BQuick On Aug. 9: Top 10 Stories In Under 10 Minutes

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

1. Factory Output Slows

Growth in India’s industrial output continued to moderate led by weakness in the manufacturing and mining segments.

• The Index of Industrial Production rose by 2 percent in June over last year, compared to an increase of 3.1 percent in May.
• While IIP growth fell, it came in slightly ahead of expectations. Twenty nine economists polled by Bloomberg had forecast June IIP growth at 1.4 percent.
• On a cumulative basis, industrial output rose by 3.6 percent in the first quarter of FY20 as against an increase of 5.1 percent in the same quarter last year.

The numbers only reinforce the evidence of a slowdown emerging from various sectors.

2. Earnings: BPCL, Britannia, GAIL, Hindalco

Bharat Petroleum Corporation Ltd.'s profit in the June-ended quarter more than halved as a fall in oil prices led to inventory loss and lower gains from marketing automobile fuels.

• Net profit declined 65.6 percent sequentially to Rs 1,075 crore.
• Revenue rose 3.1 percent to Rs 76,318 crore.
• Operating profit fell 54.6 percent to Rs 2,180 crore.

Other income too halved, while gross refining margin remained flat.

Britannia Industries Ltd.’s profit fell and missed the lowest analyst estimate in the quarter ended June as consumption slowed in the economy.

• Net profit fell 3.5 percent year-on-year to Rs 249 crore.
• The company reported an exceptional loss of Rs 15.6 crore provided toward voluntary retirement costs.
• Revenue rose 6 percent to Rs 2,700 crore
• Margin contracted to 14.6 percent from 15.3 percent a year ago.

Britannia has tightened its belt in response to the “phase of low growth”.

Hindalco Industries Ltd.’s profit slumped even as its operational performance surpassed estimates, buoyed by its aluminium division.

• The company’s profit-after-tax fell 77 percent to Rs 167 crore.
• Revenue fell 6 percent year-on-year to Rs 10,055 crore.
• Ebitda fell 35 percent to Rs 1,275 crore.

Hindalco said the reduction in equity had no material impact on its earnings.

GAIL (India) Ltd.’s profit met estimates in the quarter ended June.

• Net profit rose 14.72 percent over the preceding quarter to Rs 1,287.53 crore.
• Higher profit also came as several one-offs and foreign exchange losses impacted earnings in the previous quarter.

Revenue in its petrochemicals business fell.

3. Nifty Rises, U.S. Stocks Fall

Indian equity benchmarks closed higher for the second day in a row on optimism that government may drop additional tax on overseas investors.

• The S&P BSE Sensex closed 0.68 percent higher at 37,327.36.
• The NSE Nifty 50 gained 0.70 percent to close at 11,109.65.
• The broader markets represented by the NSE Nifty 500 Index ended 0.75 percent higher.
• The meeting of the foreign investors with the Finance Minister Nirmala Sitharaman scheduled today to ease their tax concerns further boosted the market sentiment, said Ajit Mishra, vice president (Research) at Religare Broking.
• Six of the 11 sectoral gauges compiled by NSE traded higher.

Follow the day’s trading action here.

U.S. stocks fell and Treasuries gained as investors again fretted over an escalation of trade tensions with China.

• Chipmakers led the S&P 500 lower after Bloomberg reported the Trump administration delayed licensing decisions for American companies to restart business with Huawei Technologies, adding to a week of tit-for-tat escalations between the world’s two largest economies.
• The equity benchmark halted a three-day rally that wiped out losses from Monday, when China’s currency devaluation sparked the biggest stock rout of the year. It’s now lower for the week.
• West Texas crude gained 3 percent to $54.12 a barrel.

Get your daily global markets fix here.

4. Indian Economy Suffering A ‘Cardiac Arrest’

The Indian economy is in a “bad shape” and needs more policy support than just sparing foreign investors higher tax surcharge, according to veteran investor Basant Maheshwari.

• “The government cannot look at the markets and ignore the economy as both should be addressed simultaneously,” said the co-founder and partner at Basant Maheshwari Wealth Advisers LLP, which managed assets worth Rs 224 crore as of June.
• “The underlying thesis is the economy has to improve,” he said.
• The measures could be in the form of lower goods and services tax for carmakers to boost sales, Maheshwari added.

