Weekly Capsule (Aug 07 – Aug 11) and Impact Analysis
| Major News Item | Impact Analysis |
| Ø 12 PSU banks firming up plans to raise funds through the IPO route | Ø PSU banks need to raise additional capital to the tune of Rs.110,000 crore, in addition to government support
Ø The capital base is not only required as per Basel III norms by 2019 but is also essential for building their loan books
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| Ø Nifty and Sensex correctly sharply by over 5% during the week | Ø The fall in Nifty was largely driven by SEBI clamping down on alleged shell firms, leading to margin pressures in mid caps
Ø Additionally, the geopolitical risks coming from the UK-North Korea stand-off and Doklam also added to the pressure
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| Ø Inflation across emerging markets stands at an 8-year low | Ø The weak inflation is largely driven by cheaper commodity prices and better cost management
Ø The low inflation means that central banks of EMs could focus on keeping benchmark rates on the lower side
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| Ø Tata Steel announced a smart turn-around in profit performance | Ø Tata Steel moved from a loss to a profit in the quarter, helped by better steel realizations across the board
Ø The government’s anti-dumping duties on China have helped in domestic steel industry growing by 9% YOY
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| Ø FM confirms that PSU banks have written off $41 billion in 5 years | Ø Nearly 1/3rd of these write-offs have happened in the last 1 year, with Gross NPAs of PSU banks touching 12.5%
Ø Of course, SBI has accounted for a largest chunk of these write-offs with PNB and BOI also having major write-offs
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| Ø Bharti Airtel to raise $421 million from sale of Infratel stake | Ø Bharti Airtel will be hiving off a total of 3.7% stake in Infratel out of its 61% stake in its towers subsidiary
Ø Bharti’s debt had gone up sharply after the Zain acquisition in Africa, and this monetization will help relieve some of it
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| Ø GST Council to impose an additional cess on high end cars | Ø The additional cess will be moved up from 15% to 25% as post GST luxury cars have become cheaper
Ø Most auto companies had cut prices ahead of GST and this may force most of these automakers to reverse it
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| Ø GIC Re will be the first state owned insurance company to list | Ø The government proposes to raise nearly $1 billion from the sale of stake in GIC RE, a general reinsurance company
Ø GIC RE is profit-making and will go a long way in helping meet the disinvestment target of Rs.72,500 crore for fiscal 2018
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| Ø Saudi Arabia plans to majorly cut supply of crude to Asia | Ø This move comes after the supply cut of 1.8 million bpd by OPEC and Russia failed to support crude prices
Ø Saudi may cut global supplies by 520,000 bpd, but the likes of IOC are already signing deals to import crude from the US
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| Ø Bajaj signs up with Triumph of UK to manufacture motorcycles | Ø Bajaj has already fallen to fourth place in the domestic two-wheeler segment, but leads in the exports market
Ø Triumph will help Bajaj to cater to the entry level, mid-level and the high end two wheeler segments |
| Ø Government plans to sharply cut its petrol subsidy by 60% by 2020 | Ø The petrol and diesel subsidy had become negligible after oil prices were fully deregulated in India
Ø The subsidy on LPG is also being gradually withdrawn and the plan is to make the pricing more market driven
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| Ø RBI transfers lowest surplus to the government for fiscal 2016-17 | Ø RBI transfer to the government stood at Rs.30,659 crore, nearly 50% lower than the previous year
Ø This was more due to the higher cost of printing of new notes necessitated by the demonetization process
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| Ø Banks worried as more states forfeit Power Purchase Agreements (PPA) | Ø UP, Karnataka and Andhra Pradesh have taken the lead in walking out the PPA and calling for a re-negotiation
Ø Banks fear that this could result in losses to the tune of nearly $20 billion on account of power sector NPAs
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| Ø Supreme Court says “No Stay” on sale of Aamby Valley project | Ø The Sahara group owns this property but has been in trouble due to their Rs.24,000 crore of illegal deposits
Ø Sahara’s counsel, Kapil Sibal, had urged the Supreme Court to stay the sale as a deal was round the corner
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| Ø China has been upping the ante against India on the Doklam issue | Ø Chinese media and Chinese defence analysts have been calling for a full-fledged war with India
Ø The battle is over the Chinese occupation of the Doklam plateau, which is disputed territory between China & Bhutan
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| Ø SBI stock slumped on Friday after the asset quality deteriorated | Ø The Gross NPAs of SBI rose sharply from 9.11% in the March quarter to 9.97% in the June quarter
Ø Slippages of SBI at Rs.26,249 crore raises some serious concerns on the health of the banking system
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| Ø SAT upholds SEBI order against Vijay Mallya | Ø The SEBI order pertains to Vijay Mallya not holding any board position or any key managerial position in an Indian company
Ø Mallya had appealed against the order which had placed charges of round-tripping and misappropriation of funds
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| Ø India’s Mid-Year Economic Survey raises questions over fiscal health | Ø The Survey has warned that with higher government outlays, slippages on the fiscal front could be a challenge
Ø The RBI dividend to the government has also halved to $4.6 billion putting further on the government resource raising
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| Ø ONGC plans to tap the bond markets for the first time ever | Ø This bond issue is intended to finance the HPCL acquisition which is likely to cost ONGC nearly $5.21 billion
Ø The company already has $2 billion in cash and hence its bonds would be a preferred avenue for the bond bulls
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| Ø Nifty and Sensex lose 3.5% in the week, worst return in 18 months | Ø The sharp correction was triggered by the SEBI decision to clamp down on alleged shell companies impacting mid caps
Ø At a global macro level, the stand-off between North Korea and the US is also taking its toll on markets
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| Ø Theresa May’s cabinet remains divided over the BREXIT transition plan | Ø This could further enervate the Theresa May government which failed to get a clear majority in the June polls
Ø Britain had voted to exit the EU in a June 2016 referendum and the process needs to be completed by 2019 |
