| News Announcement |
Impact Analysis |
| For the fifth time in the last 6 weeks, the Nifty and Sensex ended in the red |
- On a truncated week, the biggest impact came on Tuesday when the Sensex crashed by 625 points
- The inversion of the US yield curve has raised the spectre of global recession and that has spooked the equity markets
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| CPI inflation comes in lower at 3.15%, WPI inflation lower at 1.08% |
- The lower inflation was largely driven by lower food prices and lower fuel prices during the month of July
- This lower inflation paves way for the RBI to continue with its accommodative monetary stance with respect to rates
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| Rupee weakens by 3.5% during the first half of August |
- The rupee weakened from Rs.68.50/$ to Rs.71.50/$ in a span of just two weeks due to global weakness
- This has resulted in the INR becoming the worst performing currency across Asia in the month of August till date
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| ANZ Bank downgrades full fiscal GDP growth for India to 6.2% |
- This is a full 70 bps lower than the RBI revised estimates presented in the August monetary policy
- ANZ has pointed at global growth concerns and India’s weak consumer demand as likely reasons for the downgrade
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| US bond yield curve again inverts during the week |
- In a signal of impending recession, the yield on US 10-year bonds fell below the yields on 2-year bonds
- This was a clear indication of an impending slowdown when there is absence of demand for long dated debt
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| Jet sale delayed once again after Vedanta backed, Volcan backs out |
- With Volcan backing out, Jet has a real problem as neither Etihad nor Hinduja group is keen on majority stake
- With most of the rolling stock of the airline claimed by aircraft lessors, not too many are keen on the airline
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| Fitch expects RBI to cut rates by another 40 bps by March 2020 |
- According to Fitch, the worry over growth and lower inflation will be key factors in further rate cuts by the RBI
- While the IIP and GDP surely need lower rates, the RBI has not been too happy with the speed of transmission
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| Amravati Infrastructure bonds pose a new problem for mutual funds |
- Birla Mutual Fund and Franklin Templeton MF have an exposure of Rs.1300 crore to the Amravati Infra Bonds
- After the World Bank withdrew funding, the worry for the funds is that these bonds have a 5-year moratorium
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| India’s forex reserves touch a life time high of $431 billion |
- Limited intervention by RBI and gradual sterilization of dollar inflows has led to a sharp increase in RBI reserves
- Economists are of the view that solid reserves provide the right opportunity to go ahead with sovereign bonds
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| The siege on Kashmir has continued for the 12th day in succession |
- After near 12 days of the abrogation of Section 370, the whole of Kashmir continues to remain under curfew
- With little media coverage of the state allowed, the only information percolating is from foreign channels and videos
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| IDBI Bank touches a 16 year low as it dips below the Rs.25 mark |
- With little respite on the bad loans front, the situation at IDBI Bank has continued to remain challenging
- The latest quarter also saw a sharp rise in provisions and deepening of losses, leading to a run on the stock price
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| Hong Kong Airport taken over by pro democracy protestors |
- All flights to and from Hong Kong were cancelled after protestors had occupied the entire airport area
- China has moved its paramilitary forces to Shenzhen, just across the HK border, to send a signal to the protestors
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| OPEC paints bearish oil price outlook for rest of 2019 and for 2020 |
- OPEC has pointed out that supply caps may have little impact as the global slowdown remains a major threat
- Historically, crude prices have been extremely sensitive to the growth levels and tend to crack when growth slows
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| Central banks prefer negative rates to keep currency wars at bay |
- Currently, nearly $17 trillion worth of global bonds carry negative yields as demand for safety rises
- Bonds across Germany, Switzerland and Japan are offering negative yields as a means to avoid currency wars
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| Reliance AGM makes big announcements for the future |
- During the 42nd AGM, RIL announced that it will be selling a 20% stake in the oil and chemicals business for $15 billion
- Reliance has also announced the all-India roll out of its Jio Giga fibre which is likely to revolutionize mobility
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| WTO to rule on complaint filed against India on sugar export subsidies |
- Australia and Brazil had complained that Indian government was giving export subsidies which was contrary to WTO
- India happens to be the highest cost producer of sugar and domestic market is already oversupplied
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| PM Modi reassures businesses in his Independence Day speech |
- Modi highlighted that there was no question of hounding the wealth creators as they were also creating jobs
- In a subtle hint, the prime minister also suggested to the regulators not to look at wealth creators with suspicion
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| Auto sales for July fall by 18.71%, the worst fall since December 2000 |
- The reaction was immediately felt by the auto stocks which corrected sharply in reaction to the news
- The auto weakness has been driven by tight funding markets, weak consumer demand and volatile fuel prices
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| BSE to come back with trading incentives for F&O segment |
- Liquidity enhancement scheme (LES) is likely to be brought back after a gap to give a boost to F&O volumes
- The BSE is obviously looking to leverage on the new inter-operability norms announced by SEBI
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| FM may announce industry package next week to boost growth |
- This package is likely to be announced in the aftermath of the meeting that Ms. Sitharaman had with the prime minister
- Markets are expecting a mix of tax cuts, levy waivers and government spending to boost GDP growth
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| Indian mutual funds have a Rs.200 crore exposure to Café Coffee Day |
- This exposure is the total investment that mutual funds have made in equity and debt put together
- Fund houses like DSP have already taken a cut to the extent of 50% of their exposure to CCD and SICAL Logistics
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