This is a roundup of the day’s top stories in brief.
1. Inflation Remains Well Above Comfort Zone
Retail inflation remained above the Monetary Policy Committee’s target for the fifth consecutive month in August, even though it eased marginally compared to a month ago.
CPI inflation was at 6.69% in August compared to a revised estimate of 6.73% in July, according to government data.
Inflation in the food and beverages category rose to 8.29% in August, led by higher prices of pulses, meat and fish.
At 6.7%, inflation remained well above the MPC’s target of 4 (+/-2)%, limiting the room for interest rate cuts.
Here are the inflation internals.
Wholesale inflation in India inched up for the first time since March as prices of primary articles and manufactured products increased.
Inflation as measured by the wholesale price index rose to 0.16% in August compared with a contraction of 0.58% in July.
Core WPI, too, is now back in inflationary territory after 13 straight months of deflation, according to Rahul Bajoria, chief India economist at Barclays.
Still, a large gap between WPI and CPI is expected to persist over the medium term.
2. With Few Takers, Air India Sale Conditions May Be Relaxed
India is proposing to drop a condition that the winning bidder for Air India Ltd. will have to take on $3.3 billion of aircraft debt, people with knowledge of the matter told Bloomberg News.
Prime Minister Narendra Modi’s administration is being advised to drop the rule on concern it will deter buyers, the people said, asking not to be identified as the proposal isn’t public.
A group of bureaucrats has vetted the plan, and under the new proposition, potential buyers will be allowed to bid on the enterprise and not on the entity , the people said.
A renewed attempt to sell Air India, which hasn’t made money since 2007, has been hurt by the pandemic, forcing the government to keep extending a deadline to bid.
More details on Air India’s potential sale here.
3. Ambani Tells Carlyle, SoftBank To Wait In Line
Investor demand for Reliance Industries Ltd.’s retail business is so strong that Carlyle Group Inc. and SoftBank Group Corp. are among those that have been put onto a waiting list, people familiar with the matter told Bloomberg News.
Carlyle and SoftBank have recently expressed interest in investing in Mukesh Ambani’s Reliance Retail Ventures Ltd., said the people, who asked not to be identified as the information is private.
RIL has asked the two companies to wait on the sidelines since the Indian conglomerate is already in advanced talks with other financial investors, the people said.
The largest allocation is reserved for Amazon.com Inc., Bloomberg News reported last week.
Potential investors could still get their hands on Reliance Retail shares should others cut their commitments.
4. Nifty Surrenders Gains; U.S. Stocks Rally
Indian equity markets gave up gains to end lower, after a sell-off in banking stocks offset the gains made by technology majors.
The S&P BSE Sensex ended 0.25% or 97 points lower at 38,756 while the NSE Nifty 50 index fell 0.2% to 11,440, at the close of trade.
The Nifty Bank ended 1.8% or 400 points lower, dragged mainly by State Bank of India, HDFC Bank Ltd., Kotak Mahindra Bank Ltd. and Axis Bank Ltd.
Broader markets outperformed in today's session.
Follow the day’s trading action here.
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5. RBI Reiterates Call For Automated Bad Loan Recognition
The Reserve Bank of India has reiterated that banks must fully automate the classification of a borrower’s account as a non-performing asset and the calculations of provisions to be made against these advances.
The banking regulator said this must be completed by June 2021, according to a notification on its website.
While the automation of asset classification was first prescribed in 2011, the RBI said it has observed processes for NPAs in many banks are not yet fully automated.
Banks are still found to be resorting to manual identification of NPA and over-riding the system generated asset classification in a routine manner, RBI said.
The regulator has now prescribed a tougher framework to ensure that any manual intervention remains limited.
6. Institutional Investors Want Steep Premium For Hexaware Delisting
Institutional investors are seeking a 67% premium to the offer price set by Hexaware Technologies Ltd. to buy back shares for delisting from stock exchanges.
