This is a roundup of the day’s top stories in brief.
1. Nifty 50: What’s In, What’s Out
The National Stock Exchange has announced changes to constituents of indices in its semi-annual rejig. The changes will be effective from Sept. 25, 2020.
- Bharti Infratel Ltd. and Zee Entertainment Enterprises Ltd. have been dropped from the benchmark Nifty 50.
- The two will be replaced by Divi's Laboratories Ltd. and SBI Life Insurance Company Ltd.
- NSE has also revised the criteria for selection of companies for the Nifty 500, Nifty 100 and Nifty Midcap 150 indices.
More details here.
2. Exclusive: SBI Plans Relief For Retail Borrowers
State Bank of India is finalising its plan to offer restructuring relief to retail borrowers, after the banking regulator permitted lenders to do so. The restructuring plan will be designed strictly for retail or individual borrowers directly affected by Covid-19, two senior officials at the bank said while speaking on conditions of anonymity.
- Given the large number of retail borrowers that SBI services, the lender will not be able customise the restructuring relief as it might in the case of large corporate borrowers.
- Instead a set of basic rules will be laid down and branch level staff will be empowered to take decisions on accounts that can be restructured, the officials cited earlier said.
- The rules will likely be placed before the bank’s board for approval next week, they added.
Here’s what the relief plan may look like.
3. Why MPC Kept Interest Rates Unchanged
India’s six-member Monetary Policy Committee felt the constraints of its inflation target as it met for the last time in its four-year tenure.
- Minutes of the MPC meet released on Thursday showed that committee members grappled with striking a balance between inflation, which is running higher than its mandate, and growth, which has collapsed as a result of the Covid-19 outbreak.
- The committee kept the benchmark repo rate unchanged at 4% when it announced its decision on Aug. 6.
- While committee members saw some more space for monetary policy support, the elevated inflation readings pushed them to vote for a status quo with an accommodative stance.
Read more to see why the committee remained wary of stagflation and a looming recession.
4. Traffic Jams Are Back!
Traffic snarls, common across India’s metropolitan cities, gave way to deserted roads as the Covid-19 pandemic forced the country into lockdown and citizens into their homes. Even as nationwide restrictions have been gradually lifted, the continued rise in the number of infections has meant that activity levels have remained well below normal.
- In recent weeks though, some indicators of traffic congestion and mobility, have some shown a pick-up suggesting increased activity across metros.
- The TomTom Traffic Index, which measures the additional travel time spent in traffic, has risen across most cities in the last two weeks.
- However, Not all indicators have improved. Community mobility reports by Google, continue to show sluggish activity in a number of segments.
Find out how urban traffic has increased across major Indian cities.
5. Nifty Snaps Three-Day Streak, U.S. Stocks Bounce Back
India’s benchmark indices ended lower after gaining for three-straight days on the back of weak global cues and a stronger U.S. Dollar.
- The S&P BSE Sensex ended 1% lower at 38,220 while the NSE Nifty 50 index managed to hold the mark of 11,300, ending 0.84% lower at 11,312.
- NTPC ended as the top gainer on the Nifty 50 index, with gains of 7%, while Tata Motors was the top laggard, ending 2.6% lower. ICICI Bank, Axis Bank and HDFC were the other major laggards.
- Midcaps and Smallcaps were the outperformers in today's session. The midcap index ended 0.8% higher while the smallcap index ended with gains of 0.66%.
- The Nifty Bank ended as the top laggard with cuts of 1.3%. Other sectoral laggards included the FMCG, I.T. and auto index which fell close to 0.5% each.
Follow the day’s trading action here.
Stocks erased losses as a rebound in technology companies tempered concern that a recovery from the pandemic-induced recession will need more time.
- The tech rally offset a slide in energy and financial companies in the S&P 500.
- The NYSE FANG+ Index climbed amid gains in heavyweights such as Apple Inc. and Facebook Inc. Intel Corp. jumped as it’s entering into accelerated agreements to buy back $10 billion of shares.
- Earlier Thursday, equities slumped as applications for U.S. unemployment benefits unexpectedly increased, with initial jobless claims jumping to more than 1.1 million.
Get your fix of global markets update here.
