The August month of 2019 was a month of highs and lows. There were certain events that affected the stock market, be it in a good way or a not so good way. Let’s have a look at the events that ruled the Indian Stock Market in the month of August:
5th Week
Starting from end to beginning, the last week of the month was ruled by RBI. Finance minister Nirmala Sitharaman’s 30 August announcement on the merger and recapitalization of state-controlled banks raised hopes of better credit flow as restrictions on lending imposed by the Reserve Bank of India (RBI) on weak banks are likely to be lifted after their merger with lenders with stronger balance sheets. Five banks—United Bank of India, Indian Overseas Bank, Central Bank of India, IDBI Bank and UCO Bank—are still operating under the RBI’s prompt corrective action (PCA) framework that is aimed at reining in banks that have breached regulatory thresholds in bad loans and capital adequacy. Since United Bank of India will merge with Punjab National Bank, it is expected to exit the PCA framework. Central Bank of India, IDBI Bank, UCO Bank and Indian Overseas Bank, meanwhile, will be recapitalized, which could help them exit the framework as well.
4th Week
Companies such as CG Power voluntarily come out with wrongdoings only during extreme pessimism. Currently, every small and midcap company is beaten down on the presumption that there is likely some mischief in them.
3rd Week
Balkrishna and Endurance Technologies cancelled their expansion plans. According to the experts, this could be detrimental to the long-term future of the company but in the short-term, the stock has satisfied the traders at the cost of long term investors
2nd Week
RBI’s latest unconventional rate cut by 0.35% and allowing increased exposure limits of banks to a single NBFC is a bold move in favour of lubricating the economy whose effects will be seen in the next quarter.
1st week
The first week of the month started with Zee’s recent deal for an 11 per cent stake with Oppenheimer didn’t work out well, as it couldn’t even get at a 25% premium. Also, instead of the benefits of a strategic investor to add synergies of vast global presence and a higher open offer price, the deal was signed with a financial investor, belying the hopes of open offer for minority investors.
So, as they say ‘everything is temporary’, so the ups and downs of the stock market are. The big moves may be old and of no use in few days and any small move can make headlines. That’s how stock market is. We hope to see some new and really interesting events in upcoming months. Happy investing!
