A day after the US, France and UK launched targeted missile strikes on Syria; the attacks have been strongly condemned by Russia and China. In fact, Russia has also threatened with strong retaliation. The US strikes were a response to the alleged chemical attacks carried out by Assad in Syria. Iran and Russia continue to be the two biggest allies of Syria. India has, however, maintained a more measured stance on the issue and just called for restraint from all sides. Noted writer, Nassim Nicholas Taleb, blamed Saudi Arabia for instigating these attacks on Syria through the Western powers.
While there was not much of a surprise in the Infosys growth projects, analysts were disappointed with the weak margin guidance which has downgraded from 25% to close to 22%. That is likely to weigh on the stock price when trading commences on Monday as is the Middle Eastern uncertainty following the US attacks in Syria. However, the good news may be that the lower guidance will be an outcome of greater investments that Infosys plans to make in the digital business. Infosys ADR fell sharply by 7.7% on Friday and that impact is likely to rub off on the Indian stock when trading resumes on Monday.
India’s trade deficit for the month of March came in at $13.7 billion, roughly in line with the numbers that were presented in the last few months. The full year deficit for the fiscal year 2017-18 almost doubled on a YOY basis to $88 billion. India’s full year imports for the full fiscal year came in $460 billion which means that the forex reserves are currently sufficient to cover 11 months of imports, which is a fairly comfortable scenario, although it has deteriorated from 13-months cover in the previous year. With Brent Crude hovering around $71/bbl, it continues to be the biggest drag on the trade deficit.
The former UCO Bank Chairman, Arun Kaul, has been booked in the Rs.621 crore fraud and default case. It is alleged by the CBI that Mr. Kaul had facilitated the siphoning of funds to the tune of Rs.621 crore and divert it for purposes other than what it was meant to be. It is also alleged that Kaul was aware of the fact that the loan was secured by fabricating data and false declarations but did not alert the bank. In the last few months, the CBI has been aggressively pursuing wherever there has been connivance of the top management with defaulters to send out a strong signal.
Even as Infosys disappointed the street with its Q4 results, the company has outlined plans to sell off some its subsidiaries including the recently acquired Panaya of Israel. It may be recollected that the entire dispute between the previous CEO, Vishal Sikka, and the Infosys founders was predicated on the Panaya acquisition. The allegation was that the Infosys management had deliberately overpaid for the Panaya acquisition. The company will also look to sell another subsidiary, Skava, by March next year. Salil Parekh has outlined that the core focus of Infosys will be centred on digital initiatives, core IT services and Finacle products. Infosys had paid $120 million for Skava and $200 million for Panaya. Company has recognized an impairment loss of Rs.118 crore on account of Panaya in this quarter.
India’s forex reserves touched a record high of $425 billion. This puts India in the Top-10 in the world and is at par with major exporters like Hong Kong, Taiwan, Brazil, Russia and Saudi Arabia. China continues to lead by a margin with a forex chest of $3.5 trillion. This rise in forex reserves become all the more critical with the total imports for the fiscal year 2017-18 coming in at $452 billion. Out of these reserves, gold accounts for nearly $22 billion while IMF SDRs are to the tune of $1.5 billion. Nearly $400 billion is held in foreign currency with dollars predominating the currency list.