6. Ominous Sign For Indian Firms
The first-quarter results of India’s largest 100 listed companies indicated a remarkably low operating leverage. And that, according to Credit Suisse, raises the risk of a prolonged demand slowdown.
- Sales for the BSE 100 companies fell nearly 30% year-on-year in the three months ended June and operating profit declined 35%, the research firm said in a report.
- Given the context, the mere 1.4 percentage point decline in the BSE 100 EBIT margin was remarkable, particularly as ex-banks (where PBT is used), there was barely any change, the report said.
- This shows a sharp drop in costs, indicating a low operating leverage. Companies that have a high proportion of variable costs to overall costs are said to have low operating leverage. Such companies have a lower break-even point.
This furthers ‘bar-belling’ in sectors and raises the risk of a prolonged demand slowdown.
7. NPCI And Its ‘NUE’ Competitor
The Reserve Bank of India’s plan to create ‘new umbrella entities’ to develop and push technologies for retail payments, could bring in a number of such organisations over time with their own areas of specialisation.
- Existing entities ranging from stock exchanges to large payments firms could consider launching for-profit ventures under the RBI’s new rules, said industry executives that BloombergQuint spoke with.
- These ventures would likely complement the existing platforms run by National Payment Corporation of India rather than compete with or duplicate them, they said.
But does this dent NPCI’s dominance?
8. Prashant Bhushan’s Firm Stance In The Supreme Court
The sentence hearing in the Advocate Prashant Bhushan contempt case on Thursday ended with the Supreme Court giving him time till Aug. 24 to file an “unconditional apology, if he so desires”. If Bhushan decides to do so, the matter will be listed for Aug. 25, the apex court said in its order.
- Bhushan, earlier during the hearing, declined to apologise for his tweets made in June, for which the top court found him guilty of contempt of court last week.
- “I do not ask for mercy. I do not appeal to magnanimity,” Bhushan read from a written statement during the hearing. “I am here, therefore, to cheerfully submit to any penalty that can lawfully be inflicted upon me for what the Court has determined to be an offence, and what appears to me to be the highest duty of a citizen.”
- Earlier during the hearing, the bench declined to adjourn the arguments on sentencing on a request by Bhushan’s counsel that they intend to file a review petition against the August 14 order.
- The bench, however, assured Bhushan’s side that until the review petition is decided upon, any punishment they impose will not be implemented.
In his defence, Bhushan repeated his stance that the two tweets were a representation of his bona fide belief.
9. A Day Full Of Glitches At Google
Google Inc.’s Gmail service has now been fully restored after a day of being glitched in several parts of the world, with users complaining of issues like inability to log in, add attachments and receive messages.
- On Thursday morning, the G Suite status dashboard, which provides performance information on various Google services, said the company was investigating reports of an issue with Gmail.
- By 4:40 p.m, the company said that the problem with Gmail has been resolved.
- However, the company did not address the status of its other services like Google Meet, Google Drive, Google Chat and Google Keep that were all affected.
- The company has also not specified what the problem was.
Did you face an issue with your Google account today? Get more details here.
10. Covid-19: India Cases Top 28 Lakh
Covid-19 infections in India rushed past the 28-lakh mark as the country reported its highest ever tally of daily cases.
- India added nearly 70,000 new cases in a matter of 24 hours, taking the total tally to over 28.3 lakh.
- This includes nearly 53,000 deaths and nearly 21 lakh patients who have recovered.
- India has over 6.8 lakh active cases.
- Nearly 30% of residents in India’s capital New Delhi have had the coronavirus, according to a seroprevalence study of more than 15,000 people conducted by the state health authorities.
- The prevalence of Covid-19 antibodies has increased to 29.1% in the first week of August from the 23.48% found in the first survey held between June 27 and July 10.
Track all Covid-19 related news and updates for India, here.
Globally, 22.4 million people have been infected by the virus while the death toll stood at 7,88,000.
- Covid-19 continued to spread in Europe, where Germany recorded more than 1,000 new cases for a third consecutive day.
- Spain reported its highest number of daily infections since April.
- French President Emmanuel Macron ruled out another nationwide lockdown, saying the country will rely on local strategies to curb a resurgence of the virus.
Follow the global spread of the virus here.
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