Weekly Capsule (Aug 21 – Aug 25) and Impact Analysis
| Major News Item | Impact Analysis |
| Ø Nandan Nilekani takes over as non-executive Chairman of Infosys | Ø This fills up the vacuum created at the top after the resignation of Vishal Sikka and the Board chairpersons
Ø After a brief 3 year stint for Sikka, Infosys now returns to being run by its original founding promoters
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| Ø FIIs sold over $2 billion in Indian equities in August 2017 | Ø While Infosys selling was part of this, there are also overall concerns of growth not being in sync with valuations
Ø The strong rupee at around 64/$ is also proving to be a disincentive for FIIs to commit to Indian equities
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| Ø IOC plans to invest up to $8 billion in the Paradip refinery in Odisha | Ø IOCL is now positioning as an end-to-end player with forward and backward integration of its business lines
Ø Mr. Jaitley has already announced the intent to create a merged oil behemoth to take on global competition
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| Ø Insurance companies to dominate the IPO market in coming months | Ø A total of Rs.20,000 crore to be raised through IPOs of HDFC Life, GIC Re and New India Assurance
Ø The sale of government stake in PSU insurance companies is a step towards the divestment targets for the fiscal year
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| Ø ICRA expects microfinance institutions to report negative ROE this year | Ø Most MFIs are still feeling the brunt of the business hit taken in the aftermath of the demonetization last year
Ø MFIs have seen a sharp rise in credit cost and a larger degree of delinquencies in their cash-focused markets
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| Ø Government moves fast on curbing imports of food | Ø After curbing the import of pulses, the government has also put curbs on the import of green gram and black matpe
Ø Farmers were feeling the heat of higher imports which were pushing down prices of most agri products
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| Ø CARE has reported a 16% fall in net profits of India Inc for Q1 | Ø Lower profits were largely driven by a near 9% fall in the overall volumes and sales of Indian companies
Ø The caution was also largely due to the launch of the GST effective from July 01st which encouraged de-stocking
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| Ø Global investors caution Fed against an aggressive taper of bond portfolio | Ø The taper is likely to begin in September and markets are worried about a liquidity crunch in global markets
Ø Things could get much worse if US yields move up and other EMs see risk-off outflows
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| Ø UK laid out a tentative roadmap for its exit from the EU | Ø This is the first step in commencing the process of disengaging the UK from the EU over a 2-year period
Ø A lot will depend on how the UK will compensate for its trade losses by exiting from the EU region
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| Ø Option buyers may get an option on whether to exercise their options | Ø This is more relevant on the expiry day when all ITM options are assumed to have been exercised
Ø However, this results in a very steep STT of 0.125% on notional value of the contract and needs change |
| Ø Reliance to enter power storage business in alliance with BP | Ø Power storage is a natural extension for large companies globally that are exposed to old fossil fuels
Ø The focus will be to leverage the fast-growing renewable space in India and offer storage solutions
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| Ø The Cabinet gave in-principle approval for merger of PSU banks | Ø The idea is to reduce duplication of banking services across India and help better sharing of resources
Ø There will be national level banks with scale and also regional level banks formed through mergers
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| Ø Bankruptcy proceedings could lead to investment bank deals worth $80 bn | Ø This is likely to be an outcome of nearly $180 billion of stressed assets that need to be restructured
Ø Many large companies are likely to find good bargains especially in steel and power
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| Ø Yellen speech at Jackson Hole spooks bond markets | Ø At the gathering of global central bankers, Yellen emphasised on tapering and a hawkish rate scenario
Ø That led to a hardening of yields in the US debt and led to a fall in bond prices across the board
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| Ø Overseas Dollar borrowing of India Inc up by 57% in July 2017 | Ø The sharp rise in dollar borrowings could be largely attributed to the SEBI imposed ban on rupee denominated bonds (RDB)
Ø The borrowing market was largely dominated by large corporates like HPCL, Idea, Reliance and EXIM Bank
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| Ø Nandan Nilekani outlines immediate goals for Infosys | Ø A complete strategy report is expected to be in place by October which will outline the road ahead for Infy
Ø Nilekani will also work on a long term corporate governance structure that will accommodate founder inputs
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| Ø RBI Committee wants home loan rates linked to benchmark repo | Ø This linking is essential to ensure that a proper transmission of rate cuts by the RBI actually happens in case of home loans
Ø The committee wants banks to quote home loan rates based on the repo rate rather than their own MCLR rates
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| Ø Cyclone Harvey sends US oil prices higher as Texas shuts down | Ø The cyclone that will shut US refineries will curtain oil supply and that has pushed up crude oil prices
Ø The cyclone has come as an unexpected support for oil prices at a time when they were struggling to sustain above $50/bbl
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| Ø Violence erupted in North India after the conviction of the Dera chief | Ø The violence has already left more than 30 dead and over 250 injured as the army has already been called in
Ø The handling of the situation also raises grave concerns over the futures of Mr. Khattar as the CM of Haryana
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| Ø POSCO of South Korea could be one of the contenders for Essar Steel | Ø Essar Steel has debt to the tune of $40,000 crore and Tata Steel has already evinced interest in the company
Ø For POSCO, this will be a return to India, after its failed bid to set up a $10 billion Greenfield steel project in Odisha
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| Ø Infosys has appointed Egon Zhender to hunt for the next Infosys CEO | Ø It may be recollected that Pravin Rao is only standing in as a temporary CEO
Ø The new CEO will have a tough task to balance the recent events with the future vision of Infosys |
