BQuick On August 9: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief
1. Jaypee Infratech Insolvency 2.0
The Supreme Court today ordered a fresh round of bidding for Jaypee Infratech Ltd. A three-judge bench headed by Chief Justice Dipak Misra also ordered the reconstitution of the Committee of Creditors according to new amendments to the Insolvency and Bankruptcy Code that allow homebuyers to be part of the panel.
Here are the highlights of the apex court’s ruling:
- The 180-day insolvency resolution period started afresh today, and fresh invitation of bids will include other bidders in addition to the current three.
- Jaiprakash Associates cannot bid for Jaypee Infratech.
- The Supreme Court allowed RBI to direct banks to initiate insolvency proceedings against Jaiprakash Associates.
- The Rs 750 crore deposited by Jaiprakash Associates for Jaypee Infratech home buyers will be transferred to National Company Law Appellate Tribunal and will be subject to further directions of the tribunal.
Read more on the fresh round of bidding for Jaypee Infratech
2. SEBI Panel Recommends Seeking Powers To Tap Phones
The Securities and Exchange Board of India should seek powers to intercept phone calls, suggested a panel looking into fair market conduct. The panel was led by former Law Secretary TK Viswanathan.
- The regulator should seek direct access instead through an enforcement agency, as seeking call records as evidence to aid its investigations is not enough, the panel said.
- The powers should be equivalent to those given to other regulatory agencies such as the Central Board of Direct Taxes to deal with economic offences, the committee report noted.
- The panel acknowledged that while this would help track repeat offenders, it may not help in one-off cases of unauthorised information sharing.
Read more on the SEBI panel’s recommendations
3. Sensex Ends Above 38,000 For First Time; U.S. Equities Flat
Indian equity benchmarks extended their record breaking spree with S&P BSE Sensex Index closing above the 38,000-mark for the first time.
- Sensex rose 0.36 percent or 137 points to 38,024.
- NSE Nifty 50 Index climbed 0.2 percent or 21 points to a record closing high of 11,471.
- The rise was fuelled by a rally in banking stocks.
- The Indian rupee ended its two-day rising streak closing 0.1 percent lower at 68.68 against the U.S. dollar.
Follow the day’s trading action here
U.S. stocks hovered within striking distance of all-time highs, while Treasuries rose as investors weighed the latest salvos in the trade war with China and sanctions that torpedoed the Russian ruble.
- S&P 500 Index churned towards its January high.
- The Stoxx Europe 600 Index dipped 0.1 percent.
- The greenback climbed, while emerging-market currencies weakened.
- Oil held near a seven-week low.
Get your fix of global markets here
4. Earnings Update: Eicher Motors, Aurobindo Pharma
Eicher Motors Ltd. reported its highest quarterly profit in at least a decade during the April-June period. Yet, it missed estimates.
- Net profit rose 25 percent from the year-ago period to Rs 576.2 crore.
- Revenue rose 27 percent to Rs 2,547 crore, driven by 22.5 percent volume growth for Royal Enfield.
- Earnings before interest, tax, depreciation and amortisation, rose 30 percent to Rs 809 crore.
- Margins expanded 60 basis points to 31.7 percent.
Here’s how Eicher Motors fared in the quarter gone by
Aurobindo Pharma Ltd.’s profit in the quarter ended June missed analysts estimates.
- Net profit fell 12.1 percent from the year-ago period to Rs 456 crore.
- The company’s revenue rose 15.5 percent to Rs 4,250 crore.
- Earnings before interest, tax, depreciation and amortisation fell 7.4 percent to 779 crore.
- Operating margin contracted 460 basis points to 18.3 percent.
For Aurobindo Pharma’s earnings fineprint, click here
5. Two 'Compounding Machines For Long-Term Wealth'
Consumption and financials are two investment themes that are likely to see continued growth, according to Prateek Agrawal, the business head of ASK Investment Managers Pvt. Ltd.
