Despite some improvement in operating metrics, Air India reported a net loss of Rs.5700 crore for FY-17 as compared to a loss of Rs.3800 crore in FY-16. This loss is nearly 50% higher than the previous financial year. There was a provision of Rs.1150 crore made on account of expired and unapproved SFIS scrip claims. The CAG had also reported that the loss of Air India had been understated. These numbers are critical as Air India is supposed to be a high profile candidate next year for a strategic sale to major investors. Air India will undergo a full-fledged restructuring before the strategic sale.
Rising bond yields across the world have become the one major risk factor for global equities as the global phenomenon appears to be rubbing off on developed and emerging markets. With the US government likely to increase their spending by nearly $300 billion, bond yields in the US crept to a 4-year high. This move is likely to widen the US Federal deficit further and could also fan inflation higher. That is also a case for the Fed to hike rates by over 100 bps during the calendar year 2018. While US and European markets were under pressure, India managed to bounce back.
The quarterly profits of ACC doubled to Rs.206 crore for the quarter ended December 2017. The total income of ACC was up by nearly 14% during the same period. ACC has increased its focus on the premium cement segment which has been instrumental in improving its margins. Interestingly, cement volumes grew by 27% during the quarter. This is really appreciable because the housing market continues to be slow due to the implementation of RERA. ACC also recorded smart growth of nearly 20% in its ready mix concrete (RMC) business. The company has paid a dividend of Rs.15 per share.
Oil extended its price loss to the fifth day in succession as the overhang of shale supply weighed on the price of Brent crude and WTI crude. After scaling the $71/bbl mark, Brent crude has now come down to the $65/bbl mark and that should come as a temporary relief to global economies like India, China and Japan, which are net importers of oil. The OPEC and Russia have already implemented a supply cut of 1.8 million barrels per day and US shale could be the only risk that could actually de-risk this effort to keep oil prices at viable levels. Steep oil prices are a big negative for Indian inflation!
After the US embarked on rate hikes to cool inflation, the Bank of England could be next in the line. The markets are already pricing in 3 hikes of 25 basis points each by the BOE in the next 2-3 years. After the BREXIT announcement, UK has seen a gradual revival in growth and inflation is also on the way up towards the 2% mark. That surely makes a strong case for rate hikes. In fact, the futures market is now factoring in a 75% probability of a rate hike by the BOE as early as May this year. There are already worries that synchronized global growth revival could mean an end to cheap money policies that global central banks have been following since the crisis of 2008. In fact, the Monetary Policy Committee of UK sees the UK economy growing at a much faster rate all the way through 2020.
Twitter shares soared by over 15% after the company reported profits for the first time raising hopes that the company may have finally gotten its monetization plan right on target. Monthly active users remained static at around 330 million users with the only difference being a more successful attempt at monetizing the client base. There has been a sharp improvement in customer engagement after Twitter started using video content more aggressively and also started using algorithms to customise relevant postings first. Twitter bettered the street on top-line and bottom-line.
