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It’s a wrap: Market updates, news and insights for the week ending 22nd June
Publish date: 22nd June, 2018
News: Barclays Bank sees the Rupee at Rs 72/$ by the end of the year 2018
Investment perspective:
• A weak rupee is beneficial for sectors like IT and pharma companies as their products become more competitive in global markets.
• However, rupee at 72/$ will make oil imports more expensive and that means we may get to see more inflation.
News: OPEC to raise oil supply. It had cut oil supply by 1.8 million barrels per day since Jan 2017
Investment perspective:
• It means more oil will come into the market which can reduce the price of crude. Crude has already fallen from $80/bbl to $73/bbl.
• India imports 75% of its daily crude oil needs and that is the reason the markets were up sharply on Friday.Related read: How crude oil prices caused ‘May Day’ in Indian midcaps
News: India imposes import duties on key farm imports from the United States in retaliation to the 25% tariff imposed by the US on some metals
Investment perspective:
• India being a net importer should benefit by imposing these trade tariffs. The US has already gained $800 billion from such tariffs.
• The risk is that if every country tries that then it could lead to a trade war and currency war with rupee falling further.
Related read: US-China trade face off: Why should India be concerned?
News: LIC may take a major stake in IDBI Bank, which has been making losses and had also reported gross NPAs above 25%
Investment perspective:
• That can be good news for IDBI bank shareholders and that explains why the stock was up in Friday’s trade.
• However, the question is whether the money belonging to the insurance premium payers should be used for these buyouts?
News: More than 100 stocks have touched new 52-week lows on the NSE
Investment perspective:
• This underlines that the pain in the mid-caps and the small caps has been much more acute this time around.
• When more stocks are hitting 52-week lows, the A/D is normally negative and the market needs a bigger effort to move up.
Related read: Check the top trending stocks of this week
News: Stock futures of 45 companies will be shifting to compulsory delivery mode from the July contract onwards
Investment perspective:
• This new rule was brought by SEBI to curb speculation in stock futures. Currently, these are settled only in cash.
• Traders can rush to cover short positions. Hence, where there are stock futures short, there could be a squeeze.
News: ICICI Bank brings in Sandeep Bakshi as the interim CEO of ICICI Bank pending inquiry by the Srikrishna commission
Investment perspective:
• The final outcome can only be known once the report is out and the board takes a decision on the conflict of interest issue.
• Immediately, the corporate governance worries have been taken care of. Bakshi is a ICICI group veteran and was heading the life insurance business.
Related read: Why we continue to have a ‘Buy’ rating on ICICI Bank
News: MPC minute hinting at few more rate hikes by the RBI in the coming months
Investment perspective:
• All members of the MPC have been worried about rising inflation and that means rates could go higher.
• The decision can also be driven by how the US central bank (FED) plays its interest rates out there.
Related read: RBI policy: 5 things to know about repo rate hike
News: BJP withdraws support to the PDP government in the state of Jammu & Kashmir
Investment perspective:
• The current CM, Mehbooba Mufti has already resigned and now governor’s rule is likely to be imposed.
• This may be an interesting development in the light of the general elections schedule next year.
