BQuick On Sept. 5: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. 60% Debt Reduction
It’s been a narrow escape for Anil Ambani and his group companies. A tidal wave of debt was about to overwhelm them but Ambani was able to sell a few assets just in time, ensuring the Reliance name remains creditworthy.
- Anil Ambani-led firms are expected to lower debt by nearly 60 percent once they complete the sale of assets.
- The mobile-to-metro conglomerate had a debt of more than Rs 1 lakh crore as of March and an annual interest liability of over Rs 10,000 crore, according to BloombergQuint’s calculations based on company filings.
- That’s expected to fall to Rs 48,645 crore after the asset sales.
Here’s a snapshot of how group entities have sold assets.
2. MPC Member Questions India’s World-Beating Growth
India probably overestimated manufacturing output while calculating economic growth that topped 8 percent in the June quarter, according to a member of the Monetary Policy Committee.
- The new GDP series has mostly replaced the Annual Survey of Industries with corporate financial data for estimating value added manufacturing, according to an article co-authored by Ravindra Dholakia.
- This has resulted in its higher share in GDP and a faster growth rate compared to the older series.
“Does the new series represent a fuller description of the manufacturing value added, or is it an overestimation?” the authors wrote.
Here's why Dholakia, R Nagaraj and Manish Pandya are skeptical about GDP numbers.
3. Indian Markets Decline Again; U.S. Opens Lower
India’s S&P BSE Sensex Index posted its longest losing streak in nearly six months as the rupee weakened to an all-time low.
- Sensex fell 0.37 percent or 140 points to 38,018.
- NSE Nifty 50 Index declined 0.4 percent or 43 points to 11,477.
- Thirteen of 19 sector gauges compiled by BSE ended lower.
- S&P BSE Telecom Index was the worst performer, S&P BSE Metal Index the best.
Follow the day's trading action here.
U.S. stocks opened lower on the back of a decline in European and Asian shares, as enduring pressure in emerging markets intensified concerns of contagion.
- The pound rallied after the British and German governments were said to have abandoned key Brexit demands to potentially ease the path for the U.K. to strike a deal with the European Union.
- The S&P 500 slumped for a second day after the Stoxx Europe 600 Index sunk to its lowest since April before paring the decline.
- West Texas Intermediate crude dipped 1.4 percent to $68.91 a barrel, the lowest in more than a week.
Get your daily fix of global markets action here.
4. Rupee Continues Slide As Global, Domestic Risks Build
The Indian rupee fell to near the 72 mark against the U.S. dollar as a selloff in emerging market currencies and limited intervention from the Reserve Bank of India dragged the unit down further.
- The rupee closed at 71.76/$ on Wednesday - down 0.3 percent compared to the previous close.
- The falling rupee, in turn, pushed up bond yields as investors fear the fallout of weaker currency on inflation and the economy.
- A “deteriorating emerging market risk backdrop” and pressure on current account deficit currencies has led to the rupee hitting record lows, said Nomura Global Markets in a research note.
To understand the impact of rupee depreciation, read this.
5. Analysts Cut Price Targets For Over 50% Of India Stocks In August
Analysts lowered their target prices for more than half of the stocks last month even as the NSE Nifty 50 Index posted its best August since 2014.
- Target prices were cut for 51.5 percent of the 406 stocks tracked by at least five analysts, according to Bloomberg data.
- Analysts raised the forecasts for 40.4 percent stocks, while estimates for 8.1 percent remained unchanged.
- Even though the Nifty gained nearly 3 percent in August, the benchmark entered September on a tepid note.
Here are the biggest stock upgrades and downgrades.
6. When Will The Bleeding Stop In Emerging Markets?
Emerging markets are in pain. Currencies alone are down 13 percent for the year as contagion starts to spread across continents, from Argentina to Indonesia. Bonds and stocks have tumbled. When will the bleeding stop, asks Shuli Ren.
- The U.S. is starting to look rather like an emerging market.
- On a seasonally adjusted basis, the American economy grew 5.4 percent in the second quarter, almost as fast as China.
- Adding to the EM challenges, this American expansion now requires much more dollar funding than before.
Hedge funds are signalling that troubled times will last a while longer.
7. Nearly 400 NBFCs Shut Shop
The Reserve Bank of India is weeding out small non-banking financial companies that have been unable to meet capital requirements, in a bid to clean-up the sector.
- The regulator has been tightening norms for NBFCs in stages since 2014 and the surge in cancellation of licences is a part of that.
- The central bank has cancelled 392 licenses since the beginning of this fiscal year till the end of August, shows data compiled by BloombergQuint based on periodic updates from the regulator.
- Most of these cancellations have taken place in the last two months.
- To be sure, the number of cancellations is a fraction of 11,402 NBFCs that were registered with the RBI as of March 2018.
Read why license cancellations are expected to remain high.
8. Section 377 Verdict Tomorrow
The Supreme Court of India will rule tomorrow on the constitutional validity of the Section 377 of the Indian Penal Code that criminalises homosexuality between consenting adults.
- A five-judge constitution bench headed by Chief Justice of India Dipak Misra heard petitions filed against the colonial-era law.
- The review petition was filed against the Supreme Court’s 2013 ruling that re-criminalised homosexuality, overturning Delhi High Court’s 2009 verdict that had held Section 377 “illegal”.
- The hearing this time saw minimal opposition from the government, which left it to the wisdom of the top court.
- The only challenge came from three Christian groups who opposed it on theological grounds.
Who argued what in the challenge against Section 377.
9. Freedom Of Speech And Protection From Compelled Speech
Does the right to freedom of speech and expression under Article 19(1)(a) of our Constitution include the right not to speak when the government wants you to speak? Abhinav Chandrachud finds that previous judgments of the Supreme Court suggest that a government’s attempts to force citizens to speak will be considered reasonable so long as two conditions are satisfied:
- The condition must not impose a very heavy burden on the speaker. Requiring students to learn the official language of a state is constitutionally permissible, but it is not permissible to make the state language the medium of instruction and to force students to study all their subjects in that language.
- The state’s attempts to compel speech will be considered constitutionally valid so long as the message which the state wants its citizens to carry is informative, educational or useful, unconnected with political propaganda of any kind.
Read more on what the Supreme Court has had to say on 'compelled speech'.
10. Indians’ Love For Teen Patti Is Driving Mobile Gaming Industry
In India, where gambling is illegal in most states, people love to bet on social occasions. That’s turning into serious business.
- Social card games like teen patti, rummy and the likes are moving from physical tables to mobile phones at an "unprecedented" pace, according to a KPMG report.
- Online gaming, mostly through handheld devices, will become larger than radio and music industries combined in the next five years, growing 22 percent a year to Rs 11,880 crore.
“Card games have been part of the Indian tradition for generations,” Dhananjai Hari, vice president of marketing at online gaming site Mad Over Poker, was quoted as saying in the report. “Familiarity with the genre has translated into the massive popularity of online card games as well.”
Find out why the jury on real-money online card gaming is divided.