“These sectors are compounding machines for long-term wealth,” Agarwal said in the latest episode of BloombergQuint’s special series Alpha Moguls. Here are the key takeaways from the conversation:
- Fast-moving consumer goods companies will continue to generate strong growth for a long period of time.
- The availability of power, the need for comfort and improving brand and distribution are tailwinds in the contract manufacturing space.
- He is also bullish on the financial sector due to the underlying drop in cost-to-income ratios, technology and benefit of reforms.
Here’s more from Prateek Agarwal on pockets that could emerge winners
6. Will Rising Input Cost Dampen Graphite Electrode Makers’ Stellar Run?
Indian graphite electrode makers HEG Ltd. and Graphite India Ltd. have had a stellar run in the last one year, driven by China’s crackdown on pollution. A limiting factor has emerged now in the form of rising prices of needle coke--the key raw material for graphite electrodes.
That, however, may not be an immediate concern. Here’s why.
- Margins of graphite makers are expected to remain at elevated levels even if they don’t improve, at least in the second quarter ending September, according to IIFL Wealth.
- The legacy contracts have also ended for most companies in the space, which is another positive. “This will improve realisations as new ones will be pegged to higher prices as the companies have started quarterly contracts,” HEG management said.
Here’s what’s working for Indian graphite electrode makers
7. How Ikea Caters To Local Tastes
Ikea spent 12 years studying India and visited 1,000 homes in major cities to see how its people lived. Today, as a few dozen early shoppers walked through the doors as the emporium opened in Hyderabad, the acid test began of whether the furniture giant understands what Indian consumers want.
- Since Indian shoppers aren’t used to assembling their furniture themselves, Ikea is offering to deliver items and install them at people’s homes, if they live nearby.
- Other tweaks to the retailer’s model appear at its 1,000-seat cafeteria, where half the menu items, including samosa and seasoned biryani rice, are Indian favorites.
- The furniture lineup includes more folding chairs and stools -- flexible seating -- for Indian households where relatives tend to pop in.
Read more on how Ikea prepared its first India store
8. Gurumurthy’s Views In Gurumurthy’s Words
S Gurumurthy has been recently appointed to the central board of the Reserve Bank of India as a non-official part-time director. Gurumurthy is not only a well known chartered accountant and political economy commentator, but is also affiliated to the Rashtriya Swayamsevak Sangh.
BloombergQuint compiled some of his views on economy and banking based on newspaper columns and social media posts.
- Gurumurthy was a vocal supporter of demonetisation. He wrote in the New Indian Express that the nation “owes a standing ovation” to Prime Minister Narendra Modi for the bold decision. He continued to support it a year after it looked like it wasn’t a success in bringing back black money.
- He has also supported the MUDRA scheme and said it would've worked better if former RBI governor Raghuram Rajan hadn’t “stonewalled” it.
Here are more of his views on the fiscal deficit and the bad loan mess
9. NDA Candidate Elected Rajya Sabha Deputy Chairman
National Democratic Alliance candidate and Janata Dal (United) member Harivansh Narayan Singh was today elected as Rajya Sabha Deputy Chairman, having defeated the opposition’s BK Hariprasad.
- Singh secured 125 votes, Hariprasad got 105.
- The post of Rajya Sabha deputy chairman had been lying vacant since the retirement of PJ Kurien on July 1 this year.
Is the election a blow for opposition unity? Watch this debate.
10. Data Protection Panel’s Report: The Good And The Not-So-Good
‘The report is like buying new shoes. It’s tight in the beginning but it will become comfortable over a period of time,’ said Justice BN Srikrishna.
Experts that BloombergQuint spoke to lauded the committee’s recommendations on some grounds but also pointed out proposals that could lead to long-term shoe bites.
- Changes to the language of privacy
- Approach on surveillance
- Data portability framework
The Not-So Good
- Report and bill: conflicts
- Data localisation: huge cost, unclear purpose
- Redressal mechanisms
Read expert comments on the Srikrishna committee proposals