As Saudi Aramco restored supplies back to normal, Brent crude cracked 250 bps to $61.52/bbl on Wednesday. The oil price fell sharply after Saudi Aramco restored full production 5 days before its committed deadline of 30th September. Saudi Arabia was producing just 6.2 million bpd since September 14th, the day of the drone attacks on oil facilities. However, within 11 days flat, Saudi Aramco has restored full production of 11.3 million bpd. Oil prices also fell on global growth slowdown worries after Trump hinted that he may not be keen on a partial trade deal.
In a bid to protect the interests of bond holders, SEBI proposed tighter default disclosure requirements for Indian companies. SEBI has made it mandatory for companies to provide details of delayed loan repayments and possible defaults to the credit rating agencies. This will enable the rating agencies to take a timely view on possible defaults. In a number of recent cases, rating agencies had suddenly downgraded companies to default grade, creating major havoc in the bond markets. This demand has been there for some time but RBI had stalled this move on client confidentiality concerns.
According to a study done by Morningstar, it is not just global funds but Indian mutual funds also struggle to beat the index. Morningstar has underlined that Indian fund managers have struggled to beat the index in the last 3 years and it is just going to get more difficult going ahead. Morningstar is of the view that Indian investors should increasingly look at passive strategies like indexing and ETF investing. For investors it is hard to find funds that outperform and much harder to identify such fund managers, which is what makes a strong case for passive investing.
Coal India workers strike hits production by 56%, adding to power sector woes. Coal India workers have been on strike against the proposed privatization of the company and the permission for 100% FDI in coal mining in India. Power players have been demanding greater FDI in coal mining to help them meet the coal shortages and keep power capacities viable. However, the biggest loser in the entire production cut would again be the Indian power companies. The banking sector has an Rs.2 trillion exposure to the power sector and this is being put under pressure due to the coal availability.
After the rally came the fall as the Sensex wiped out Rs.1.85 trillion of wealth on Wednesday losing over 500 points. Autos and banks were the major losers. Apart from concerns over the impeachment investigations against Trump, the markets were also jittery over fault lines in the trade talks. There was also profit booking at higher levels after shorts had been largely squeezed! Meanwhile, the Trump impeachment took a serious turn as call records ratified allegations made by Nancy Pelosi. Trump had prevailed upon the Ukrainian president to investigate his political rival, Joe Biden, over transactions related to Biden’s son. The impeachment motion may now acquire an important dimension. The global markets are already jittery as a successful impeachment will not be good news for markets.
SEBI notifies new relaxed norms for foreign portfolio investors (FPIs), which were originally laid out in the budget and reiterated by the FM at a later date. In continuation of the promise made earlier, the regulator notified two key changes to the FPI regulations. Firstly, the KYC verification prior to on-boarding FPIs has been substantially simplified. In addition, the FPIs have also been allowed to execute off market transactions to transfer shares from one DP account to another without putting in a trade in the market or paying capital gains tax. This could be a major boost for FPIs.
