Weekly Market Report – 11th February 2019

“Do not save what is left after spending, but spend what is left after investing.”
– Warren Buffet
CEO of Berkshire Hathaway

Indian market witnessed a selloff in the last two trading sessions of the week, which pushed benchmark indices below crucial levels largely on weak global cues. The S&P BSE Sensex closed the week below 37,000 while Nifty50 failed to hold on to 11,000 for the week ended February 8. However, Sensex rose 0.2 percent while the Nifty50 recorded gains of about 0.46 percent. The Indian Rupee (INR), registered a marginal change as it ended at 71.16 on February 8.

Key Updates for the week

• The Reserve Bank of India (RBI), under its new Governor Shaktikanta Das, cut the repo rate by 0.25 per cent to 6.25 per cent on expectation of inflation staying within its target range. The RBI changed the monetary policy stance to ‘neutral’ from the earlier ‘calibrated tightening’, indicating further softening of rates if inflation remain within its target range. Reverse Repo Rate was consequently reduced to 6 per cent from 6.25 per cent. Repo rate is the rate at which commercial banks borrow money from the RBI, while Reverse Repo Rate is the rate at which RBI collects money from banks. The rate cut is in accordance with achieving the medium-term objective of maintaining inflation at the 4 per cent level while supporting growth.
• Tata Motors reported a consolidated net loss of Rs 26,960.80 crores for the third quarter ended December 31. The losses were largely caused by one-time exceptional non-cash charge for asset impairment of 3.1 billion pounds for its British Subsidiary Jaguar Land Rover (JLR). Tata Motors had reported a net profit of Rs 1,214.6 crore in the October-December quarter of 2017-18. Tata Group chairman N Chandrasekaran suggested that the company’s domestic business continues the strong momentum and has delivered market share gains as well as profitable growth. Shares of Tata Motors cracked over 29 per cent after the company reported a record loss in December quarter. The company reported that profits were impacted due to an exceptional expense of asset impairment in its British arm Jaguar Land Rover (JLR) of Rs 27,838 crore (3.1 billion pounds).
• In a massive success for Indian investigating agencies, UK Secretary of State, Sajid Javid approved extradition of the liquor baron Vijay Mallya. He will face trial for charges of fraud and money laundering amounting to an estimated Rs 9,000 crore. After the extradition was approved, Vijay Mallya, as per UK laws would have 14 days to appeal in the higher court against the order. Vijay Mallya had managed to escape to the United Kingdom in March 2016 after a consortium of lenders led by State Bank of India started legal proceedings to recover the loans. He has been living in the UK since then. Last month, a special Prevention of Money Laundering Act (PMLA) court had declared Mallya a fugitive economic offender. The fugitive economic offender tag to Mallya empowers investigating agencies to seize assets of the fugitive liquor baron across India.

HRITHIK Performance

• HRITHIK stocks stands for HDFC Bank, Reliance Industries, Infosys, Tata Consultancy Services, Hindustan Unilever Limited, IndusInd Bank and Kotak Mahindra Bank. HRITHIK stocks have an enormous impact in the Indian market and possess a combined market capitalization that is bigger than the size of most national economies.
• HRITHIK stocks are considered the FAANG of India. FAANG stands for stocks of Facebook, Apple, Amazon, Netflix and Google. This term was coined by CNBC Analyst Jim Cramer, to highlight that these 5 stocks have enormous impact as a collective group.