The counting on 24th gave a decisive verdict in Maharashtra but the outcome of Haryana was still unclear. The NDA took control of Maharashtra but it may require outside support in Haryana. Although the BJP won lesser number seats in Maharashtra assembly compared to 2014, it still has a comfortable majority when combined with its partner, the Shiv Sena. The NCP-Congress alliance did much better than estimated by the exit polls. In Haryana, the NDA is about 6 seats short and may need the support of the JJP party or of independent candidates to cross the half-way mark and form the government.
In a major jolt to telecom companies like Bharti Airtel and Vodafone Idea, the Supreme Court has asked telecom companies to pay Rs.92,000 crore to the government. On Thursday, the SC ruled that while the telecom sector had benefited from the adjusted gross revenue (AGR) scheme between 2004 and 2015, they had not fulfilled obligations. The SC observed that the telecom companies had not paid up the license fees to the government based on the AGR. Reduction of license fee from 15% of AGR to 8% of AGR had caused this loss to government and telcos had also claimed part of this as incentives.
The long awaited UTI IPO may finally become reality and UTI AMC may become the third mutual fund house to get listed on the stock exchange. After Nippon Life Asset Management and HDFC AMC, the third AMC to get listed is likely to be UTI AMC. The UTI IPO has been on the anvil for quite some time but had been put off due to market conditions. While the final size of the offer is yet to be firmed up, it is reported to be around Rs.2600 crore. UTI AMC has appointed Citi and I-Sec to manage the offer-for-sale issue. UTI is 26% held by T-Rowe Price and Indian institutions will be divesting their stake.
After the RBI set the tone by downgrading GDP to 6%, S&P and Moody’s followed with lower estimates. Now Fitch has downgraded India’s full year GDP growth estimates to 5.5%, in what is the lowest full-year estimate put out for India’s GDP growth in FY20. Fitch has pegged growth at just 5.5% on the back of weakness in domestic spending as well as external demand losing momentum. Justifying the forecast, Fitch stated that the structural slowdown in GDP was being exacerbated by the credit squeeze among NBFCs. However, Fitch expects a growth revival in FY21 as the tax and investment incentives take effect.
The Sensex closed in the negative on Thursday after the huge telecom penalty of Rs.92,000 crore and the Fitch growth downgrade dampened market sentiments. In the US markets, impressive results from Microsoft took the NASDAQ higher even as the Dow was subdued on the back of weak results from 3M. FTSE was higher on the back of Johnson calling from fresh elections in UK. Johnson called for fresh elections in the UK on December 12th after it became clear that the BREXIT deadline of 31st October may not be feasible. This is Johnson’s third attempt to force a snap vote after the House rejected previous attempts to speed up the BREXIT process. Jeremy Corbyn, leader of the Labour party, has said that they should still wait for the EU response to the 3-month BREXIT deadline extension sought.
Brent crude closed 81 bps higher at $61.67/bbl on Thursday on inventory draw down. Despite trading lower in the first half, prices of Brent Crude picked up sharply in the second half, which was rather surprising considering the weak demand and growth outlook globally. The oil markets were reacting positively to indications from the sharp draw down in US oil reserves. In addition, the OPEC commitment to cut supplies beyond 1.2 million bpd also helped oil prices. However, the Brent prices have consistently faced resistance around the $60/bbl level and that remains the decisive cut-off mark.
