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Air India May Finally Fly, NBFCs Face the Heat et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 8, 2018 1:37 PM 3 min read
Editorial

Good evening readers,

 

Following last week's bloodbath in the domestic markets - one which saw the "best performing Asian Index" title dissipate away from the Sensex, Monday offered some respite (as it usually does after a period of heavy selling). Sensex inched up 0.28% while the Nifty 50 crept up 0.31%, recovering some of last week's losses, albeit fairly modestly. 

 

However, there might be a silver lining in the offing. This week kicks off the earnings season for the July-Sep quarter with 26 companies expected to report.

 

As stock pickers look to find the diamond in the rough, earnings growth, management guidance and for that matter any meaningful fundamental metric would perhaps be closely watched to gain an advantage from recently depressed valuations. Consequently, this edition of earnings season probably has heightened relevance as the hunt for 'quality stocks' and 'bargains' take center-stage.

 

With a whole gamut of macro factors at play, ranging from a pressured Rupee, lofty oil prices, unchanged interest rates, and a general yield-driven 'flight to quality', it is perhaps the time for textbook 'stock picking'.

 

Macro takes back seat. Fundamentals take the front. Investors are watching. So are we!

 

Here are today's Top 6 Business Stories in our End Of Day Wrap Up:

 

INDIA

 

Government to provide final financial assistance and significant autonomy to debt-ridden Air India, but conditions apply. 

The government has planned steps to give a significant autonomous status to Air India’s Board for commercial and financial decision making, with a final boost of INR150bn. However, the deal also entails that the airline will not seek any more financial support from the government after 2018-19. Air India till date, needs permission from the Ministry of Civil Aviation for taking business decisions.

 

RIL increases price of petrochemicals to balance the effect of rising Crude Oil prices.

Reliance Industries Limited (RIL) has hiked prices of over seven petrochemicals in Q2 of this fiscal year by 10-21%, to counter the effect of rising price of Crude Oil and falling value of Rupee. The year-on-year increase in prices stand at 17-61%.

 

NBFCs stock fall as RBI plans to tighten norms - DHFL, Edelweiss Financial, and IIFL amongst losers.

Shares of Non Banking Financial Companies (NBFC) fell in response to RBI’s recent announcement of strengthening asset-liability guidelines to reduce risk of rollover. Dewan Housing Finance Corporation Ltd. (DHFL) dropped 20.39%, whereas Edelweiss Financial and IIFL plunged 14.16% and 8.49% respectively.

 

YES Bank promoters, Rana Kapoor and Madhu Kapoor seek settlement of decade-old feud.

The two promoters of YES Bank are initiating talks for putting an end to a long legal battle, seeking an out-of-court settlement. Back in 2013, Madhu Kapoor and her daughter had filed a petition in the Bombay High Court about their lack of say in the appointment of directors.

 

US/INTERNATIONAL

 

Chinese markets fall as Central Bank announces cut in the cash reserves for commercial banks.

China’s stock market fell more than 3.7% after People’s Bank of China slashed the Reserve Requirement Ratio (RRR) to boost liquidity. RRR is the amount of cash that commercial banks need to set aside at the central bank. The RRR currently stands at 15.5% for large institutes and 13.5% for smaller banks. The RRR will be cut by 100 basis points from October 15. This move, fourth of its kind this year, comes amidst concerns about China’s ongoing trade war with US.

 

Walmart partners with MGM to advance its video-on-demand service, Vudu.

Walmart will partner with Metro Goldwyn Mayer (MGM) Studios to boost Vudu, its VOD service that was acquired eight years ago.

 

 

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