After several attempts at selling the stake held by Baring Private Equity Asia in the software and outsourcing services provider, the promoter has embarked on delisting through reverse book building—a process to discover price—from Sept. 9 to Sept. 15.
The promoter and associate firms—HT Global IT Solutions Holdings Ltd. and HT Global Holdings BV—arrived at a floor price of Rs 264.97 apiece and will accept shares at an indicative offer price of Rs 285 apiece.
These bids are yet to be confirmed. If accepted, this will increase the cost of delisting.
7. Wind World, IBC And The Doctrine Of Frustration
Wind World (India) Ltd., an insolvent wind power company which owns farms across seven states, faced a problem that many will identify with. Long delays in its resolution process even under the supposedly time-bound Insolvency and Bankruptcy Code.
Except in this case, the frustration became the legal ground on which the resolution applicant—Suraksha Asset Reconstruction Company—was allowed to withdraw from the process.
Suraksha received the court’s approval to withdraw its resolution plan under what it is referred to in the legal world as the ‘doctrine of frustration’ under Section 56 of the Indian Contract Act.
On Sept. 8, the Ahmedabad bench of the National Company Law Tribunal allowed Suraksha ARC to withdraw its resolution plan for Wind World without incurring any charges.
The committee of creditors and the the resolution professional now find themselves back to square one.
8. India Looks To Spend An Extra Rs 1.67 Lakh Crore
The government has sought Parliament’s approval to spend additional Rs 1.67 lakh crore in the current financial year.
The total approval sought by the government is to spend Rs 2.35 lakh crore on a gross basis, of which Rs 1.67 lakh crore would involve a net cash outgo, according to Supplementary Demand for Grants tabled on Monday.
The remaining amount would be through savings or reallocation or under-utilisation of funds allocated to other ministries.
The large chunk of this additional spend is for government’s flagship rural employment guarantee scheme MGNREGA.
The additional outgo partly comprises new items under the fiscal support plan, higher health spending and some items that were under-budgeted.
9. India's Covid-19 Tally Tops 48 Lakh
The Covid-19 pandemic continues to spread unabated in India amid concerns that the second-most populous nation may soon be the world's worst-hit.
India added 92,000 confirmed cases in the last 24 hours, taking the total tally to more than 48 lakh, according to health ministry data.
This includes nearly 38 lakh patients who've recovered and more than 79,000 who succumbed to the illness.
Fresh cases in India fell from the record spike reported on Saturday. The number, however, is still higher than what any other nation has added in a single day.
Track news and developments around the Covid-19 outbreak here.
Global coronavirus cases surpassed 2.9 crore leaving over 9.24 lakh dead.
Israel’s cabinet backed a second national lockdown, while gatherings in the U.K. will be restricted as new cases climb at a pace not seen since May.
Iran recorded its biggest jump in daily coronavirus figures since mid-August.
Pfizer Inc.’s chief executive officer said it’s likely the U.S. will deploy a Covid-19 shot before the end of the year, while AstraZeneca Plc restarted testing after its vaccine trial was halted last week.
Follow the global spread of the virus here.
10. Dream11 Gets Fresh Funds Ahead Of IPL
Dream11 raised $225 million in a fresh round of funding, nearly a month after India's biggest fantasy sports platform bagged the Indian Premier League sponsorship and days before the T20 cricketing event kicks off.
The Mumbai-based fantasy sports platform, which allows users to play multiple virtual sports, raised fresh financing from Tiger Global Management, TPG Tech Adjacencies, ChrysCapital and Footpath Ventures through primary and secondary investments, it said in a statement on Monday.
While the company didn't reveal valuations, two people in the know told BloombergQuint on the condition of anonymity that the new round s the 12-year-old firm at around $2.5 billion. The firm was last d at $1.5 billion after a secondary stake purchase by Steadview Capital.
Find out more about the funding round and the company here.
Also Read: What Indians Wore During The Lockdown
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