BQuick On July 30: Top 10 Stories In 10 Minutes
This is a roundup of the day’s top stories in brief.
1. UPI To Get An Upgrade Soon
The second phase of the Unified Payments Interface is set to launch close to the second week of August but without a key feature that many were looking forward to, two people in the know confirmed.
- Recurring payments still not an option due to security concerns.
- UPI 2.0 will allow inward remittances for non-resident Indians.
- Banks will be able provide overdraft facilities to customers through the platform.
- Customers will be allowed to view invoices before approving transaction.
Here’s what’s new in UPI 2.0
2. Taxman May Now Go After Advertising Costs Of Consumer Goods Firms
The Directorate General of Goods and Services Tax Intelligence has initiated its investigation against consumer goods companies for claiming input tax credit on advertisements at point-of-sale display or retail stores, two people aware of the development told BloombergQuint.
- Consumer goods companies advertise products through posters and branded stands, then claim input tax credit for tax paid on these products as advertising expense.
- The companies are not eligible to claim credit for tax paid on these products, according to the taxman.
- No official notice has been issued to these companies till now.
Find out more on who’ll bear the brunt
3. Indian Markets Extend Record Run; U.S. Stocks Fluctuate
Indian equity benchmarks extended the record-breaking spree on the back of better-than-expected June quarter earnings.
- The S&P BSE Sensex Index rose 0.42 percent to 37,494.40.
- The NSE Nifty 50 Index climbed 0.37 percent to 11,319.55.
- Gains were led by Reliance Industries Ltd., which reported strong June quarter earnings on Friday.
- ICICI Bank Ltd. too rose despite an unexpected loss as brokerages maintained 'buy' call.
- Mid- and small-cap shares were in-line with their larger peers.
Follow the day's trading action here.
The rupee is on track to weaken for the sixth straight month in July, it’s longest losing streak in over 16 years. The pressure, however, is easing.
Find out more on why the rupee has weakened.
U.S. stocks were mixed as investors took in the latest corporate earnings reports and prepared for key policy meetings from some of the world’s biggest central banks.
- Dow Jones Industrial Average edged higher after Caterpillar Inc. beat estimates.
- Nasdaq Composite Index lagged behind as traders remain cautious on tech stocks.
- Food and beverage makers weighed on Stoxx Europe 600 Index.
- Treasuries and European bonds sold off before a series of rate decisions.
Get your fix of global markets here.
4. Earnings Update: Axis Bank, HDFC, Tech Mahindra
Axis Bank Ltd. returned to profitability in the April-June period after reporting its first-ever quarterly loss in the previous quarter.
- Net profit fell 46.3 percent to Rs 710 crore.
- Net interest income rose to Rs 5,167 crore from Rs 4,616 crore.
- Gross bad loan ratio fell to 6.52 percent from 6.77 percent in the quarter-ended March
- Net interest margins grew to 3.46 percent.
Read more about the private lender's first quarter earnings.
Housing Development Finance Corporation Ltd.’s profit met estimates in the quarter ended June.
- Net profit rose 53.7 percent to Rs 2,190 crore
- Profit was aided by a Rs 511-crore dividend income from HDFC Bank Ltd.
- Bad loan ratio stood at 1.18 percent compared to 1.11 percent in the March quarter.
- Provisions fell to Rs 19.7 crore from Rs 163.3 crore.
Read more to find why HDFC’s net interest margin declined.
Tech Mahindra Ltd.’s profit met estimates even as it fell for the first time in five quarters.
- Net profit fell 26 percent quarter-on-quarter to Rs 897.8 crore.
- Revenue rose 2.8 percent to Rs 8,276.3 crore.
- Ebit fell 1.4 percent to Rs 1,045 crore.
- Margin contracted to 12.6 percent from 13.2 percent.
- Management said overall business trajectory for 2018-19 is on track.
Read more about Tech Mahindra's quarterly performance.
5. JioPhone Users Have An Insatiable Hunger For Data
Mukesh Ambani’s low-cost feature phone users are addicted to data—even if it means paying more.