Still, he thinks there are pockets of opportunity. Watch the full interview here.

5. Supreme Court Upholds Homebuyers’ Rights

The Supreme Court today rejected a batch of petitions challenging the status of homebuyers as financial creditors under the Insolvency and Bankruptcy Code.

• A bench headed by Justice Rohinton Fali Nariman upheld the amendments introduced in the bankruptcy code that raised the status of homebuyers on a par with lenders.
• This means homebuyers will remain vested with powers such as filing insolvency applications against errant builders and will have a say in the resolution process.
• The petitions were filed by around 140 builders who had argued that homebuyers have been provided other avenues such as approaching the National Consumer Dispute Redressal Commission as well as seek relief under the Real Estate (Regulation and Development) Act.

The government had taken a stand in favour of homebuyers during the hearing.

6. Mumbai’s Largest Slum Redeveloper Looks To Pare Debt

Mumbai’s largest slum redeveloper is looking to sell assets to pare debt at a time the real estate sector is facing a funding crunch.

• Omkar Realtors and Developers Pvt. Ltd. had a consolidated debt of Rs 9,107 crore at the end of March 2018, according to the data on the Ministry of Corporate Affairs’ website.
• The company, however, hasn’t disclosed its latest financials and consolidated debt.
• “As a policy, we cannot give specific financial details,” Gaurav Gupta, director at the real estate developer, told BloombergQuint. “But we have a clear path to reduce debt.”
• That includes selling 2 million square feet of commercial real estate in Andheri in suburban Mumbai. The project spread across 7.5 acres of land is part of the 65 acres of mixed-use township—Omkar International District—coming up on a slum land near Mumbai’s Western Express Highway.

Maroo, however, said the company is undertaking these “strategic moves” so that its fund situation is not stressed.

7. Making Bill Payments, Easier, More Accessible

The Reserve Bank of India’s plan to introduce more billing entities on the Bharat Bill Payments Service rests on expanding the use case for such platforms. While the platform is so far used largely for utility payments, the RBI’s latest decision to allow other categories of billers could mean that consumers will be able to make a wider range of payments from school fees to building society charges using Bharat Bill Pay.

• The BBPS bill payments platform is currently only open for electricity, telecommunications, direct-to-home cable operators, gas and water utilities across the country.
• In its less than two-year existence, the platform has seen transaction value jump from Rs 1,098 crore in FY18 to Rs 9,099 crore in FY19.
• This data reflects completed bill-payments passing through the Bharat Bill Payment Central Unit, for which NPCI is the sole operator.

Here’s how the platform works and how it can expand bill payment’s rise.

8. Auto Slowdown Spurs More Production Cuts

Mahindra & Mahindra Ltd. said on Friday that it will be suspending automobile production for 8-14 days in the ongoing quarter in various plants to align production with demand.

Jamna Auto Industries Ltd., a maker of springs used in vehicle suspension, will also cut production at its plants in August as India’s worst sales slowdown in a decade affected suppliers of paints and tyres to lighting equipment.

• The annual production capacity of Jamna Auto, which has about 70 percent market share in domestic original equipment manufacturing space, is 250,000 million tonnes per annum across nine cities in India.
• Its customers include Ashok Leyland Ltd., General Motors Company Ltd., Mahindra & Mahindra Ltd. and Tata Motors Ltd., among others.

And Jamna Auto is not alone. Some of its customers and peers alike have been cutting production.

9. ‘Fragile’ Outlook For Oil

The outlook for global oil demand is “fragile” amid growing signs of an economic slowdown, which squeezed consumption growth during the first five months of this year to the weakest in a decade, the International Energy Agency said.

• The IEA, which advises major economies, trimmed forecasts for oil-demand growth this year and next, and warned that it may lower the estimates further as the U.S.-China trade conflict drags on.
• World consumption increased by just 520,000 barrels a day from January through May -- about half the rate seen the previous year, and the slowest for the period since 2008, the agency said.
• Brent crude futures slumped into a bear market this week.

The IEA trimmed its estimates for global oil demand growth.