BQuick On July 24: Top 10 Stories In 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Portfolio Managers To India’s Rich Lost Money In June Quarter
India’s rich lost money in stocks in the first quarter as the broader market declined.
The top 10 portfolio managers handling $6.8 billion for wealthy Indians gave an average negative return of 2.1 percent in the first quarter, according to BloombergQuint’s calculations. Seven out of 10 portfolio managers lost money.
India’s NSE Nifty 50 Index gained nearly 5 percent during the period. But that masks the trend in the broader market with small- and mid-cap indices falling 22 percent and 14 percent during the period. The decline in portfolio managers’ returns was largely driven by their exposure to mid caps.
Read more about the losses incurred by portfolio managers.
2. The Mid-Cap Rout May Be Coming To An End
The NSE Nifty Midcap 100 Index has fallen 12.6 percent so far this year compared with a 5.8 percent gain in the benchmark NSE Nifty 50 Index.
But three key indicators suggest that the mid-cap index may have bottomed out and could even rebound.
- The price ratio of the Nifty Midcap Index and Nifty 50 has now reverted to its mean.
- Mid-caps are no longer as expensive as a year ago. The one-year forward price-to-earnings multiple for the 100-stock gauge is now one standard deviation above the five-year average.
- The mid-cap index is now at a key support level. The current price is close to its 100-week simple moving average.
Analysts are optimistic about a likely rebound as well. “While the last calendar year was great for mid caps, this year we have seen a correction. But expect the mid caps to bounce from current levels after base formation,” said Chandan Taparia, associate vice president at Motilal Oswal Securities.
Read more on why mid-cap stocks might come-off their lows.
3. Sensex, Nifty End At Record Highs; U.S. Equities Rally
Indian equity benchmarks rose for a third straight day to close at record highs as investors expect Indian companies to perform well in the June quarter.
The S&P BSE Sensex Index rose 0.3 percent or 106 points to 36,825 and the NSE Nifty 50 Index climbed 0.45 percent or 50 points to 11,134. “Sensex and Nifty hit fresh highs on earnings optimism,” AK Prabhakar, head of research at IDBI Capital, told BloombergQuint over the phone.
Eight out of 11 sector gauges compiled by National Stock Exchange ended higher led by the NSE Nifty Metal Index’s 3 percent gain. On the flipside, NSE Nifty Private Bank Index was top loser, down 0.3 percent.
Follow the day’s trading action here.
U.S. equities climbed along with European stocks as positive earnings reports boosted investor sentiment, and after China’s efforts to support its economy spurred interest in higher-risk assets across Asia.
The S&P 500 Index opened higher on Tuesday, as the likes of Boeing Co. climbed on strong results. Google parent Alphabet Inc. anchored a big leap in tech stocks after beating analysts’ estimates, sending the Nasdaq 100 Index to a record intraday high. Carmakers and banks were among the biggest winners in the Stocks Europe 600 Index, as PSA Group said subsidiary Opel turned a profit and lender UBS Group AG posted better-than-forecast results.
Get your fix of global markets update here.
4. Asian Paints’ Q1 Profit Beats Estimates
Asian Paints Ltd.’s profit rose for the fourth straight quarter, surpassing street estimates.
The paintmaker’s net profit increased 31 percent year-on-year to Rs 558 crore in the quarter ended June, despite lower other income and higher other expenses. That’s higher than Rs 517-crore consensus estimate of analysts tracked by Bloomberg. Revenue rose 15 percent on a yearly basis to Rs 4,391 crore compared with the Rs 4,433-crore estimate.
The company’s management hailed the GST Council’s decision to reduce taxes on decorative paints from 28 percent to 18 percent. “It should help improve demand from small customers,” noted Managing Director and Chief Executive Officer KBS Anand.
Read this to find out more about Asian Paints’ performance in the June quarter.
5. India May Sell $2.6-Billion NHPC Stake To NTPC
India’s ministries of finance and power are discussing a plan to sell government’s stake in NHPC Ltd. to its state-run peer NTPC Ltd., according to people familiar with the matter.
The government’s 73.67 percent stake in NHPC is worth about 182 billion rupees ($2.6 billion) as per current prices, according to Bloomberg calculations. Talks are at an initial stage and a deal is unlikely to be concluded this fiscal year, although the government plans to complete some formalities before March, the people said. NHPC surged as much as 9.7 percent before closing 3.9 percent higher at 24.15 rupees.
