. This is a roundup of the day’s top stories in brief.
1. An Ominous Sign For The Stock Markets
Equity mutual funds in India may witness their first monthly net outflows in more than four years as investors continue to cash out to tide over the pandemic-related credit crunch, while others hold off adding more in a rising stock market.
Net withdrawals from stock plans may top Rs 1,000 crore ($134 million) in July, said Nilesh Shah, managing director of Kotak Mahindra Asset Management Co. and chairman of the Association of Mutual Funds in India. That would be the first net outflow since March 2016.
“Some are redeeming to book profits after the rebound and others are selling to meet the cash crunch in their businesses in the absence of bank finance,” Shah said.
The contraction in fund flows are a cautionary tale for India’s $1.9 trillion stock market.
2. Flurry Of Earnings: Who Fared How In June Quarter
IndusInd Bank Ltd.’s quarterly profit took a hit as the private lender safeguarded against a possible rise in bad loans on account of the Covid-19 pandemic.
Net profit fell 67.8% year-on-year to Rs 460.6 crore.
Net interest income, or core income, rose 16.4% to Rs 3,309.2 crore.
The board has approved a capital raising plan through a preferential issue. More details here.
Nestle India Ltd.’s revenue rose marginally even as lower tax aided profit in the quarter ended June, a period when the Covid-19 lockdown disrupted everything from sourcing and production to supply.
Revenue rose 1.7% year-on-year to Rs 3,050 crore.
Net profit of Nestle India rose 11.2% over the year ago to Rs 487 crore.
Find out how Covid-19 disruptions hurt Nestle’s chain.
UltraTech Cement Ltd.'s profit fell in the first full quarter affected by the coronavirus pandemic that froze economic activity.
Net profit declined 38% year-on-year to Rs 797.4 crore.
Revenue declined 33% to Rs 7,633 crore.
But its operational performance managed to beat estimates, aided by cost cuts.
Yes Bank Ltd.’s profit fell by more than half and core income declined in the first full quarter affected by the coronavirus pandemic.
Net profit fell 60% year-on-year to Rs 45.4 crore.
Net interest income fell 16.3% to Rs 1,908 crore.
Read more for the provisioning and asset quality metrics of the private lender.
3. How Airtel Battled Debt, Rivals
India’s second-largest mobile operator’s net debt rose in the year ended March even as it managed to raise $8 billion.
Bharti Airtel Ltd.’s net debt, according to its annual report for 2019-20, including lease obligations rose to Rs 1.18 lakh crore compared with nearly Rs 1.13 lakh crore a year ago.
Excluding the obligations, its debt stood at Rs 88,251.2 crore.
Debt levels, the company said, will continue to remain heightened as it will have to “increase investment in its network to ensure quality of service, continued spends on distribution and maintaining world-class customer service”.
Airtel now expects increase in cost structures ahead of revenues which may impact liquidity.
4. Nifty Jumps, U.S. Stocks Stumble
A recovery in banking stocks propelled the Indian equity markets to reverse Monday's losses and end near the highest point of the trading day.
S&P BSE Sensex ended 1.47% higher at 38,492
NSE Nifty 50 index ended 1.5% higher at 11,300.
42 out of the 50 Nifty constituents ended with gains.
UltraTech Cement Ltd. emerged as the top Nifty gainer, ending 7% higher post its first quarter results.
Follow the day's trading action here.
Related Coverage
FAANG-like valuation for Reliance misplaced, Edelweiss says
Blowout earnings spur the biggest upgrades for India tech since 2013.
U.S. stocks fell as traders assessed a flurry of corporate earnings amid a resurgence in global coronavirus cases.
The S&P 500 trimmed its monthly gain as worse-than-estimated results from McDonald’s Corp., 3M Co. and Harley-Davidson Inc. sent the shares slumping.
Pfizer Inc. climbed after the drugmaker raised its earnings forecast and began a later-stage trial for a coronavirus vaccine with its German partner.
The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020.
Meanwhile, U.S. lawmakers debate another $1 trillion fiscal stimulus package amid speculation the Fed will signal Wednesday that rates will stay near zero for longer.
Bonds rose, while gold retreated after a record-breaking rally.
Get your daily fix of global markets.
5. A New Headache For Zee?
Zee Entertainment Enterprises Ltd.’s auditors have flagged the letter of comfort that the broadcaster issued against borrowings by a related party that eventually defaulted, raising another potential concern for the company that has faced corporate governance issues in the past year and a half.
