Door handles move along a conveyor in an infrared oven at a factory in Aligarh, Uttar Pradesh. (Photographer: Udit Kulshrestha/Bloomberg)

BQuick July 12: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. Sensex Closes At Record High

India's S&P BSE Sensex closed at a record high led by a rally in Reliance Industries Ltd. But the broader markets declined.

The S&P BSE Sensex rose 0.8 percent or 383 points to 36,548 and the NSE Nifty 50 index climbed 0.7 percent or 75 points to 11,023.

The rally in today’s session was led by Reliance after a surge in its shares made it India's second company to enter the $100 billion club this year, a feat which the Mukesh Ambani-led firm reclaimed after a decade. However, the broader markets came under selling pressure with the Nifty Midcap 100 index declining 0.4 percent and Nifty Smallcap 100 index slipping 0.2 percent.

Read an hour-by-hour account of the day’s trading action in India here.
Global Markets Update:
Stocks Rally as Trade Nerves Settle
And here’s why the
rout in commodities can no longer be ignored

2. Reliance Industries Back In $100 Billion Club

India now has two companies that are valued over $100 billion.

Nearly three months after Tata Consultancy Services Ltd. became India’s first information technology major to breach the $100-billion mark in market capitalisation, Reliance Industries’ market value crossed the milestone for the first time in the last 10 years.

The country’s largest oil-to-retail conglomerate had last hit $100 billion in market capitalisation on Jan. 18, 2008. The latest surge started with the launch of Reliance Jio Infocomm Ltd. in September 2016 that disrupted India’s telecom industry with cheap data. RIL’s market capitalisation has since doubled.

The rally increased Ambani’s wealth to more than $42 billion, according to Bloomberg Billionaires Index. India’s richest man owns close to 47 percent in RIL—the owner of the world’s largest oil refining complex. The oil explorer and refiner scaled the $100 billion valuation peak despite the rupee depreciating 7.5 percent against the U.S. dollar this year.

BQuick July 12: Top 10 Stories In Under 10 Minutes

3. CPI Rises Less Than Expected In June But Core Inflation Jumps

India’s retail prices rose at a slower than expected pace in June as food prices rose modestly. Core inflation, however, jumped more than expected suggesting that higher input costs are being passed on due to steady demand conditions.

Consumer price inflation stood at 5 percent in June, compared with 4.87 percent in May, according to data released by the Central Statistics Office. Inflation had fallen to a low of 1.46 percent in June last year, adding an adverse base effect. Factoring that in, economists polled by Bloomberg had estimated CPI inflation at 5.29 percent in June.

The lower than expected reading is in line with the monetary policy committee’s view that retail inflation will be near 4.8-4.9 percent in the first half of the year and at 4.7 percent in the second half of the year.

Here’s more on the data and why inflation internals are not comforting.

4. India’s Industrial Output Growth At Seven-Month Low In May

After gathering pace in April, India’s industrial activity declined sharply in May mainly due to a slowdown in manufacturing activity.

The index of industrial production rose 3.2 percent year-on-year in May, compared to a revised 4.8 percent in April, data released by the Ministry of Statistics and Programme Implementation showed. A Bloomberg poll of economists had projected a 4.4 percent growth.

Key Highlights:

  • Manufacturing sector output grew 2.8 percent in May compared to a 5.2 percent rise in April.
  • Electricity generation grew 4.2 percent compared to a 2.1 percent increase in April.
  • Mining activity rose 5.7 percent compared with a 5.1 percent growth in April.

Here’s more on what led to the sharp decline this month.

5. Taxman Goes After Discounts On Toothpastes And Shampoos

Companies may soon find it less lucrative to lure customers with that 25 percent extra shampoo in a bottle at no additional cost or a one-plus-one-free pack of cookies. If the taxman has his way.

The Central Board of Indirect Taxes and Customs may ask the makers of fast-moving consumer goods to pay tax on free products or extra grammage offered under promotional schemes, a senior official told BloombergQuint requesting anonymity.

Giving a product free leads to loss of revenue for the government, the official said. While no goods and services tax is paid on the freebies, the FMCG company still claims credit for taxes paid on manufacturing inputs, he said.

But FMCG companies have taken a different view, said Ritesh Kanodia, partner at tax consultancy Dhruva Advisors. What is being labelled as “free” is actually a reduction in transaction value, which the law doesn’t bar, he explained. “Same is the case for extra grammage. A company can choose to sell 500g of oil for Rs 100 or 500g plus 250g for Rs 100. GST is still charged on the gross value.”

