BackUS Fed hikes, Agarwal shops and BJP triumphs
The US Federal Reserve raises interest rates; Anil Agarwal eyes $2.4 billion stake in Anglo American; BJP wins elections in four states
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1. Fed hikes rates
The US Federal Reserve on Wednesday increased interest rates by 0.25 percentage point. It also signalled that it would look to raise rates at least two more times this year. The market had largely factored in the rate hikes in light of the improvement in the American economy. Employment and inflation numbers are both close to what the central bank would like. President Donald Trump, who took office in January, has also indicated that the government would look to support growth. A smaller gap between US bond yields and those in emerging markets such as India increase the likelihood of outflows from the latter.
2. Inflation picks up
Wholesale inflation accelerated at the fastest pace in 39 months in February, showed data the government released on Tuesday. Retail inflation came in at 3.65% even as wholesale inflation rose to 6.55%. The gap between the two widened from 0.25% in November to 2.9% in February, noted a Mint analysis (read it here). Higher input prices have contributed to the rise in wholesale inflation. Numbers suggest that companies are to pass on the increases to customers. This could have a negative impact on margins.
3. IISc in Asia’s top 30
The Indian Institute of Science (IISc) in Bengaluru is ranked among the top 30 Asian universities, according to Times Higher Education (THE) University Rankings. The number of Indian universities in Asia’s top 300 is 33, it was reported on Wednesday. India is now the third-most represented country in the top 300. Others in the list include the Indian Institutes of Technology (IITs) located in Mumbai, Delhi and Chennai. IIT Bombay, which was the second highest ranked Indian university, came in 42nd.
4. 140th anniversary of the first ever Test match
This week marked the 140th anniversary of the beginning of Test cricket. The first match is accepted to have been played between Australia and a touring England team in 1877. The match was played between 15 and 19 March. Australia won that match, and maintained that winning habit in the matches that followed. It is currently the team which has won the highest percentage of matches played, according to an analysis of data from sports website ESPNcricinfo.
5. CPSE ETF sees record subscription
The government’s exchange-traded fund had anchor investors bid for 7.5 times the units available on offer on the opening day. A PTI report on Tuesday indicated that anchor investors bid for Rs5,700 crore worth of units in the fund. The Reliance Mutual Fund-managed Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF) is a fund which has shares of 10 state-owned companies. The current offering has a size of Rs2,500 crore. Less than a third was reserved for anchor investors. A comparison with other funds in its category shows that investors have got better returns over its peers over the last one year, though the performance has lagged in recent months.
6. Exports grow in February
India’s merchandise exports grew at a robust pace in February. according to data the government released on Wednesday. Exports grew 17.48% to $24.5 billion last month. Meanwhile, imports rose 21.76% to $33.4 billion. The rising trend in exports is said to be an indicator of resilient global demand.
7. Anil Agarwal’s $2.4 billion shopping spree
Mining baron Anil Agarwal is looking to buy up to $2.4 billion worth of shares in Anglo American Plc, one of the world’s biggest mining companies. Agarwal’s move will give him a 13% stake in Anglo American. He had earlier been turned down for a potential merger. Agarwal has said that he would not make a takeover bid. The company has witnessed something of a turnaround lately. Its earnings before interest, taxes, depreciation and amortization grew 25% in 2016. It had earlier been experiencing difficulties because of issues including the falling price of commodities.
8. BJP sweeps assembly elections
The Bharatiya Janata Party (BJP) won Uttar Pradesh and Uttarakhand with handsome majorities, according to assembly election results declared over last weekend. It also managed to form governments through quick alliances in Manipur and Goa during the week. This is despite the Congress being the single largest party, albeit without a majority in the latter two states. This left the Congress with a victory only in Punjab. The BJP’s share of total elected MLAs exceeded that of the Congress for the first time in this decade. The Congress has been in steady decline, while other parties, even excluding the BJP, have seen their share rise.
9. Government plans to allow 90% EPFO withdrawals to fund homes
The labour ministry told the Rajya Sabha on Wednesday that it is planning to allow subscribers to the Employees’ Provident Fund withdraw up to 90% of their retirement savings to pay for houses. The ministry controls the Employees’ Provident Fund Organisation (EPFO). The EPFO manages a Rs8.5 trillion portfolio, with 37.6 million subscribers. The withdrawal can happen if at least 10 EPFO subscribers form a group to construct their own homes or purchase them from a builder. The government has already decided to make the required amendments, according to the ministry’s Rajya Sabha statement.
10. Nifty hits record high
The National Stock Exchange’s Nifty 50 index hit an all-time high of 9,087 points on Tuesday. The rise followed news of the ruling Bharatiya Janata Party’s victory in state elections including in Uttar Pradesh. This is expected to make it easier for Prime Minister Narendra Modi to push through reforms. The Nifty rose again to close at another record high of 9,154 on Thursday after the American central bank indicated that it would not be increasing the pace of interest rate hikes. It hit yet another all-time high on Friday, closing at 9,160.05.
Graphics by Prajakta Patil/Mint.
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