BQuick On April 5: Top 10 Stories In Under 10 Minutes

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

1. Lakshmi Vilas Bank, Indiabulls Housing To Merge

The board of The Lakshmi Vilas Bank Ltd. has approved a scheme of amalgamation with Indiabulls Housing Finance Ltd., the two entities said in separate notifications to stock exchanges on Friday.

• For every one share of Rs 10 each, shareholders of Lakshmi Vilas Bank will receive 0.14 equity share of Rs 2 each of Indiabulls Housing Finance, the bank said in its filing.
• The merger will create a large, healthy and diverse asset book, said the bank in its statement.
• It will also allow them to collectively foray into newer businesses that help increase fee income, the bank added.
• “The merger will create a stable low-cost funding in the form of public deposits and expanded distribution franchise,” Indiabulls Finance said in its statement.
• The merger will need the approval of the Reserve Bank of India.

Typically, the regulator does not agree to a bank licence transfer as part of a merger.

2. These Firms May Deliver The Best And Worst Margins

Nearly half of the widely tracked companies listed on Indian bourses are expected to report an expansion in their operating margin for the year ended March 2019, according to Bloomberg data.

• As many as 80 of the 163 companies tracked by at least 15 analysts—excluding those from the banking, financial services and insurance sector—are expected to report higher Ebidta margins for the fiscal.
• Coal India is expected to show the largest margin expansion while Vodafone Idea is expected to show the largest margin contraction.

Here’s the list of companies expected to see the biggest jump in margin.

3. Ulips Hit A Dry Spell

Net inflows into unit-linked insurance plans have shown sluggish growth over the past few years as investors switch to mutual funds.

• Additional yearly inflows into Ulips—for fresh plans bought every year— stood at Rs 790 crore between April and February for financial year 2018-19, according to data shared by Insurance Regulatory and Development Authority of India under the Right to Information Act.
• That compares with Rs 4,942 crore net inflow in 2017-18.
• Flow of funds into Ulips have stagnated over the last five years due to lower returns and falling investment income due to volatility in equity markets.

But it’s not that many people have pulled out of Ulips.

4. A Week Of Gains

Indian equity benchmarks extended gains for the seventh consecutive week, clocking their longest stretch of weekly gains in 14 months.

• The S&P BSE Sensex ended 0.49 percent higher this week to close at 38,862, while the NSE Nifty 50 ended at 11,655 after gaining 0.36 percent this week.
• On Friday, the 31-share index closed 0.46 percent higher at 38,862.
• The Nifty ended 0.59 percent higher at 11,666.
• The market breadth was tilted in favour of buyers.
• Nine out of eleven sectoral gauges compiled by NSE ended higher, led by the NSE Nifty Metal Index’s 1.9 percent gain.

Follow the day’s trading action here.

U.S. stocks climbed toward all-time highs, the dollar strengthened and Treasury yields fell after a report showed the economy is adding jobs with few signs of inflation and President Donald Trump called for the Federal Reserve to cut borrowing rates to sustain growth.

• The S&P 500 index rose for a seventh consecutive day, the longest rally since 2017, and approached the record high reached in September.
• Earlier, global stocks had edged higher while Treasuries slipped following remarks from both China and the U.S. that progress was being made in trade talks.
• U.S. payrolls rose by 196,000 in March, a Labor Department report showed. The median estimate in a Bloomberg survey saw an increase of 177,000 after an initially reported 20,000 gain in February.
• West Texas Intermediate rose 0.3 percent to $62.26 a barrel.

Get your daily fix of global markets here.

5. Jet Airways: Crisis Averted

A major crisis was averted at the cash-starved Jet Airways (India) Ltd. today after Indian Oil Corporation Ltd. resumed fuel supplies to the airline, which was halted earlier in the day due to non-payments.

• The supply, which the state-run oil marketer stopped around noon was restored at around 5 p.m. after the airline assured of payment of dues, the people with knowledge of the matter told PTI.
• Earlier in the day, Jet Airways faced operational disruptions across major airports when IOC refused to refuel its planes without clearing the outstanding amount.

A spokesperson for Jet refused to comment.

6. Growth-Inflation Trade-Off

Persisting high ‘real’ interest rates provide room for some further, moderate, policy easing, writes Saugata Bhattacharya.

• Even with a perfect storm of shocks, inflation is unlikely to breach the 4 (+ 2) percent upper limit of Reserve Bank of India’s inflation target.
• How the growth-inflation trade-off plays out over the next few months will determine future MPC responses.

The next MPC review will probably vote for a pause, assess the election results, the full FY20 budget, the rains, global and domestic activity.

7. Mukesh Ambani’s AI Edge

The chat-bot venture Aakrit Vaish, 32, co-founded with his University of Illinois batchmate nearly ran out of cash about four years ago after an investor backed out at the last minute. Luckily, they found another one just in time, helping Haptik Infotech Pvt. Ltd. survive. The startup will now help power Asia’s richest man’s bid to take on Siri and Alexa in India.

• Reliance Jio Digital Services Ltd., part of billionaire Mukesh Ambani’s telecom venture, bought 87 percent in the company for Rs 700 crore. Haptik founders and employees will hold the rest.
• It’s the biggest such deal involving an artificial intelligence-backed service in India.
• His Reliance Jio Infocomm Ltd., which upended data tariffs in the world's second largest telecom market, offers everything from high-speed data and low-cost phones to online shopping, and music and video streaming services to more than 280 million users.
• Haptik will help add artificial intelligence-powered digital assistants in multiple languages to the company's services to begin with.

Here’s how the technology will be used across Jio’s offerings.

9. Modi Versus Mini-Modi In Odisha

Naveen Patnaik goes into Odisha’s double-header election with a long track record, but faces a Bharatiya Janata Party that’s rapidly on the rise, writes Amitabh Tiwari.

• Prime Minister Narendra Modi and Chief Minister Naveen Patnaik are very similar to each other.
• Both rely on bureaucrats for running their governments and implementing policy decisions.
• Both have towering personalities and each has created a huge fan base that is bigger than their party’s.

Here’s the state of play in Odisha.

10. Ray Dalio Sounds A New Alarm

Ray Dalio, the billionaire founder of the world’s biggest hedge fund, said he believes flaws in American capitalism have created destructive and self-reinforcing gaps in education, social mobility, assets and income -- and the result could be another revolution.

• Writing in a new essay, the Bridgewater Associates co-chairman points to statistics showing the bottom 60 percent of income-earners in the U.S. keep falling further behind the top 40 percent.
• While Dalio, 69, previously has focused on inequality and warned about the dangers of populism, his 18-page treatise goes into more detail about the “existential threats” they present to American society.
• He cites a weaker economy, the loss of competitiveness relative to rival nations and a “high risk of bad conflict.”

Dalio paints a picture of capitalism in crisis.