Tuesday marked a day of new highs for the Nifty and the Sensex but also saw the markets giving up gains at higher levels. During the day, the Nifty scaled the 12,100 mark and the Sensex scaled 41,000 but failed to sustain above the levels. Despite the late correction post the resignation of the Maharashtra BJP government, the Nifty still closed above the 12,000 mark. During the day, the Reliance market cap came very close to the Rs.10 trillion marks before closing lower. Interestingly, RIL had a market cap of Rs.10 crore when the IPO was launched back in 1977 and around time Sensex was launched.
It was a day of mixed fortunes for Indian economy on the global data front. Crude oil prices in the Brent market stayed above the $64/bbl mark due to hopes of an imminent trade deal between the US and China. At the same time, the Indian rupee also strengthened to Rs.71.50/$ on the back of sharper FPI flows and hopes that the trade deal should facilitate a pickup in growth. The rupee has also been strong on the back of lower trade deficit, which is putting less pressure on the rupee. The demand for dollars from banks and importers has also reduced and that is giving some respite to the rupee.
RBI has raised some concerns over the Mudra loans, which are small ticket loans given to small businesses, traders and entrepreneurs. According to concerns expressed by the RBI deputy governor, Mr. M K Jain, there were concerns over bad loans within Mudra loans. Many of these loans were apparently given without complete due diligence and a full credit evaluation due to limited information available. According to RBI, the growth in the last few years has been quite frenetic in this space and the focus has been entirely been on business growth. RBI has called for greater caution on this front.
Mutual fund houses, meanwhile, want the Karvy name to be dissociated from the mutual fund registry business. Karvy and CAMS are the two largest MF registrars in India and Karvy has been conducting the MF registry business under the brand of Karvy Fintech. Now mutual funds have asked Karvy Fintech to change the name to remove the reflection of Karvy considering its recent involvement in the sale of pledged shares and the recent SEBI order. Karvy Fintech is already majority owned by General Atlantic. The founder of Karvy group, Mr. C Parthasarathy, has already resigned from the Karvy Fintech board.
Shares of Indigo Airlines fell sharply after the Directorate General of Civil Aviation (DGCA) asked Indigo to phase out one Pratt & Whitney (PW) engine plane for every new A-320 plane that is inducted into the fleet. The problems with the PW engine started last year after a software fault made many of these aircraft vulnerable to aircraft crashes and there were a lot of close shaves in India. Subsequently, the DGCA had passed an order asking Indigo to phase out all its PW engine aircraft by January 31st latest. According to DGCA, this order of phasing one for one was taken after DGCA felt that Indigo would not be able to meet the Jan 31 deadline. This is likely to negative for the airline because Indigo has the largest fleet of PW engine aircraft and this is likely to seriously impair their ability to expand routes.
The BJP CM, Devendra Fadnavis, resigned ahead of the floor test after Ajit Pawar submitted his resignation and expressed his inability to bring in the requisite MPs to the BJP fold. The 3 party combinations of Shiv Sena / NCP / Congress has, meanwhile, submitted its letters of support to the governor and the swearing is expected to be held on the 28th November in the evening. According to sources, Uddhav Thackeray will be the chief minister while the NCP and the Congress will have one deputy minister each. The portfolio allocation is yet to be decided and should be interesting.
