Global financial markets slumped this week after the US imposed steel and aluminium tariffs on exports. However, markets worldwide pared the losses on Friday amid robust US jobs data.
Data from the U.S. Labor Department revealed that the nation had added 313,000 jobs last month, surpassing analyst expectations of 200,000. Construction was the biggest sector gainer, with 61,000 new job roles, followed by retail. This news meant that Wall Street posted sharp gains, with the Dow soaring over 250 points, thus making sure it ended the week in black, up 1.2%.
European stocks ended the week in red, however positive jobs data from the US helped cut losses. Among country benchmarks, the UK’s FTSE was down 0.1% while Germany’s DAX was down by 0.8%, and France’s CAC 40 was lower by 0.9% over the week.
Back home, the BSE Sensex closed the week lower as sector indices across the board witnessed selling pressure. Taking a cue from PNB, bank stocks continued to be under pressure, while metal stocks were the top losers for the week, with the BSE Metal index down by 6.9%.
Key World Markets During the Week
On the sectoral indices front, stocks from Consumer Durables and Banking witnessed selling pressure.
BSE Indices During the Week
Key economic and industry developments last week.
Over a dozen public sector banks (PSBs) will get Rs 461 billion as part of capital infusion in the current fiscal ending this month to allot shares to the government in lieu of equity capital.
These banks, including SBI, PNB, Bank of Baroda, Central Bank, Union Bank and OBC, have called shareholders’ meetings this month to pass the resolution to allot preferential shares to government so as to receive the capital.
The country’s largest lender, State Bank of India (SBI), will get the largest sum of Rs 88 billion as government’s capital infusion.
Meanwhile, Bank of Baroda will get Rs 53.8 billion as government equity capital; Central Bank Rs 48.5 billion; Union Bank of India Rs 45.2 billion; Oriental Bank of Commerce Rs 35.7 billion; Dena Bank Rs 30.5 billion; Syndicate Bank Rs 28.4 billion and Corporation Bank Rs 21.9 billion.
In October, the government had announced a mega-Rs 2.11 trillion capital infusion into PSBs in the course of next two years, of which Rs 800 billion are to be raised via issuance of bonds by the banks.
The intent of this huge capital infusion is aimed at strengthening the PSBs and to help them clean up their balance sheets of the bad assets they have been plagued over the last several years.
Several mechanisms like referring cases of NPA accounts to National Company Law Tribunal (NCLT) to recover dues as well as selling bad loans to asset reconstruction companies (ARCs)/banks/FIs/NBFCs are also being employed by banks to get rid of the bad assets.
In the latest development, the Union Cabinet has given its nod to a relief package for the financially-stressed telecom sector.
Reportedly, the government agreed to allow more time to the telecom operators to pay for the spectrum bought in auctions, under the new plan and also relaxed the spectrum holding limit for telecom companies to 35% from 25% at present.
These measures are expected to increase the cash flow for telecom operators immediately, providing the operators some relief. Besides, revising the limit for spectrum holding will facilitate consolidation of telecom players and may encourage their participation in future auctions, the reports noted.
Last year, the Inter Ministerial Group (IMG) was tasked to suggest policy reforms and strategic interventions for the troubled sector bruised by falling tariffs, eroding profitability and mounting debt in the face of stiff competition from new entrant Reliance Jio. The IMG, in its recommendations submitted last year, had mooted the extension of time period for the payment of spectrum bought in auctions by operators to 16 years from the current 10 years.
