The saga of retaliatory tariffs on US imports and after the EU it is now the turn of India to impose these tariffs on US imports. Higher import tariffs will be applicable on 29 US products effective from August 04^th. India has already appraised of the WTO about its decision to impose retaliatory tariffs. India had requested the US for exemption from higher tariffs on steel and aluminium, but the US had not responded positively. Like the EU and China, India is also attacking more of farm based US exports like almonds, apples, Walnuts, chickpeas, lentils, Bengal Gram etc.

The SEBI, on the sidelines of the 21^st June board meeting has also underscored its stand on two key issues viz. the NSE algo trade issue and the ICICI corporate governance issue. On the NSE algo trade subject, SEBI has clarified that some brokers had benefited from early access and the action will be taken against them shortly. In fact, Tyagi indicated that the action will also be taken against those internal persons who had abetted the action. On the ICICI issue, Tyagi clarified that they were still to get a response from ICICI Bank on the Chanda Kochhar conflict of interest issue.

MSCI has added Saudi Arabia and Argentina to the Emerging Markets Index which will now grow by $600 billion. Since the end of January, a sell-off in equities had wiped out wealth to the tune of $2.7 trillion from emerging market equities. Apart from the threat of higher US Fed rates, the ongoing trade war is also taking its toll on EM stocks. The big advantage that Argentina and Saudi Arabia will derive from their inclusion in the MSCI index is that it will help them attract global portfolios worth billions of dollars from passive index funds and ETFs. India may see its weight reduced in the index.

Ahead of the OPEC meeting in Vienna, Brent Crude slipped below the mark of $74/bbl. The OPEC is likely to agree to a sharp winding down of its supply cut. In January 2017, OPEC and Russia and agreed to a 1.8 million bpd cut in supply, which has been sustained. With pressure mounting from the US, the oil supply may be restored to a level close to its previous highs. That is likely to take oil prices below the $70/bbl mark and the trend is showing in the markets. While Iran and Venezuela were opposing higher supply, they appear to have come around to accepting a sharp hike in OPEC supply once again.

In the midst of NPA crisis, the good news is that commercial credit growing at a robust pace. Between March 2017 and March 2018, commercial credit grew by a robust 8.1%. Interestingly, a chunk of the demand growth came from the small and medium scale sector. That is a good sign because this sector had borne the brunt of the demonetization and the GST as a larger share of the market had moved towards the organized sector. The credit to large companies grew by just 5.9%. While mid-sized credit grew at 7.2% and SME credit at 12.8%, the credit to the micro enterprises grew by a healthy 22.2%. Most of the larger companies, it is estimated, directly approached the bond markets instead of going through the banking route. Mid-segment NPAs may be finally plateauing.

With the fracas over the ICICI Bank issue continuing, governance experts like Anil Singhvi have raised serious questions over the bank’s credit process and believe that the Board may have overstated the robustness of the processes. According to Singhvi, when the board had literally guaranteed the processes on March 29^th, there was no reason for them to do an about turn on the issue and appoint a high powered committee. According to Singhvi, there was a need to review the complete history of credit decisions at ICICI Bank in the interests of shareholders and depositors.