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Expect a recovery in oil prices, non-viability of ATMs, the NBFC crisis, and more financial news

On a trading day when banking and clearing operations were largely shut, the Nifty fell below the 10,600 mark. Even the Sensex lost over 250 points as the markets were a little jittery over the sharp fall in crude prices as an indicator of a global slowdown. FPIs were also aggressive sellers on Wednesday. The lower crude oil prices also took energy stocks lower even as tech stocks came under pressure on the back of the NASDAQ sell-off. Surprisingly, there was a sharp rally in mid cap stocks even as the Nifty and the Sensex overall came under pressure. Markets have a long weekend this week.

Even as Brent Crude has already fallen $23 from a high of $86/bbl to $63/bbl, start oil trader Andy Hall is expecting a recovery in oil prices on the back of an OPEC fuelled recovery in crude prices. Hall expects the OPEC nations to impose cuts on supply in the next one month and Russia is also likely to support it. Oil started falling after the trade war threatened to trigger a global slowdown even as the surprising dilution of Iran sanctions also led to a sharp fall in oil prices. Oil is already in surplus supply with the sharp currency depreciation of EMs leading to a weakening of oil demand.

50% of the ATMs in India could fall due to non-viability

The Confederation of ATM Industry has warned that more than 50% of the ATMs in India could fall due to non-viability. India currently has 2.38 lakh ATM machines and the body expects that nearly 1.15 lakh machines could become unviable. The industry has complained that recent regulatory changes like regular software and hardware upgrades, mandates on cash management standards and cassette swap method of loading cash are likely to cost the industry nearly Rs.3000 crore, which it can ill afford considering the wafer-thin margins. This could impact banks and financial inclusion in a big way.

NBFC Crisis and Dewan Housing

In the midst of the NBFC crisis, Dewan Housing appears to be aggressively putting its house in order. In the last 2 months, DHFL has already sold loans worth Rs.7,400 crore and repaid loans to the tune of Rs.14,000 crore. The home loan portfolio was largely offloaded to banks who keep buying such home loan portfolios to meet their priority sector requirements. There has been a pall of gloom over NBFCs after the default by IL&FS had raised serious doubts about the capacity of Indian NBFCs to be able to service their loans on time. DHFL has a loan book of Rs.1.10 trillion.

Birla shares concerns over the high spectrum fees

In a recent meeting with Telecom Minister, Manoj Sinha, the head of the Aditya Birla Group has raised serious concerns over the liquidity crunch in the sector and also the high spectrum fees. Since the launch of Reliance Jio in late 2016, there has been a severe fall in price, a crashing of the ARPUs and stress on the profitability of the telecom companies. Mr Kumaramangalam Birla also expressed concerns over the sum of Rs.30,000 crore that is currently locked up on account o GST payment under the “Reverse Charge Mechanism”. Another issue raised by Birla was on the high Spectrum Fees charged. Birla also sought an extension of spectrum payment period from 16 years to 18 years and also include a moratorium on payments. In the latest quarter, Idea Vodafone had reported losses of Rs.4973 crore.

The political crisis in Jammu and Kashmir

It was a day of high action in the state of Jammu and Kashmir. After traditional rivals, PDP / NC / Congress announced a grand alliance to form the government, the governor hurried through to announce the dissolution of the J&K assembly. Mehbooba Mufti had apparently tried faxing the letter of support to the governor but the fax machine had been out of order. To avoid the embarrassment of calling the floor test, the governor decided to dissolve the assembly. His justification was that Sajjad Lone had also staked a claim to the post with BJP support and hence the dissolution.