Weekly Capsule (May 21 – May 25) and Impact Analysis

News Announcement Impact Analysis
HD Kumaraswamy sworn in as the chief minister of Karnataka
  • The swearing in ceremony was a show of opposition unity with most opposition CMs attending the meet
  • On Friday, the Kumaraswamy government also managed to prove its majority with 117 votes in their favour
SEBI has issued notices to Chanda Kochhar on the Nu Power Issue
  • Chanda had been accused of favouring her spouse via a Videocon loan where there was conflict of interest
  • The main accusation was that she had headed the credit committee and failed to disclose the conflict of interest
IDBI posts Rs.5600 crore loss, SBI posts Rs.7700 crore loss in Q4
  • IDBI has already put assets worth Rs.21,000 crore on the block with NPAs well above the 28% mark
  • With total PSU banking losses of Rs.50,000 crore this quarter the bad assets are almost entirely provided for
Sun Pharma has warned that US pricing pressure could hit profits in FY2019
  • Generic drugs are facing a tough time in global markets due to pricing pressure from competition and tighter regulation
  • Sun has been struggling to get clearances for its factories from US FDA due to its lax quality standards
Forex reserves dip by over $11 billion in May to $415 billion
  • The total forex reserves had touched a level of close to $430 billion before the rupee crash began
  • The RBI, through a clutch of banks, has been trying to support the INR from depreciating beyond the Rs.69/$ mark
Government may impose cess on ONGC to compensate for higher crude
  • The government has been finding it politically sensitive to keep raising fuel prices just 1 year ahead of elections
  • The idea was to impose cess on oil extractors above $70/bbl and use that to hold retail petrol and diesel prices
Centre rules out excise duty cut on petrol and diesel
  • With fuel prices at all-time high, there have been demands for cuts in central excise and state VAT
  • With a tight budget, the government has refused to oblige although Piyush Goyal has promised a joint formula
Donald Trump may meet with Kim Jong Un of North Korea in June
  • The meeting was in jeopardy after North Korea had objected to some of the public comments made by US officials
  • It had reached a point where Trump had even threatened that the US was ready with military options against North Korea
Trump applies pressure on Saudi Arabia to curb oil prices around $80/bbl
  • The US has threatened to flood the global oil market with US supplies if prices went higher
  • As a rapprochement measure, OPEC and Russia may increase supply and try to bring down oil prices further
GIC RE posted underwriting losses of Rs.1170 crore in March quarter
  • The losses were led by higher claims on crop insurance and also in the area of motor insurance
  • Crop insurance losses at Rs.1358 crore was huge while motor insurance had losses of Rs.570 crore for GIC RE
Tech Mahindra profits up 30% in Q4 on the back of deferred tax gains
  • The profit of Rs.1222 crore was much higher than the Bloomberg consensus estimates of Rs.931 crore
  • The stock has been among the best performers in the last 1 year on the back of better performance metrics
HSBC warns of sharper capital outflows in the next 3-4 months
  • The combination of higher oil inflation and RBI refusal to hike interest rates could give rise to capital outflows
  • FIIs have sold over $2.50 billion in equity and debt during the month of May and it is expected to sharpen going ahead
Goldman warns of likely global risks due to High Frequency Trading
  • According to Goldman, the rise of HFT runs the risk of sudden depletion of volumes and create a new risk for markets
  • Interestingly, Goldman has spent aggressively on algo trading and HFT as well as robotics in the last few years
Investcorp to acquire IDFC’s realty and private equity business
  • Investcorp currently manages nearly $22 billion of realty and P/E investments across the Middle East
  • In the last few years, Investcorp has invested over $11 billion in real estate assets alone
HPCL pushing petrol and diesel under the ambit of GST
  • Currently, petrol and diesel are two of the major products that are kept off the ambit of GST and continue in old regime
  • By bringing oil under GST, centre and states will lose the power to tax them, which explains the resentment
SBI to hive off stake in some of its major non-core businesses
  • SBI has hived off stake in SBI Life and now proposes to hive off in SBI General Insurance and also in SBI Cards & SBI Caps
  • This is in line with the recent trends where large group have been looking to monetize the value of their non-core assets
Tata Steel finally gets the approval to acquire Bhushan Steel for $5.3 billion
  • This is the first successful resolution in the NCLT and opens the doors for more such resolutions
  • The acquisition gives Tata Steel the inorganic boost to substantially expand its steel making capacity in India
MCX launches options on copper and silver futures contract
  • Exchanges had a deadline to launch commodity options by October subject to regulatory approvals
  • In the meanwhile, MCX has also denied reports about a reported merger with National Stock Exchange
Government insurers to need capital infusion of up to Rs.10,000 crore
  • This capital infusion will be essential before they can consider a 3 way merger of general insurance companies
  • The 3 companies will need the capital to bring their solvency margins to 1.50 times their total liabilities
Ultratech to buy out the cement division of Century Textiles
  • This acquisition will take the total all-India capacity of Ultra-Tech to 106 million tonnes
  • If Binani Cements also gets added then Ultra-Tech will be the biggest player by a huge margin with pan-India presence
Christian Lagarde of IMF blames  protectionism for slow growth
  • In a direct dig at countries like the US, IMF chief has called for bringing down trade barriers to revive global growth
  • The entire debate began with the US imposing 25% tariff on steel and 10% on aluminium setting off a trade war

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