overall has been consistently trying to explore synergies within the group so as to reduce the slack within the system and ensure better ROI through sharing of resources. Already, companies like ITC, JK Paper and International Paper APPM are in the fray for buying out the paper division of Century. Additionally, Century has 5 cement plants with a total capacity of 12.8 MT per annum, textiles business, rayon unit and also a fairly robust real estate business.
The GST Council’s 21st meeting in Hyderabad took some crucial decisions on the rates front and on the all-important issue of sprucing up the technology backbone for GSTN. The GST Council will only be imposing a part of the proposed 10% additional cess on automobiles, which is a welcome move as far as auto companies are concerned. Luxury cars and SUVs will still be marginally below the pre-GST levels. The Council has also reduced the GST rates on certain items of food like dried tamarind, roasted gram, custard powder, idli/dosa batter. It also reduced the GST rates on items of mass consumption like raincoats and rubber bands. However, the last date of filing the GST-1 for the month of July was extended by a full month from 10th September to 10th October, which should be a matter of relief.
Biocon is now aiming at touching a total revenue base of $1 billion by year 2019. In the last fiscal year 2016-17, Biocon had posted revenues of just Rs.4087 crore meaning that the revenues will have to grow at over 60% in the next 2 years to touch the $1 billion mark. The company will also focus on out-licensing and global development of novel molecules. Biocon also expects that a chunk of the incremental growth in the bio-similar market will be driven by emerging markets. Another key area of focus for Biocon will be the area of Branded Formulation!
