Moneycontrol Pro picks of the week

This has been a busy news week from the economy’s standpoint. You could call it sobering even. The week ended with the Reserve Bank of India (RBI) cutting the repo rate by 25 basis points to which the stock market responded with a 434 point decline.

Investors may have been expecting a bigger rate cut or more steps to spur credit growth. The cut in GDP growth estimates should not have surprised, as many others have already done it.

This week saw markets inch down a bit as scepticism appeared to have made its way back into investor’s minds. It started with sobering news on the domestic automobile front, although month on month data showed some improvement.

Manufacturing growth continued to shrink showed Purchasing Managers Index (PMI) data, while later in the week the services front offered little respite, with India’s services PMI slipping.

Will the government give in and pull out a personal tax cut from its hat to boost economic growth? That could do a lot to boost and support a consumption revival in the near to medium term. What it'll do to the fiscal deficit though is another matter

While it was a sobering week for the economy, the IRCTC IPO was one bright spot with a hefty oversubscription that shows there is always healthy investor appetite for good quality stocks that are priced right (even better if they are cheap).

This week we analysed these developments, pondered over the impact of the minimum alternative tax (MAT) credit denial to companies who switched over to the lower corporate tax rate and among stocks wondered if Yes Bank had made a bottom.

Here are some key stories from the week that went by, written exclusively for subscribers of Moneycontrol Pro.

Monetary policy review | A small rate cut belies dovish statement

If it walks like a dove, coos like a dove and looks like a dove, it must be a dove. Or is it? The big question after the monetary policy review is this: If the central bank cut its GDP growth estimates for the current financial year by 80 basis points, why lower the policy rate by only 25 basis points?

Read here to see what we found when we read between the lines.

MAT credit fine print: has the market popped the bubbly too soon?

The Indian stock markets had reacted with unbridled joy to the surprise sharp cut in corporate tax rates announced by the finance minister. But the initial euphoria has died down and now nearly half the stocks in the BSE 500 are trading below the prices they were at just before the announcement was made.

What was not clear earlier was the treatment of MAT credit. A circular by the tax authorities clarified the matter, which unfortunately could mean bad news for more stocks. Read more.

Macro Matters | Global markets plunge as manufacturing PMIs slump

The September PMIs show the manufacturing sector continues to shrink in many countries. India is still doing relatively better but that is not good enough.

Read here to know why the state of the global manufacturing sector and what this means for the world’s dependence on services for GDP growth.

Lakshmi Vilas Bank problems show continued weakness in the financial system

The Reserve Bank of India faces a tough choice in considering the merger of Lakshmi Vilas Bank with Indiabulls Housing Finance. The regulator has placed lending restrictions on Lakshmi Vilas citing its weak capital position and high level of sour loans.

Read here to see what this means for the bank, for the merger plans and more importantly, what all this says about RBI’s supervisory capabilities.

Yes Bank: Are all concerns priced in?

Yes Bank has been hitting the headlines for all the wrong reasons ever since the regulator directed its founder Rana Kapoor to step down as CEO. In the last couple of months, the share price corrected by 64 percent to touch Rs 32 before recovering in October 3 trade.

Investors’ loss of confidence and multiple questions on the bank’s asset quality are key culprits. However, the good news is that the stake of the promoter-founder is down to 0.8 percent from 9.6 percent. Is that enough reason to buy the stock? Read more.

Indostar’s price is down by over 50% since debut last year, is that reason enough for a second look?

Primarily a wholesale financier, Indostar forayed into SME lending, vehicle and housing finance to de-risk its loan book. The result of diversification is clearly evident in the changing mix of its loan book in favour of retail assets.

At a time when NBFC stocks have fallen out of favour with investors and that sentiment has not spared even those with strong institutions backing them. Read here to see why our analyst picked up Indostar for a closer look.

IRCTC IPO: A gem available at a discount

IRCTC’s IPO will see investors get a chance to invest in a government company that has made a name for itself in booking railway tickets online, eliminating the need for queuing up for tickets.

While e-ticketing volumes are one part of the story, that’s not all there is to the business. Click here to read about the company and what our analyst makes of its business prospects, a clean balance sheet and valuations.

GuruSpeak | Trade like a monk – wait for your stock to come to you

Market participants, in general, do not like a falling market. The loss in the value of their investment or a bias towards trading only on the long side may be behind this dislike.

It is, however, a falling market which provides opportunities for long term buying. In this piece, veteran trader Naresh Nambisan talks about how falling markets have been his favourite hunting ground. Read more.

Next week, after digesting the monetary policy announcements over the weekend, the market could react some more, and among events that are expected, the Index of Industrial Production numbers will give yet another look at the state of the manufacturing sector while the Fed minutes will be out and give analysts more grist for their mill.

More details can be found in our Business in the Week Ahead section on the Moneycontrol App.