This is a roundup of the day’s top stories in brief.
1. Delhi Violence: Police Orders Probe As Death Toll Rises
The Delhi Police transferred northeast Delhi riots probe to the crime branch and formed two Special Investigation Teams to probe the violence, officials said on Thursday. The teams will be headed Deputy Commissioners of Police Joy Tirkey and Rajesh Deo and have four Assistant Commissioner of Police-rank officers each.
- That comes after at least 34 people have died and more than 200 were injured over four days of rioting, according to the most recent tally from the state-run Guru Teg Bahadur Hospital.
- The Delhi High Court, meanwhile, made the Centre a party in the public interest litigation which has sought lodging FIRs and arrests in communal violence in northeast Delhi and gave it four weeks to file a reply.
- Solicitor General Tushar Mehta told the bench that since the Centre is responsible for maintaining law and order in Delhi, it be made a party in the matter, which was allowed by the court.
- Political parties including Congress, NCP, SAD and Samajwadi Party blamed the BJP for the violence with some demanding the resignation of Home Minister Amit Shah.
- Board exams for Class 10 and 12 were also postponed. Exams will go on per schedule from March 2.
Here are the latest news and updates around the Delhi violence.
2. India Vix Near 9-Month High; S&P 500 Falls 10% In Six Days
The Nifty’s futures and options series posted a loss for the second straight month in February.
- In the February series, the 50-stock index fell 3.5 percent, registering its worst F&O series in five months, according to data compiled by BloombergQuint.
- Today, Indian stock indices extended declines for the fifth consecutive trading session.
- The S&P BSE Sensex fell 0.36 percent to close at 39,745.66 and the NSE Nifty 50 fell 0.39 percent to end at 11,633.30.
- Nine out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Meanwhile, volatility in Asia’s third-largest economy spiked to a nine-month high—the highest since elections last year—as traders are worried about worsening economic outlook and the uncertain spread of coronavirus.
Global stocks, government bond yields and crude oil extended their declines, as anxiety over the spread of the coronavirus surges.
- The six-day slide pushed the S&P 500 and Dow Jones Industrial Average indexes down by 10 percent from their all-time highs, a so-called correction.
- The MSCI All-Country World Index fell to the lowest since October, while the Stoxx Europe 600 also entered a correction.
- Goldman Sachs strategists wrote that they expect no profit growth for U.S. companies in 2020 as they update their earnings model to incorporate the likelihood that the virus becomes widespread.
- Haven assets continued to be in demand, and the yen strengthened as yields on 10-year U.S. and Australian government bonds hit fresh record lows.
- West Texas Intermediate crude declined 4.5 percent to $46.54 a barrel, the lowest in 14 months.
Get your daily fix of global markets here.
3. Bank Credit Grows At Slowest Pace In More Than Two Years
Bank credit grew at its slowest pace in more than two years in the latest fortnight even as several high-frequency indicators showed signs of an economic revival.
- Net bank credit in the fortnight ended Feb. 14, rose 6.4 percent—the slowest pace since September 2017—compared with 7.1 percent in the fortnight ended Jan. 31, according to data released by the Reserve Bank of India.
- Growth in deposits, though slowed from 9.9 percent in the previous fortnight, remained above the credit growth at 9.2 percent during the reported period, the RBI data showed.
- Credit growth continues to weaken amid poor demand from industry and retail consumers.
- This comes despite the government’s efforts to push bank credit to ease the flow of funds in the economy and the central bank’s measures to improve transmission to lower interest rates.
Still, there’s a silver lining.
4. Government Mulls Special Loans For Telecom
India is considering options including offering subsidised loans for cash-strapped wireless carriers that owe $13 billion in past dues, people with knowledge of the matter told Bloomberg News.
- The proposals include asking the companies to pay 20 percent of the principal upfront and the rest over a period of 16 years at an interest rate of 0.5 percent over the yield on the benchmark government bond, the officials said, asking not to be identified as the matter is private.
- Another option being explored will require the companies to issue bonds and warrants against the balance amount.
- A third proposal involves banks providing funds against securities issued by the wireless operators.
All three will offer a five-year moratorium on principal and interest payment.
5. Vodafone Idea Says Hike Prices, Save The Sector
Vodafone Idea Ltd. and its promoter Vodafone Group Plc have proposed tariff hikes across offerings to raise revenue that would enable the telecom operator to pay the adjusted gross revenue dues.
- The proposal is part of a letter sent to the Department of Telecommunications and the Telecom Regulatory Authority of India.
