The weekly market tabulation

News Announcement	Impact Analysis
Ø  RBI hikes rates by 25 basis points to 6.25% in June policy	Ø  This was largely anticipated on the back of higher inflation and a weaker rupee. Capital outflows have also been strong Ø  With inflation guidance at well above 4%, the RBI has hinted at two more rate hikes this year of 25 basis points each
Ø  Nifty and Sensex react positively to the RBI rate hike by 25 bps	Ø  The 25 bps was already factored in and the markets celebrated the neutral stance of the policy Ø  Markets also appreciated the fact that the rate hike was actually indicative of a revival in the GDP growth
Ø  Sun Pharma surges after the US FDA issues VAI status to Halol plant	Ø  VAI means Voluntary Action Initiated which hints that the FDA may not seriously pursue the lapses if systems are in place Ø  Sun Pharma has corrected over 70% in last 3 years on stiffer competition, thinner margins and FDA concerns
Ø  Bond yields fail to sustain above the psychological 8% mark	Ø  Although the bond yields did touch a high of 8.03% on Friday it closed lower at 7.92% as bond prices rallied Ø  Markets are expecting quick action from the government post Piyush Goyal’s meet with PSB chiefs
Ø  Foreign Direct Investment (FDI) stood at $61.96 billion in 2017-18	Ø  The FDI inflows into India have sustained at the same level as previous year making India the largest FDI recipient Ø  FDI inflows have improved in the last four years on the back of a more favourable “Make in India” policy
Ø  Germany calls upon Europe to be unified in light of US trade tensions	Ø  Trump has already hinted at trade sanctions on the EU and it is going to start with steel and aluminium Ø  EU has already threatened a retaliation to the US trade war and called on the EU to have a unified foreign policy
Ø  Equity mutual funds inflows drop by 10% in the month of May 2018	Ø  Inflows into equity MFs and ELSS stood at Rs.11,346 crore in May, lower by 10% on a MOM basis Ø  There was heavy redemptions in income funds and liquid funds by corporate investors during May
Ø  Power companies could add another Rs.1.80 trillion to bank NPAs	Ø  These included 34 stressed power companies like Jaypee, Lanco, Essar, Monnet and GMR among others Ø  The key reason was the non-availability of coal after the cancellation of the coal licenses
Ø  Raamdeo Agarwal sees value migration in favour of aviation stocks	Ø  Aviation stocks are likely to see a business model that automatically adjusts to fuel price vagaries Ø  With annual growth rate of over 20% and an under-served market, aviation offers a good consumer story
Ø  ECB hints at early withdrawal of liquidity stimulus in Europe	Ø  With signs of growth revival across the EU region, the ECB may be inclined to gradually wind down the stimulus of $6 bn Ø  This also generally gels with the global monetary stance which is now veering towards greater hawkishness
Ø  Indian banks to take a hit of Rs.6000 crore on state bonds portfolio	Ø  State Bond benchmark yields have already gone up to 8.45% and could add to losses after the recent rate hike Ø  Banks are not allowed to defray their state bond losses over 4 quarters unlike their central bond losses
Ø  ICICI Bank may ask for a consent closure of the Kochhar case	Ø  A consent closure allows the bank to continue business by paying a penalty without accepting or denying the charges Ø  Earlier, SEBI had refused to grant consent closure for NSE and may maintain the same stand in the ICICI case too
Ø  US warns OPEC and Russia over runaway rally in crude prices	Ø  The US has called upon OPEC and Russia to reduce their supply cuts by 1 million bpd to increase supply Ø  Supply  is already constrained due to problems in Venezuela, Libya and the sanctions on Iran
Ø  Videocon Industries admitted to NCLT for bankruptcy proceedings	Ø  Videocon has debt of Rs.47,000 crore with nearly half of that classified as bad loans Ø  Videocon erred on its oil bets and the recent conflict of interest issue has made life harder for the group
Ø  Government moots the idea of time bound closure of PSU units	Ø  This will free up capital allocation for productive purposes and it remains to be seen if it will apply to Air India too Ø  The land parcels of these companies will be used by the government to further its low cost housing program
Ø  Loans to the tune of Rs.5 trillion turned bad in 2017-18, as per CRISIL	Ø  This was largely driven by more stringent bad asset recognition norms proposed by the RBI Ø  With nearly Rs.1 trillion likely to be written back post NCLT, the NPA cycle is expected to have bottomed out
Ø  Government to announce Rs.8000 crore rescue package for sugar mills	Ø  The sugar mills owe nearly Rs.22,000 crore to cane farmers and this package will be used to provide relief Ø  With annual output of 31.7 million tonnes in the last sugar cycle, prices are likely to remain non-remunerative
Ø  M K Jain will take over as RBI deputy governor in place of SS Mundhra	Ø  Jain was formerly the CEO of IDBI Bank and has specialized in turnaround and strategic asset sales Ø  As the government embarks on a massive attack on bad loans, Mr. Jain’s skills will really come in handy
Ø  Nitish Kumar attempts a third front of sorts in the state of Bihar	Ø  Nitish has been shunting in and out of the BJP but now he sees an opportunity after being sidelined by the BJP Ø  However, the Congress and the RJD may be sceptical of Nitish after their previous experience with him
Ø  Italy may be the next in line to shake up the common currency	Ø  The new government has clear sympathies towards seceding out of the Euro and opting back for the Lira Ø  This could be serious as Italy has one of the world’s largest bond markets and its GDP is in excess of $1 trillion
Ø  Aviation turbine fuel (ATF) prices hiked for the 11th month in a row	Ø  This has been necessitated by the sustained increase in the price of Brent Crude in the last 1 year Ø  The price of ATF is up by 40% in the last 1 year and that is putting pressure on aviation company margins

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