Here is a roundup of the day’s top stories in brief.
1. NCLT Admits Jet Airways To Insolvency
The Mumbai bench of the National Company Law Tribunal has admitted Jet Airways (India) Ltd. to insolvency proceedings ordering a resolution professional to take over its assets immediately.
- NCLT has directed the resolution professional to handle the matter with utmost care as the case has national implications.
- The tribunal has also directed the RP to file fortnightly progress reports starting July 5.
- Operational creditors have been directed to file their claims with the resolution professional.
The matter is next listed for July 5. Here’s what the SBI counsel argued in court today.
Curiously, late Thursday afternoon Jet Airways’ shares spiked 150 percent with most of the gains added in the last hour of trade.
2. More Tax Cheer For Middle Class On The Cards
India is considering increasing the personal income tax threshold in next month’s budget, according to people familiar with the matter, as authorities seek to kickstart consumption in the economy.
- Finance Minister Nirmala Sitharaman may raise the tax exemption limit for working-age individuals to Rs 3 lakh of their annual income, up from the current Rs 2.5 lakh.
- The tax measures haven’t been finalised yet.
- Any tax exemptions will add stimulus to an economy that’s slowed sharply this year.
Here’s how much the move will put in the hands of India’s 50 million tax payers.
3. MPC Minutes: Some Consensus, Some Sharp Differences And Ernest Hemingway
India’s six member Monetary Policy Committee, which voted — this time unanimously — to cut the benchmark policy rate for a third time in 2019, agreed that slowing growth in the economy warranted a strong monetary policy response. The members, however, differed on the role that fiscal policy will play in the outlook for inflation and interest rates in the coming period.
- The minutes of the meeting, released on Thursday, paint a picture of a dovish MPC, with most members citing the fall in core inflation and GDP growth as signs of a weakening economy.
- Even previously hawkish committee members — Viral Acharya and Chetan Ghate — acknowledged the need for monetary stimulus, albeit reluctantly.
- RBI Governor Shaktikanta Das was among the stronger proponents of monetary stimulus on the committee and called for “decisive action.”
- While all members agreed on the need to support growth, the committee was sharply split on the emerging fiscal risks.
Read more to find out how Ernest Hemingway helped Viral Acharya vote for a rate cut.
4. Worst Growth in Decade for India’s Corporate Bond Market
There’s yet another sign that India’s push to quickly expand its corporate debt market is faltering, as borrowers turn more to banks already struggling with one of the world’s worst bad debt ratios.
- India’s bond market remains small compared with other major economies, frustrating policy makers who champion it as a way of diffusing credit risks that have stacked up at banks.
- While the amount of outstanding rupee corporate notes, excluding banks, has been expanding for years, the pace of growth has generally been slowing since 2017 and marked its lowest rate in over a decade in May at 9.7 percent, according to a Bloomberg Economics index.
- In contrast, bank lending grew 12.7 percent in the twelve months through May 24, Reserve Bank of India data show.
‘Demand for credit has shifted to banks from the bond market’
5. Sensex, Nifty’s Best Gain In Three Weeks
Indian equity benchmarks clocked their best single-day gains in nearly three weeks.
- The S&P BSE Sensex closed 488 points or 1.25 percent higher at 39,601.63
- The NSE Nifty 50 closed at 11,831.75, up 1.2 percent.
- The broader market index represented by the NSE Nifty 500 Index closed 1.26 percent higher.
- All the eleven sectoral gauges compiled by NSE advanced.
Follow the day’s trading action here.
- One Indian stock fell over 15 percent from two concerns: Chinese soybean imports and an African swine fever outbreak. Find out why.
- DLF says that it can pare its debt by half by March next year. Here’s when it can become debt free.
More market stories to follow...
- Construction companies are bagging more orders and improving financials, suggesting a revival may be on the cards. But why don’t valuations show that yet?
- There are worries that the real estate sector may face a crisis. One property consultant thinks it will only be developer-specific.
U.S. stocks surged to a record while Treasuries extended gains and the dollar slumped as the Federal Reserve’s dovish shift reverberated through markets. Gold rose to the highest in more than five years.
- The benchmark S&P 500 Index surpassed the previous all-time closing high of 2,945.83 set on April 30 and is up more than 17 percent this year.
- The 10-year Treasury yield at one point dropped below 2 percent for the first time since November 2016.
- Oil futures climbed as much as 4.6 percent after Iran said it shot down a U.S. spy drone in its airspace.
Get your fix of global markets action here.
6. Can The Gold Rally Sustain?
For the past six years, there’s been no number more filled with dread for gold bulls than $1,350 an ounce. Barring a few brief spikes, the metal has struggled to break through that level ever since it came off its run-up to $1,900 between 2011 and 2013.
- Thousands of investors believe that $1,350 an ounce is a “resistance level” that gold will struggle to break above.
- As a result, they’re likely to sell hard as the price approaches that point, and change their view of things if it confounds them by decisively moving higher.
It looks like we’re in that territory now. David Fickling questions whether the spurt in gold is just another temporary hike.
7. Apollo Munich Sale A ‘Strategic Exit’
HDFC ERGO General Insurance Co. Ltd. is looking to ramp up its health insurance portfolio, its Chief Executive Officer Ritesh Kumar said a day after its parent agreed to buy a majority stake in Apollo Munich Health Insurance Co. Ltd.
- “Health insurance as a segment is the fastest growing within the general insurance space,” Kumar, also the managing director of HDFC ERGO, told BloombergQuint in an interview.
- While the general insurance market in India is growing at an annualised rate of 17 percent, health insurance, Kumar said, is growing at 24 percent.
- That, according to him, was the “core rationale” behind the HDFC-Apollo Munich merger deal.
While Apollo Hospitals seeks to deleverage its balance sheet, HDFC Ergo is looking at consolidation.
8. How ‘Loss Aversion’ Affects Your Investments
Many investors are not risk averse, they are ‘loss averse’. It makes investors behave irrationally, against their own interests, writes Amit Trivedi.
- Investors reveal that good stocks were sold fast, while the bad ones remained. What explains this?
- Once the stock price goes up, investors fear that it may go down as fast as it went up. Such thinking makes them sell the stocks too soon.
With bad stocks, humans look to avoid pain, one form of which makes investors avoid acknowledging an investment loss at all costs.
9. Indian Telecom’s $84 Billion Dilemma
After racking up $59 billion of net debt to survive a brutal war in the world’s second-biggest phone-services market, some of India’s billionaires are bracing for more as their next battle looms: 5G.
- India seeks to raise $84 billion this year from a sale of airwaves -- most of it for the new technology tipped to revolutionise connectivity.
- That’s posing a conundrum for the carriers controlled by tycoons including Mukesh Ambani, Asia’s wealthiest man.
- Investment would mean more borrowings, but the reward could be revenue streams never seen before.
Operators will soon have to decide how much more pain they can endure for a high-speed wireless network.
10. Did He Invent Bitcoin? Or Is He Lying? Who Knows
At a convention on digital currency, rarely does an audience Q&A session include a question as incendiary as, “Why is this fraud allowed to speak at this conference?” But that’s how a discussion about Bitcoin ended up last year in Seoul.
- The supposed fraud is Craig Wright, an Australian-born technologist who gained notoriety three years ago when he declared himself the inventor of Bitcoin.
- The provocateur is Vitalik Buterin, a baby-faced Russian-Canadian programmer who helped create another popular digital currency called Ether.
- No one disputes Buterin’s role in Ether, but many reject Wright’s claim to be Satoshi Nakamoto, the mysterious genius behind Bitcoin.
Wright is a comic-book supervillain for some in the world of cryptocurrency
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