| News Announcement |
Impact Analysis |
| Monetary policy cuts the repo rates by 25 basis points in June |
- This takes the repo rates to 5.75%, reverse repo rates to 5.50% and the bank rate to 6%
- The markets were expecting a bigger rate cut to the tune of 35 bps to 50 bps considering the growth slowdown
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| RBI waives charges levied on digital transactions like NEFT / RTGS |
- This is intended to give a push to digital transactions and banks have to necessarily pass on this benefit
- However, banks may still charge customers at their end for the electronic services provided
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| Monetary Policy Committee (MPC) changes stance to Accommodative |
- The policy stance was Neutral and the shift is surprising after 3 rate cuts in the last 4 months
- The accommodative stance means that the RBI has kept the door open for more rate cuts in the future
|
| Brent Crude prices touched a low of $60/bbl during the week |
- The sharp fall was triggered by fears of global weakness due to the ongoing trade war and the inverted US yield curve
- However, the crude price did take some support after OPEC affirmed its commitment to persist with supply cuts
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| DHFL bonds downgraded to Default Status by CRISIL and ICRA |
- This was necessitated after DHFL defaulted on debenture interest payment of Rs.960 crore on 4th June
- The classification into Default status means that all MF holders will now have to write off 75% of their holdings in these bonds
|
| UTI Mutual Fund entirely writes off its exposure to DHFL |
- Out of the total MF exposure of Rs.5200 crore to DHFL, UTI Mutual Fund alone had exposure of Rs.1800 crore
- Apart from the write-off, UTI has also imposed 3% exit load on any withdrawals in the next 3 months
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| RBI gives better leeway to banks and corporates on defaults |
- Instead of the 180 days resolution period kicking immediately on default, now it will start after a gap of 30 days
- Additionally, the maximum time period has been extended to 365 days, although higher provisions will apply after 180 days
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| Iran not planning to leave OPEC, confirms Iranian Oil Minister |
- Iran, the second largest oil producer in the OPEC, has been on the wrong side of American sanctions since May 02nd
- Iran has affirmed that it will continue to remain within the OPEC and continue its battle against American hegemony
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| Centre lifts land holding limit and extends PM-Kisan to all farmers |
- In a bid to increase farm incomes and relieve farm distress, the government has universally extended PM-Kisan
- This is likely to increase the outlay for PM-Kisan and will have implications for the fiscal deficit
|
| Nifty and Sensex ended the week in losses after 3 weekly gains |
- The losses mainly came on the monetary policy day after the lower rate cut and NBFC crisis added up
- Interestingly, even during this sharp fall in the markets, the VIX was headed lower towards the 14.5 mark
|
| Bond yields on the benchmark fell below the 7% mark to 6.93% |
- The sharp fall in bond yields was led by low inflation expectations and falling yields in the US
- The actual trigger for the fall below 7% came on the credit policy day due to the rate cut and accommodative stance
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| G-20 members see the trade war as the biggest global macro risk |
- As the World Bank and IMF have affirmed, global GDP growth is likely to fall by up to 70 bps in the current year
- Markets also fear that this could push many countries into deflation and lead to currency volatility risk for EMs
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| Monsoon arrives in Kerala a full 7 days behind its normal schedule |
- A delayed monsoon arrival means that sowing gets delayed and that impacts overall food grain output
- A delayed start impacts food grain output even if the actual rainfall ends up being normal
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| With Jet out of business, airline industry may turn around to profits |
- The shutdown of Jet Airways has already led to a hike in air fares across the board leading to improved profits
- Above all, with reduced competition, the need to play the fare cutting game is not too intense at this point of time
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| IDBI plans to entirely exit its 1.05% stake in the NSE |
- At the current valuation of the exchange at Rs.50,000 crore, this stake would be worth around Rs.500 crore
- With the IPO of the NSE nowhere in sight due to the SEBI investigation, investors could be opting out
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| Trump suspends tariffs on Mexico after immigration agreement |
- Mexico, largely dependent on the US economy, has given in to US pressure and promised to curb illegal immigration
- The US has been trying this tactic with China also, with little success as China has refused to come to the table
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| Barnes & Noble sells out to Elliott Hedge Fund for $475 million |
- B&N was once the largest bookstore before Amazon reinvented the ecommerce space
- B&N tried to replicate the Amazon online market place and Kindle (via NOOK) but failed to make any impact
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| Government to revive BOT model for road construction projects |
- The Build Operate Transfer (BOT) model had been put on hold over 4 years back and has now been reintroduced
- BOT will see private investment coming upfront and the centre will not have pump in huge sums of money
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| Foreign Exchange reserves get back close to peak levels at $422 billion |
- The last two rounds of dollar swap auctions have been instrumental in shoring up the reserves
- With oil prices rising and imports moving higher, a solid forex chest is a necessary cushion for the markets
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| L&T open offer for Mindtree to be open from Jun 17th to Jun 28th |
- L&T will make a Rs.5030 crore offer for another 31% stake in Mindtree to eventually take its stake to 66%
- However, the success of L&T’s attempt will largely depend on the support of FPIs holding more than 40% stake
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| Piyush Goyal gets down to the job of pushing exports higher |
- This includes fast tracking anti-dumping investigations to initiating research on import substitution
- The Commerce Ministry is also preparing a list of non-essential imports to reduce the trade deficit
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