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Weekly wrap-up: Market updates, news and insights for the week ending 22nd March, 2019
Publish date: 29th March, 2018
NEWS: NIFTY CLOSES THE FISCAL YEAR STRONG AT 11,624
Perspective:
- There was across the board buying as Indian markets appeared to benefit on hopes of weakening crude oil prices on risks of a global supply glut and weak growth.
- Strong FPI flows in excess of Rs.45,000 crore in March spurred a rally in banking and financial stocks taking the Nifty sharply higher.
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News: BRENT CRUDE HIGHER ON FRIDAY AND INDIA RAISES GAS PRICES BY 10%
Perspective:
- After a volatile week, Brent Crude prices again settled above the $68/bbl mark as crude traders continued to buy aggressively into futures.
- In the meanwhile, India raised the price of natural gas for the April-Sept period by 10% to $3.69/mmBtu. The ceiling price of difficult gas has been raised by 21% to $9.32/mmBtu.
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NEWS: INVERTED US YIELD CURVE IS BACK TO SPOOK GLOBAL MARKETS
Perspective:
- US 10 year bond yields have gone below the 3 year treasury rates clearly indicating lack of confidence in buying into long term bonds in the market.
- In the last 60 years, all recessions have been preceded by an inversion of the yield curve and the global markets are seeing the broad cues like global growth also falling in sync.
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NEWS: INDIAN TOP LINE COULD FACE A SQUEEZE IN FOURTH QUARTER - CRISIL
Perspective:
- CRISIL expects the top line of Indian companies to be squeezed in the fourth quarter due to weak commodity prices, especially oil and industrial base metals
- This analysis was done based on a sample of over 350 companies which excluded companies from the financial sector and the oil sector to remove regulatory anomalies
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NEWS: GOVERNMENT REVENUES THIS FISCAL MAY BE IMPACTED BY WEAK DIRECT TAXES
Perspective:
- The CBDT has reported a 15% shortfall in direct t tax collections till March 23rd with weakness across personal taxes, corporate taxes and advance tax payments.
- This is likely to put further pressure on the government revenues and also on funding the fiscal deficit as the GST revenues are already expected to fall short by Rs.1 trillion.
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NEWS: SEBI POSTPONES NEW NORMS FOR PAYMENT ROYALTY TO PARENT COMPANIES
Perspective:
- The new norms (supposedly from April 01st) required a special shareholder approval where the royalty payment exceeded 2% of the total revenues of the company.
- Since most MNCs pay royalty to their global parent companies, these norms had led to protests from foreign business houses culminating in the indefinite postponement.
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NEWS: RBI GETS STRONG RESPONSE FOR ITS FIRST DOLLAR-SWAP AUCTION
Perspective:
- Against the proposal to raise $5 billion from banks as dollar conversions, the total demand was to the tune of $16.3 billion, leaving room for more such issues.
- Dollar swap bonds will perform the twin jobs of infusing domestic liquidity and also add to RBI forex reserves and protect exporters from rampant rupee strengthening.
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NEWS: INDIAN PHARMA TURNED OUT THE MOST REGULATED BY FDA LAST YEAR
Perspective:
- US FDA inspections of India facilities were up by 24% last year even as the FDA inspections in other regions across the world actually was lower by 17%
- The FDA has long complained about lax standards of Indian pharma companies in its manufacturing facilities and testing labs. That is not great news for Indian pharma.
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NEWS: CSFB INDIA CONSUMER SURVEY WARNS OF LIMITED LARGE PURCHASE APPETITE
Perspective:
- While India continued to rank top in the CSFB consumer sentiments survey, there was a clear willingness and intent to postpone the purchase of high value of goods.
- That is not good news for auto stocks, which have already been under pressure in the last fiscal delivering negative returns of (-25%) on the stock markets.
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By: Sandhya Kannan, Head – Content
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