JioPhone, which became the best-selling device in its category in just a year of launch, has 25 million users. And each one of them on an average consumes 7 gigabytes of data a month, according to Anshuman Thakur, head of strategy and planning at Reliance Jio Infocomm Ltd.
- Each JioPhone user consumes 10 GB a month on average compared to the industry average of 2 GB.
- Data consumption jumped nearly ninefold since launch.
- Consumer are discovering content on JioPhone, and average daily engagement on the feature phone is over five hours now, at a time when YouTube, WhatsApp and Facebook aren’t available.
- About 90 percent of the JioPhone users have migrated to the Rs 153 a month plan that offers 1.5 GB of data a day.
Read more about how JioPhone users are not averse to paying more.
6. HDFC Bank’s Rs 15,500-Crore Share Sale
HDFC Bank Ltd. today launched a combination of qualified institutional placement and an American Depository Receipts issue, it said in an exchange filing.
- India’s largest lender by market capitalisation is looking to raise Rs 15,500 crore.
- HDFC Bank fixed the floor price at Rs 2,179.1 apiece for the QIP.
- Each ADR will represent three equity shares.
Here are more details from HDFC Bank’s fund raise.
7. Another Asset Quality Review In The Works?
The Reserve Bank of India is in discussions with banks over another pool of stressed assets to check whether banks have classified them appropriately and provisioned adequately against them. The queries from the regulator follow a three-year long process of cleaning up bank balance sheets, which has led to reported bad loans across the banking sector rising to over Rs 10 lakh crore.
- RBI has sent a list of stressed accounts to each bank individually and sought details regarding asset classification and provisioning.
- Lenders are in the process of submitting their responses to the regulators’ queries.
- The RBI will then assess the responses and decide on the future course of action required by the loan accounts.
- The current round of assessment is focused more on provisioning than asset classification.
Read more about how this may trigger higher provisioning.
8. Additional Stamp Duty In Mumbai Has Developers Worried
Developers say the Maharashtra government’s move to levy an additional stamp duty on property transactions to fund infrastructure will hurt home sales in Mumbai even as they try to revive demand with discounts and freebies.
- Maharashtra has proposed to levy a 1 percent surcharge on stamp duty.
- This will make new houses more expensive.
- Housing demand is yet to review from disruption by demonetisation and a new housing law.
- The amount collected will be used to fund infrastructure projects in the city like metro and monorail.
Read more about the potential impact of higher stamp duty
9. The Indian Economic Revival Has Momentum
The Indian economy is showing signs of a recovery in animal spirits, suggesting that the mid-term outlook can weather global trade tensions and emerging market strains.
- A cross section of forward-looking indicators compiled by Bloomberg News show largely positive signs.
- Sentiment in the manufacturing and services sectors rebounded in June, with new orders picking up pace.
- The RBI is optimistic about growth and a narrowing output gap, with the monetary policy committee seeing recovery pushing the inflation higher in coming months.
- The export industry is still recovering from the double blow of a cash ban in late 2016 and the chaotic implementation of GST, introduced last year.
- Credit to various sectors including agriculture has risen 12.3 percent year-on-year, data available as of July show.
- After a dip in March, foreign direct investments picked up pace in April and May.
Find out if India can keep the momentum going.
10. The Spectacular Collapse Of A Private Equity Titan
Days before rubbing elbows with global business titans in Davos in January, Arif Naqvi set out to charm another circle of friends—Gulf Arab tycoons—in a last-ditch attempt to save his Dubai private equity firm. But things were already on the cusp of spiraling out of control. Dogged by allegations Abraaj had mismanaged investors’ money, Dubai’s star financier soon couldn’t pay the rent.
- Naqvi surrendered control of Abraaj in June and it was then reveled that for many years its revenue didn't cover operating costs.
- Abraaj was borrowing to fill the gaps and now owes over $1 billion to creditors.
- The reliance on leverage created a “highly unstable” business model that's unusual for a the private equity industry.
Read more about Abraaj's fall and how it dealt a blow to Dubai's reputation.