This is a roundup of the day’s top stories in brief.
1. Legal Trouble Brews For HDFC Bank
A New York-based law firm has initiated an investigation of potential securities claim on behalf of the shareholders of HDFC Bank Ltd. following allegations that the private lender may have “issued materially misleading business information to the investing public”.
- Rosen Law Firm—that according to details on its website represents individual and institutional investors injured by corporate fraud, breaches of fiduciary duty, and other financial wrongdoings—is preparing a securities lawsuit against HDFC Bank, and has invited the lender’s shareholders to join the class action lawsuit, according to a media statement released on Aug. 16.
- The law firm cited media reports on alleged impropriety in the bank’s vehicle financing department and delays in reporting customer data to the Indian unit of Experian Plc, a credit bureau, which drew the attention of the Reserve Bank of India.
The statement highlighted that the bank missed analyst estimates while its asset quality deteriorated. Read more.
2. Why India’s Defence Manufacturers Are Confused
India has released two draft plans over the past few months on acquisition and production of defence equipment to boost domestic manufacturing. Yet, the local industry is confused.
- The draft acquisition policy released in May and the draft policy on local production released over the previous weekend are aimed at making India a defence manufacturing and export hub. But the government also raised foreign direct investment cap to 74% earlier this year, making it easier for overseas firms to set up local subsidiaries.
- That sent conflicting signals to the industry.
- While India’s private defence manufacturers publicly hail the initiative, they privately voice concerns about lack of clarity.
Find out how multiple laws, regulations and policies are creating confusion for Indian companies.
3. Nifty’s Late Recovery, S&P 500’s Relentless Rally
Indian equity markets began the new trading week with gains led by a recovery in banking stocks that bounced off their lows in the half hour of trade.
- The S&P BSE Sensex ended 0.6% higher at 38,099 while the NSE Nifty 50 ended above the mark of 11,250, up 0.72% at 11,259.
- The recovery was led by the banking stocks.
- The Nifty Bank recovered 350 points from its day's low of 21,404 to end 0.3% higher at 21,754.
- Pharma and PSU banking stocks were the laggards in today's session.
- Broader markets were in-tandem with the benchmarks. The Midcap index ended with gains of 0.5% while the smallcap index rose 0.9% at the close of trade.
Follow the day’s trading action here.
U.S. stocks climbed toward an all-time high as a rally in technology companies tempered a slide in banks.
- The S&P 500 took aim at its February closing record, buoyed fresh Chinese stimulus overnight.
- The Nasdaq 100 outperformed as a jump in Tesla Inc. and strong results from online retailer JD.com Inc. powered gains in tech shares.
- The relentless rally in stocks has pushed the S&P 500 up more than 50% from its March lows amid large stimulus injections and better-than-expected economic and earnings data.
Get your fix of global markets update here.
4. The Yoga Guru And The Billionaire: Tales From India’s Bond Market
Billionaire Anil Agarwal’s Vedanta Resources is marketing a dollar bond in a crucial test of investor appetite for Indian junk debt.
- The commodities giant is offering a three-year amortising note with an initial price guidance of around 13.25%, according to a person familiar with the matter.
- The fundraising is critical for Vedanta Resources, whose plans to delist its Indian unit Vedanta Ltd. still face hurdles including getting stock exchange approvals.
The proceeds of the offering will be used to partially fund the privatisation.
First-time bond issuers are rushing into India’s debt market as unprecedented stimulus steps reduce borrowing costs to the cheapest since 2005.
- Yoga guru Baba Ramdev’s Patanjali Ayurved Ltd. and Wipro Enterprises Pvt., part of Indian software tycoon Azim Premji’s empire, are among 91 maiden rupee-note sellers so far this year.
- That’s a rebound from 2019, when investors’ risk aversion amid a credit crunch led to only 61 firms making their bond-market debut in the same period.
The increase in debut bond sales will help add depth to the debt market, providing more choices for investors.
5. Will Hero Lead The Auto Recovery?
India’s largest two-wheeler maker expects demand to revive and is gearing up for the upcoming festival season to boost sales at a time when its peers are grappling with broken supply chains.
- Hero MotoCorp Ltd. is ramping up its supply chain to build inventory at dealerships and hopes that demand in the entry-level and premium motorcycles segments is here to stay.