The discussions point to the government’s plans to consolidate state-run energy companies to give them global size and scale, apart from helping it to boost revenue collections and stick to its budget gap target.
Find out more about what this means for NTPC
6. Mukesh Ambani’s Tariff War Could End Only When This Happens
The bruising telecommunications price war unleashed by the entry of India’s richest man into the sector may continue for at least a year or as long as it takes Reliance Jio Infocomm Ltd. to nearly double its user base.
Ambani’s telecom unit “will strive to double subscribers to 400 million before raising prices,” Kunal Agrawal, a Hong Kong-based analyst with Bloomberg Intelligence said in an emailed response to questions. “We expect cut-throat pricing and weak average revenue per user to continue over the next one-to-two years, possibly increasing balance sheet leverage for other domestic telecom incumbents.”
Read more on Reliance Jio’s likely pricing strategy.
7. Can Online Grocer Grofers Turn Into A Consumer Goods Maker?
Online grocer Grofers wants to become a consumer goods maker as it looks to stand out in a crowded market.
“We want to completely move to a 100 percent private label firm in two to three years,” Co-Founder Saurabh Kumar told BloombergQuint. Customers are shifting towards private labels, which account for 25 percent of the revenue for Grofers, he said. “Our strategy is to invest more in private labels, and slowly shift towards them.”
From selling its own tea to detergents and toothpastes, Grofers is betting on low-priced brands. Its products will be about 5 to 50 percent cheaper than the market price of popular brands, Kumar said.
Here’s how Softbank-backed firm wants to go about achieving the transformation.
8. WhatsApp Testing A Feature To Mark Unusual Links As ‘Suspicious’
WhatsApp is testing a new feature to mark dubious messages as ‘suspicious’ on the messaging platform as it continues to look at ways to curb fake news and block spam in India—its biggest market.
The label will automatically apply to messages that have unusual characters in their links or web address, Facebook Inc.-owned WhatsApp said on its website. The feature will alert users in case a spammer is tricking to visit a fake website. The feature is in a beta testing mode and is only available for Android users.
“Spammers may use these character combinations to trick you into tapping on links that appear to go to a legitimate website, but actually take you to a malicious site.”
Find out what else the messaging platform is doing to combat fake news.
9. Tata-Mistry Case: A Tribunal’s Deference To ‘Corporate Democracy’
Much like sovereign democracy, corporate democracy plays to the will of the majority. The majority rule enforces a contractual bargain among shareholders that puts collective decision-making ahead of individual interests. By placing business decisions in the hands of the board of directors, it introduces an element of efficiency. However, what is to prevent a tyranny of the majority that steamrolls minority shareholders?
The Mumbai Bench of the National Company Law Tribunal’s ruling on the Tata-Mistry corporate battle provides an opportune moment to dissect the oppression and mismanagement remedy in the light of the Tribunal’s ruling.
Proponents of corporate democracy may see this as a vindication of the majority rule, as minority shareholders are likely to sight victory only in the rarest of rare circumstances. Is this a desirable situation? Alternatively, is there a dire need to rebalance the interests of shareholders by redesigning the oppression and mismanagement remedy?
For more on this column by Umakanth Varottil, Professor, National University of Singapore click here.
10. This Is The Train Robbery Capital Of The World
Head southeast out of Mexico City for about four hours or so and you will come upon the town of Acultzingo.
It is an impoverished, dusty little place nestled up against the rugged peaks of the Sierra Madre. Most inhabitants work the land for a living. They grow corn and avocados and raise cattle and pigs. They also rob trains. Lots of trains. So many, in fact, that Acultzingo (pronounced ah-coolt-ZEEN-go) is not only the train robbery capital of Mexico but, arguably, of the world.
Over the past year alone, there were 521 crimes committed against cargo trains in the town. And a chunk of those incidents bore no resemblance to the run-of-the-mill petty crime seen in the bigger cities of northern Mexico -- vandalizing a train car or stealing railway signs. No, these were massive, choreographed affairs that often started with a low-tech trick that dates back to the days of the Wild West -- piling rocks up high on the tracks -- and involved small armies of thieves who descended on the derailed cars in waves to cart off the loot.
Find out more about Mexico’s new-age train robbers.