The Q2 GDP numbers and the F&O expiry are expected to be the big triggers for the market this week. The GDP numbers for the September quarter will be announced on 29th November. The GDP had come in lower at 5% for the June quarter and most analysts and economists are pegging the growth for the September quarter at closer to 4.2%. If that were to happen, the full year growth would get downsized to around 5.5%. The indications from the IIP front and the core sector front have been quite negative and that is likely to weigh. For the F&O expiry, the banking stocks will be the focus after the rally.
It was a tough week for the large caps with the top 7 out of 10 companies losing nearly Rs.76,200 crore in market capitalization. TCS was the biggest loser during the week and this comes after a week of strong gains. FPI flows were tepid during the week but for the month of November as a whole, FPIs have infused nearly Rs.17,700 crore with more than 95% of these flows coming into equity. FPIs have turned net buyers since the last week of September after the finance minister announced the aggressive corporate tax rate cut. FPIs are betting on a revival in growth in the third and fourth quarters.
Telecom stocks continue to be shrouded in uncertainty. Last week, the government offered the telcos moratorium on payment of spectrum usage charges (SUC). However, the telecom ministry has ruled out any concessions in the dues pertaining to AGR (adjusted gross revenues). The SC had recently passed an order asking telcos to pay Rs.92,000 crore to the government towards AGR dues. Both Bharti and Vodafone Idea have already written off these dues in their second quarter results which led to both of them reporting record combined losses of Rs.78,000 crore in the second quarter.
India appears to be moving ahead on a war footing on privatization. The BPCL valuer has been asked to present a valuation report on the company within 50 days so as to take forward the divestment call quickly. Earlier, BPCL and SCI were the two Navaratnas where the government had decided to fully exit its holdings and hand over to private management. While BPCL has evinced a lot of interest, bids for SCI have been cautious considering its diversified fleet. The government is also selling a minority stake in CONCOL and is merging THDL and NEEPCO into NTPC as part of disinvestment program.
The government has decided to amend the Insolvency and Bankruptcy Code (IBC) to ensure that the interests of the buyer of assets are also better protected. Till now, the focus was more on protecting the interests of the banks which had to recover the loans from stressed companies. As a starting point, the government will now provide immunity to the buyers from legal prosecution to instil confidence in bidders. This would only pertain to legal cases faced by the previous promoters. This was one of the reasons the acquisition of Bhushan Power by JSW Steel had been inordinately delayed. A number of bidders had expressed reservations about the IBC process and asked for this type of immunity. This will encourage more genuine bidders to come forward and put bids for stressed assets in the future.
The uncertainty in the state of Maharashtra continued and is slated for another hearing in the Supreme Court on Monday. The opposition parties led by the NCP-Sena-Congress filed a petition against the swearing in of a BJP chief minister with the support of Ajit Pawar and demanded an immediate floor test. While the Supreme Court refused to order an immediate floor test, the governor and the CM have been asked to produce original copies of letters of support in the court on Monday. The hearing will continue on Monday but exactly a month after results, the state is still in uncertain zone.