- “We’re almost back to 80-90% of the pre-Covid levels as far as demand is concerned,” Niranjan Gupta, chief financial officer of Hero MotoCorp, said in a post-earnings call on Friday.
- Gupta agreed that while demand was outstripping supply soon after the lockdown was relaxed, the company’s now optimistic that supply will outstrip demand soon.
A lot is hinging for automakers on the pick-up during the festive season.
6. A 35-Year-Old NBFC’s Fight For Survival
India’s non-bank lenders have seen a double whammy of sorts with the crisis brought on first by the collapse of Infrastructure Leasing & Financial Services Ltd. and now by the outbreak of the Covid-19 pandemic. While larger institutions have found it easier to wade through choppy markets, smaller peers are struggling.
- SREI Infrastructure Finance Ltd., a 35-year-old NBFC which has seen many ups and downs in its lifecycle, is among those who has seen new business stall and liquidity dry up.
- The months of April and May were a complete washout, said Sunil Kanoria, vice chairman at SREI.
- There was a brief respite in June but business slowed again in July following heavy rains and state lockdowns, Kanoria told BloombergQuint over the phone.
Read this BQ Blue Exclusive to see why Kanoria thinks the NBFC business model needs a review.
7. Homebuyers Can’t Initiate Insolvency To Enforce Court Decrees
A decree, granted by the real estate regulator, in favour of a homebuyer cannot be the basis of an insolvency action, the National Company Law Appellate Tribunal has said.
- In doing so, the appellate tribunal has set aside the National Company Law Tribunal's order that allowed initiation of insolvency proceedings against Ansal Properties and Infrastructure Ltd.
- The order implies not all recoveries by homebuyers warrant initiation of insolvency proceedings, Ashoo Gupta, partner at Shardul Amarchand Mangaldas & Co., said.
Here’s what the ruling pointed out and what are the implications.
8. Lawyers In Solidarity With Prashant Bhushan
A group of over 40 lawyers from Delhi and Mumbai have come out in support of Advocate Prashant Bhushan who was found guilty of contempt of court last week.
- The statement says that while some of the signatories did not agree with the content of Bhushan’s tweets, they unanimously believe that the tweets do not qualify as contempt of court.
- The lawyers who are signatories to the letter include Senior Advocates Darius Khambata, Navroze Seervai, Dushyant Dave, Vrinda Grover, former Additional Solicitor General of India AS Chandiok, Chander Uday Singh, Raju Ramachandran, Arvind Datar, Ramji Srinivasan and others.
- This judgment does not restore the authority of the court in the eyes of the public. Rather, it will discourage lawyers from being outspoken, the letter by the lawyers says.
The statement requests the court to not give effect to the judgment until a larger bench has reviewed it.
9. Why India Wants To Claim Kamala Harris
For very different reasons, both Indians and U.S. conservatives are emphasizing Sen. Kamala Harris’s Indian heritage. This shouldn’t be entirely surprising, writes Shruti Rajagopalan.
- Indians have always been quick to appropriate successful members of their diaspora.
- And right-wing commentators and even U.S. President Donald Trump are seeking to spread suspicions about the Democratic vice presidential candidate’s citizenship by emphasizing her mother’s Indian background and father’s Jamaican heritage.
In reality, though, Harris is the very definition of American.
10. Covid-19: Over 50,000 Dead In India
India reached another grim milestone with over 50,000 dead due to the Covid-19 infection, at a time the country is adding over a lakh new cases every two days.
- India added over 57,000 new cases in a matter of 24 hours, taking the total tally to nearly 26.4 lakh. This was the lowest new case additions seen in the last six days.
- This includes nearly 51,000 deaths and more than 19 lakh patients who have recovered.
- India is now fourth among the countries with most deaths behind U.S., Brazil and Mexico.
- The total number of tests for detection of Covid-19 has crossed the 3 crore mark in India.
Track all Covid-19 related news and updates for India, here.
Globally, the virus has now infected over 21.6 million people globally with the death toll over 7,75,000.
- France’s public health agency warned that all of the country’s Covid-19 indicators are trending upward.
- A cluster of infections from giant churches in South Korea is reviving concern the country could again become a hotspot.
- Australia had its deadliest day, and the state of Victoria extended a state of emergency.
Follow the global spread of the virus here.
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