- That comes after the Supreme Court threatened to hold India’s beleaguered telecom operators in contempt for not complying with its Oct. 24, order to pay thousands of crores worth of dues within the deadline.
- As part of the letter, the telecom operator asked the new “floor price” to be made effective from Apr. 1, 2020.
- The price hikes will “ensure that sector is fully sustainable and in a position to pay deferred spectrum, and AGR dues and still invest to create world-class networks and services”, the letter said.
Here’s a complete look at what Vodafone Idea has proposed.
6. How Much Are SBI’s Subsidiaries Worth?
SBI Cards & Payment Services Ltd., which opens its initial public offering next week, will become the latest from the State Bank of India stable to enter the public markets. SBI Cards will become the third group company, after SBI itself and SBI Life Insurance Co. Ltd. to become a public listed entity.
India’s largest lender has many more where those came from.
- In total, SBI has nearly 40 non-bank subsidiaries, foreign bank subsidiaries, joint ventures and investments, according to the bank’s annual report for the year ended March 2019.
- The largest of these are SBI Mutual Fund, SBI Cards, SBI Life Insurance, SBI General Insurance and SBI Capital Markets.
- According to internal estimates, the bank’s holding in its subsidiaries and joint ventures is d at around Rs 1.9 lakh crore, said a senior bank official, who spoke on condition of anonymity.
- The initial investment made by the bank in these subsidiaries was only Rs 4,700 crore, this person said.
Read how India’s largest lender is looking to unlock one subsidiary at a time.
7. A ‘Spark’ Of Recovery
India’s electricity demand rose for the first time in six months, suggesting a recovery in industrial production.
- Electricity demand from distribution utilities rose 3.6 percent year-on-year in January, according to a report by Kotak Institutional Equities, which gathered its data from the Central Electricity Authority.
- This marks a recovery from the slump which started in August, when power requirement dropped for the first time in more than two years.
- The increase in demand was led by Maharashtra (8 percent), Andhra Pradesh (7.4 percent and Karnataka (7.7 percent)—all areas of significant industrial and commercial activity, said Debasish Mishra, partner at Deloitte.
This could mean a few things. Find out what.
8. A $21-Billion Plan To Plug Power Leakages
India’s nationwide roll-out of smart power meters, aimed at supporting ailing utilities and bolstering reliable electricity supply, will cost about Rs 1.5 lakh crore ($21 billion), according to a government estimate.
- The prepaid meters are expected to help to improve billing and collection, which are the most basic problems facing the country’s ailing distribution companies, known as discoms.
- These utilities, mostly controlled by their state governments, lose money because of poor billing and theft of power, which often leads to them delaying payments to generators and depriving their customers of reliable supplies.
- The price tag estimated for the smart meters includes hardware, installation and operations, such as the system integration and data analysis, according to Power Secretary Sanjiv Nandan Sahai.
The planned 250 million prepaid meters across the country will raise enough revenue to cover the costs and lead to some savings.
9. PSU Stocks: ‘Deep Value’ Or Value Trap?
Should investors bite into the valuation argument or leave it out in the cold, asks Niraj Shah.
- Smaller PSUs, with the right business model and low float, are creating wealth for shareholders.
- The technical overhang of a supply glut from the CPSE ETF may lift for some large PSUs.
- PSU bulls hope that if business improves and some technical headwinds ease, then maybe the larger ones too may find favour.
But keep in mind, not all public sector companies are showing the promise of growth.
10. Coronavirus: Can We Call It A Pandemic Yet?
Health officials are trying to contain the virus that causes Covid-19, a pneumonia-like illness that can be severe in a minority of patients and spread from others who look healthy.
- Just 11 years after the swine flu outbreak, which infected more than 60 million people in the U.S. alone and took as many as half a million lives worldwide, the new coronavirus is threatening to spark another global epidemic.
- Death rates estimated at around 2 percent are higher than the 0.1 percent for seasonal flu, another lung infection, but far lower than those from severe acute respiratory syndrome, or SARS, the related virus that killed about 9.6 percent of some 8,000 infected.
- Now, researchers and disease trackers are teetering on the brink of calling it a pandemic, a crisis that will likely affect the entire world.
- “We’re on the knife-edge,” said William Schaffner, a Vanderbilt University infectious disease specialist who’s been through the Asian flu, Hong Kong and swine flu pandemics.
Questions over the nature of the virus underscore WHO’s reluctance to call the outbreak a pandemic just yet.
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