The Nifty correctly sharply on Monday after the rupee once gain got close to the 69/$ mark. The major correction came from Reliance Industries and HDFC Bank, two heavyweights that corrected over 1.5% in the day. The big worry continues to be the vulnerability of the rupee to the rise in crude oil prices. The markets are also worried that the trade war between the US and China could gradually exacerbate into a currency war with impact on most of the emerging markets countries. The impact on the MSCI EM index was also quite sharp on Monday with most of the Asian markets impacted.

Core sector dipped for May even as the PMI Manufacturing rose sharply above the 53 mark. While the core sector growth at 3.6% was at a 10-month low the real traction came from the PMI front. The PMI is a gauge of business confidence and it measures where the business is expanding or contracting. A number of above 50 is considered to be expansionary and a growing trend is better. The core sector is an aggregation of 8 key sectors of the economy like cement, steel, coal, refineries, extraction etc. These core sector industries account for over 40% of the IIP and hence are very important.

Now it is the turn of ICICI Prudential Mutual Fund to be pulled up by SEBI for lapses in corporate governance. The fund had invested Rs.240 crore in the IPO of ICICI Securities where the promoters were forced to reduce the size of the issue at the last moment. The MF investment was done to bail out the issue. SEBI has asked ICICI Pru MF to refund the amount of Rs.240 crore as not being in the interests of the unit holders of the fund. Now the fund will have to refund the schemes with the money along with 15% interest for the interim period.

SEBI has scrapped the plans of HDFC MF to allot pre-placement shares out of its proposed IPO to mutual fund distributors. Out of the 200 distributors that HDFC AMC had approached, nearly 140 distributors had evinced interest. However, the deal ran into trouble with SEBI after competitors complained that it would take objectivity away from mutual fund advisory services. Distributors with equity stake in a fund will be naturally inclined to push that fund to enhance their own share value. The regulator has asked for the money to be refunded to the distributors with interest at 12%.

Amazon and Apple are closing in on the $1 trillion market cap mark. While Apple is still ahead with a market cap of $900 billion, Amazon is close behind with a market cap of $810 billion. Interestingly, the market cap of Amazon was just $150 billion in early 2015. The market gap that was 50% just a year back is now just 10%. Apple had scaled close to the $1 trillion market cap in the past but has failed to break that level. The only company to have crossed the $1 trillion market was China Petroleum on the day of its listing but that hardly sustained. Cisco had touched a peak market cap of $600 billion in 2000, which would more than $1 trillion in today’s value. It would be really interesting to see which of these two companies gets to the market first.

The government has come up with a new Sashakt scheme for the NPA problem of banks. This is an extension of the bad bank concept wherein an AMC will be created to hold the bad assets. The companies will be first classified into buckets and the Sashakt scheme will have a distinct strategy for each segment. The idea is good but the big issue who will capitalize the bad bank. It must not end up making a large institution like LIC the receptacle for all the bad loans in the system which may only end up compromising the interests of the policy holders. The finer print will be interesting to read.