BQuick On April 16: Top 10 Stories In Under 10 Minutes
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This is a roundup of the day’s top stories in brief.
1. Wipro Rewards Shareholders... Again
Wipro Ltd. announced its third share buyback in four years to reward shareholders.
- The software services provider will repurchase 32.31 crore shares, representing 5.35 percent stake, at Rs 325 apiece.
- That’s a 16 percent premium to the current market price.
- The buyback will be worth about Rs 10,500 crore.
- Wipro’s quarterly profit met analyst expectations even as margin narrowed because of a stronger rupee.
- Net profit fell 1.1 percent over the preceding quarter to Rs 2,483 crore in the January-March period.
The company also cut its revenue guidance.
2. Jet Airways’ Battle For Survival
Lenders to Jet Airways (India) Ltd. are discussing ways to revive the crisis-hit carrier and fresh funds are likely to be infused shortly, officials told PTI.
- Jet Airways management is awaiting clarity on receiving fresh funds after which a decision would be taken on continuing operations.
- Earlier in the day, PTI reported citing unnamed sources, that Jet Airways founder Naresh Goyal has decided not to bid for acquiring a stake in the cash-strapped airline.
Naresh Goyal Should Have Long Seen The Writing On The Wall
Jet Airways’ way of fighting competition was behind the scenes, not in the market place, writes Jitender Bhargava.
- Goyal is a product, in a large way, of the crony capitalism in the country.
- He knew how our systems functioned, how to manipulate the machinery, how to get policies framed which favoured him.
- Then he went up against a new kind of competition, the stiff kind, that IndiGo gave.
- If Goyal had had a baptism by fire, he would have had fire in his belly to fight.
But he wasn’t one of those guys.
3. Over 300 Days, And Still No Resolution In Sight
It is one of India’s largest insolvency cases and is also proving to be among the most complex to resolve.
- The Venugopal Dhoot-promoted Videocon Group, whose flagship Videocon Industries Ltd. was part of the first list of firms to be referred for insolvency in June 2017, has seen no progress in resolution.
- The case was admitted for insolvency proceedings 10 months ago and has stretched well beyond the 270-day deadline set under the Insolvency and Bankruptcy Code.
- Claims filed against two of the largest Videocon Group companies — Videocon Industries and Videocon Telecommunications Ltd. — add up to Rs 88,000 crore.
Here’s what’s causing the delay.
4. Broadcast Business Disruption
Not many people outside parts of northern India may have heard about Dangal TV but it’s now India’s second-most-watched satellite channel.
- That’s the new reality for the nation’s broadcast industry as changed tariff rules sent viewership rankings topsy-turvy.
- Little-known or low-ranked free channels have crept up the charts, while paid channels dropped, show data from the Broadcast Audience Research Council.
- Urban viewers are cutting the cord when cheaper data has made access to online movies and series on streaming services such as Netflix and Amazon Prime easier.
- That hurt the English entertainment genre the most. Rural audiences are happy with free-to-air stations.
Here’s how each genre of channels has fared after the new tariff rules.
5. Indian Benchmarks Hit Record High, U.S. Stocks Rise
Indian equity indices closed at record highs as investors speculated on the outcome of the national elections, while watching for signs of earnings growth.
- The S&P BSE Sensex ended 0.95 percent higher at 39,275.
- The NSE Nifty 50 Index rose 0.83 percent to 11,787.
- The broader market index represented by the NSE Nifty 500 Index ended 0.67 percent higher.
- Seven out of 11 sectoral gauges compiled by the NSE ended higher.
Follow the day’s trading action here.
U.S. stocks edged toward all-time highs as investors sifted through a group of high-profile earnings for clues on the strength of the American economy.
- The S&P 500 clung to a six-month high, though traded off session highs.
- The Nasdaq 100 rose above its all-time closing high, with Netflix Inc. adding 2.5 percent before it reports results later.
- The 10-year Treasury yield reached its highest level since the March Federal Reserve meeting.
- Gold fell 0.5 percent to $1,281.37 an ounce, the weakest in almost 12 weeks.
Get your daily fix of global markets here.
6. Smallcaps To Watch This Earnings Season
A stronger rupee, weak base, higher raw material prices and the equity indices trading near their all-time highs will have a bearing on India Inc.’s March quarter earnings.
- Analysts expect the banking sector’s performance to revive in the fourth quarter.
- While cement, capital goods and infrastructure sectors are expected to outperform due to increase in cement prices and strong order inflows, earnings of information technology, pharmaceuticals, metal and consumer goods sectors may be impacted by a stronger rupee and higher raw material prices.
Here are the 10 small-cap stocks that may report the best and the worst operational performance.
7. Monsoons And Food Prices
The official forecast of a “near-normal” monsoon this year has brought some relief amid concerns over a slowing economy. But will it push inflation higher?
- Retail inflation rose for the second straight month in March, led by an increase in food prices. A lower-than-expected rainfall could push up food prices.
- The projection is biased towards the lower side of the range, indicating a near-normal or below-normal rainfall, said Sonal Varma, chief India economist at Nomura.
- Despite expectations of food inflation’s mean reversion to pre-2016 levels of close to 5 percent, the forecast does not offer clarity on what it means for food inflation, she said.
A favorable mix of price increase and production level could alleviate the farm distress to some extent.
8. The Masala Bond That Stirred Debate
Earlier this month, the Kerala Infrastructure Investment Fund Board raised Rs 2,150 crore through a masala bond issue. This issue of rupee-denominated bonds in the overseas markets was the first time a state government entity borrowed offshore, said a statement from Cyril Amarchand Mangaldas, which advised the entity on the issue of these securities.
While KIIFB had secured approval from the Reserve Bank of India before proceeding with the bond issue, it’s fund raising has raised questions. Among them:
- If a state is not permitted to borrow overseas then should an entity guaranteed by the state be allowed to use that route?
- Should this route become popular, will it lead to under-reporting of fiscal deficit by states as large infrastructure expenditure gets pushed on to quasi-government entities?
Here are the answers to these two burning questions.
9. Will Ericsson’s Victory Be Short-Lived?
The Reliance Communications Ltd. and Ericsson AB saga has gone through many twists and turns–an insolvency application followed by a conditional stay, settlement offer, desperate attempts to sell assets, reneging on the settlement agreement, contempt of court, potential jail term and payment.
But these are three issues that will likely determine the plot:
- Ericsson needs the Supreme Court’s approval to withdraw its original insolvency application. It has gone to the apex court to do so but RCom is arguing against it.
- If the Supreme Court allows insolvency proceedings to continue, Ericsson may have to return Rs 550 crore to RCom because the payment may qualify as a preferential transaction.
- The date of commencement of insolvency against RCom will determine if the Rs 550 crore payment can be covered under Insolvency and Bankruptcy Code’s preferential transaction provisions.
Here's how these issues may play out had Shakespeare written them.
10. Election Battle In The Skies
India’s vast and chaotic election is being fought in the skies with private jets and helicopters.
- For the Bharatiya Janata Party and rival Congress Party, getting senior figures out to as many of the nation’s 90 crore voters as possible is key to swaying the electorate.
- And Modi’s cash-rich BJP booked most of the nation’s available private air fleet as early as three months back, limiting Congress’s mobility, people with direct knowledge of the matter told Bloomberg News.
- India doesn’t have enough choppers and planes to cater to the surging demand, catalysed by polls every five years.
- The BJP has booked as many as 20 private jets and 30 helicopters, while the Congress could manage to book just about a fifth of that, the people said, asking not to be identified as the transactions are confidential.
Such political rivalry has never been witnessed in India before.