The matter is already under litigation as Yes Bank Ltd. moved the Bombay High Court to enforce the letter of credit after the default.
But it's another issue that may be construed as a corporate governance matter for the company after pledged promoter shares and related-party transactions.
Incidentally, the latest issue, too, involves related parties.
Shares of Zee Entertainment fell 4% on Monday.
The belief in the market is that more problems might come up in the future.
6. Jaguar Land Rover Gets A New CEO
Jaguar Land Rover named former Renault SA head Thierry Bollore its next chief executive officer to help steer the U.K. carmaker out of a prolonged sales slump that has been exacerbated by the coronavirus pandemic.
Bollore, 57, will take charge of the manufacturer of luxury sports cars and SUVs when Ralf Speth steps down as CEO in September, JLR said in a statement Tuesday.
A former No. 2 at Renault, Bollore rose to the top job after the arrest of Carlos Ghosn in 2018. He was ousted when tensions with partner Nissan Motor Co. came to a head last October.
Speth will become vice chairman and remain on the board of Tata Sons.
The Frenchman is taking the helm as auto demand remains under pressure.
7. Viral Acharya On Modi Government’s U-Turn On Bank Clean-up
The Bharatiya Janata Party-led government promised a cleaner, more independent banking sector when it first took over. For a while, it looked like the government was serious about a banking clean-up.
For a while, it was. It went along with an asset quality review conducted by the Reserve Bank of India and pushed through with the Insolvency and Bankruptcy Code.
But the mood changed and the government started to push for relaxations in banking regulations. Viral Acharya, former deputy governor of the RBI, told BloombergQuint that the change in mood was because of a lack of fiscal space, which meant the government went after credit-driven growth.
Ultimately, they realised that what they wanted was what the previous governments wanted. They wanted banks to be lending left, right and centre. They wanted credit and liquidity taps to be opened up.Viral Acharya, Former Deputy Governor, RBI
Acharya said fiscal management went out of “whack” and accounting policies followed by the government were “appalling”.
8. Should India Print Money To Fight Covid-19?
Should India resort to debt monetisation, or is the cure worse than the disease? Hugo Erken and the Rabobank team study the data.
In times such as these, there is a magic money tree for governments.
The mechanism by which Modern Monetary Theory works is very simple, but there are huge risks involved.
A country can adopt MMT without causing side effects in case it meets three criteria.
Find out what those are, here.
9. India's Covid-19 Tally Nears 15 Lakh
Coronavirus infections in India continue to mount as the country’s total case tally rushes towards the 15-lakh mark.
India added 47,703 fresh cases in 24 hours, taking the total tally to 14.8 lakh, according to the Health Ministry’s 8 a.m. update.
Fresh cases continued to come in at a heightened pace but has not touched the 50,000 mark so far, hovering around it for the last five days.
India’s active cases are likely to hit the 5-lakh mark by tomorrow.
Even as the transmission rate of Covid-19 remains high in India, the pace of recovery has risen too. On Tuesday, India reported the fifth straight day of over 30,000 recoveries.
Track news and developments around the Covid-19 outbreak in India here.
Globally, cases crossed 1.64 crore leaving over 6.54 lakh dead.
The U.S.’s top infectious disease expert, Anthony Fauci, said he was “cautiously optimistic” that the world will have answers about a vaccine by late fall.
A renewed increase in coronavirus infections posed challenges around the world. Following a steady rise in cases in tourism-reliant Spain, Madrid reacted with anger to travel curbs imposed by the U.K.
Follow the global spread of the virus here.
10. Flipkart’s Hyperlocal Push
Walmart Inc.-owned Flipkart has started an instant neighbourhood delivery service as people avoid going outdoors during the pandemic.
Called Flipkart Quick, it offers 90-minute to two-hour delivery across categories, including grocery, mobiles and electronics, and home accessories, according to its statement.
The pilot, starting Bengaluru, is the online retailer's second attempt at instant, local delivery after it shuttered a similar Nearby service in 2016.
The fresh foray comes when demand for instant delivery has shot up as Indians avoid going out amid the coronavirus pandemic.
Flipkart also aims to bring together a network of neighbourhood kirana stores in the next phase of expansion.
RECOMMENDED FOR YOU
POPULAR