There may be some good news for Air India as the government mulls easier FDI norms to attract buyers for Air India. Currently 100% FDI is not permitted in the airline flying business although 100% FDI is already permitted in the case of ground handling and MRO services. The government is now planning to make a special concession by fixing FDI at 100% for aviation companies as a special case to push the Air India sale. Air India currently has debt of Rs.58,000 crore apart from accumulated losses. Many global investors were unwilling to commit money without full and effective management control.
In response to the request made by UK for an extension of the BREXIT deadline, the EU agreed to delay BRERXIT even as UK Parliament blocked the December UK elections. Donald Tusk of the EU confirmed that the EU had agreed to an extension of 3 months to the BREXIT deadline till January 31st 2020, even as Johnson vowed to push for elections on December 12th. However, his third attempt to force elections was defeated in the House by 424 to 299 votes. Johnson has always been a votary of not delaying BREXIT and getting done with it on October 31st; with or without a BREXIT deal.
FPIs have started trimming their positions in mid-sized private banks that are most vulnerable to asset quality risk. In fact, FPIs trimmed their positions in 12 private banks in the second quarter of FY20. At a time when private banks have flattered the street, foreign portfolio investors have been paring their stake. The deepest cuts in stake were seen in mid-sized banks and not so much in the larger private banks. FPIs reduced their stake in Karnataka Bank, Federal Bank, DCB Bank even as they did some minor adjustments to their holdings in large private banks. SME loan slippage was the main reason.
Sensex to resume after 3 days even as US Indices scaled all-time records. Even as the Indian stock markets resume trading on Tuesday after a break of 3 days, the US markets showed a spurt in optimism to scale new highs. The market euphoria in the US was driven by a mix of trade war resolution expectations with China as well as a weak dollar giving a boost to global companies in the IT sector. BREXIT extension by 3 months also gave relief to the global markets. The Indian markets may still see weak and tepid trades as most traders may come back from holiday week only by Wednesday.
Gold ETFs have garnered funds to the tune of Rs.200 crore in the last two months. While this may appear to be small, it reverses the trend of consistent redemption in the gold ETFs. The global trade conflicts and the solid returns given by gold in the last 1 year has encouraged investors to opt for gold ETFs as a safe haven to park funds. Rising interest in gold ETFs is a global phenomenon. Meanwhile, gold has created a problem of a different sort in India. After the recent default by Goodwin Jewelry on its gold deposit schemes, the Indian Bullion and Jewellers Association (IBJA) has called on the RBI to put a blanket ban on gold deposit schemes offered by jewellers. Many jewellers had invested such deposits in real estate and low quality NBFCs, and the risks got passed on to the gold deposit customer.
Brent crude closes 74 basis points lower at $61.57/bbl on stockpiling and China worries. After scaling the mark of $62/bbl after four successive days of rally last week, oil prices in the global Brent market remained subdued on Monday. Rising US stockpiles of oil combined with fears of a distinct industrial slowdown in China took its toll on crude prices. There was some optimism over the progress of trade talks but the fears of Chinese growth continued to weigh on oil prices and the latest indications are that the Chinese industrial growth may continue to disappoint in the coming months.