Detailed analysis of this exclusive story here.

6. Idea Cellular Must Backstop $2-Billion Spectrum Liabilities For Vodafone Merger

The Department of Telecommunications wants Idea Cellular Ltd. to provide bank guarantees and payments worth more than Rs 13,600 crore (about $2 billion) for Vodafone India Ltd.’s spectrum payments to approve their merger to create India’s largest telecom operator.

The merged entity will also have to reduce its market share based on adjusted gross revenue in Kerala, Maharashtra and Gujarat to under 50 percent within one year from date of approval, according to the department’s letter to Idea Cellular. BloombergQuint has obtained a copy of the letter.

The conditions have to be satisfied before the final nod comes through, newswire PTI reported quoting an unnamed senior official. Idea Cellular declined to comment on BloombergQuint’s emailed queries.

For more on the conditions set by the department read this.

Meanwhile, RCom has called the DoT’s stand on spectrum discriminatory. Read this to know why.

7. Theresa May Unveils Blueprint For Soft Brexit

Theresa May released the most contentious document of her two-year premiership on Thursday, vowing to push through her plan to keep the U.K. closely tied to the European Union single market after Brexit.

Despite the resignation of two pro-Brexit Cabinet ministers and a growing rebellion from within her own party, May published a 98-page “white paper” setting out in detail the deep trading partnership the U.K. wants with the EU.

At its heart is a proposal for a new U.K.-EU “free trade area,” with interlinked customs regimes, and identical regulations for industrial goods and agri-food. While there would be “no tariffs on any goods,” the U.K.’s vast services sector will suffer significant disruption. Banks in particular will lose their current access to the EU market, as the government gives up on its earlier plan for both sides to recognize each other’s regulations.

BQuick July 12: Top 10 Stories In Under 10 Minutes

8. Temasek Holdings Invests $1.5 Billion In India Over Three Months

Temasek Holdings Pvt. Ltd., a sovereign wealth fund of the Government of Singapore, has invested close to $1.5 billion in India over the last three months.

The firm wants to continue investing in the country, increase its India exposure in absolute terms and as a share of its portfolio, said Rohit Sipahimalani, joint head of the wealth fund’s portfolio strategy and risk group. “We see India as the fastest growing large economy in the world,” he told BloombergQuint in an interview.

Watch the full interview here.

9. Gujarat’s Power Deficit Hits Seven-Year High This Summer

This summer, India’s power sector stress hurt one of the nation’s most industrialised states: Gujarat

Prime Minister Narendra Modi’s home state couldn’t meet the peak demand for the first time in seven years due to falling output at stressed plants. The deficit, which usually rises in summer, hit 7 percent in May—the highest since 7.5 percent in 2011, according to data by the Central Electricity Authority.

Gujarat’s power generation fell 15 percent over the year-ago month to 7,133 gigawatts in May. That was largely due to non-availability of power from Adani Power Ltd. and Essar Power Ltd., Pankaj Joshi, managing director at Gujarat Urja Vikas Nigam Ltd., said in response to BloombergQuint’s text messages. The shortfall was met by purchasing power under “bilateral arrangement and from power exchanges”.

Here’s more on Gujarat’s power problems. Here’s a quick update on the savings due to UDAY. Read this for an overview of the power crisis in India.

10. Must Reads

Watching Mukesh Ambani unveil the next version of his digital plan at the Reliance Industries Annual General Meeting a few days ago, was a moment that was both exciting as well as déjà vu. In 1999, when I was approached by the Ambanis to be a part of their planned digital foray, I remember Mukesh telling me what his overarching vision of a converged world was. To say it was ambitious and futuristic is an understatement. Having spent over three decades in media and entertainment, and having done some path-breaking stuff myself, I not only connected with him but also told him of how I foresaw the space in the new millennium. It was a matter of weeks—Mukesh Ambani has an uncanny ability to convince even the die-hard skeptic—before I decided to shut Plus Channel, India’s first integrated media and entertainment company which I had founded, and come aboard the Reliance juggernaut as chairman of Reliance Entertainment.

The vision then, as it is now, was to straddle all segments of the digital value chain and the route we selected was wired broadband.

BQuick July 12: Top 10 Stories In Under 10 Minutes