BQuick On April 4: Top 10 Stories In Under 10 Minutes
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Here is a roundup of the day’s top stories in brief.
1. Mukesh Ambani Vs Sunil Mittal
Billionaires Mukesh Ambani and Sunil Bharti Mittal are considering competing bids for a stake in a troubled Indian television network, people with knowledge of the matter told Bloomberg News, as their telecom carriers race for content in the world’s second-biggest mobile market.
- Mittal’s Bharti Airtel Ltd. has started due diligence of Zee Entertainment Enterprises Ltd. and is expected to make a formal proposal soon, one of the people said, asking not to be identified citing confidentiality.
- Ambani’s Reliance Jio Infocomm Ltd. is also considering a bid, the people said.
- Deliberations are preliminary and may not lead to a transaction, they said.
- A representative for Zee said the company doesn’t comment on speculation though it is in “steady dialogue” with potential partners.
- A spokesperson for Bharti said the company is not in the race to acquire the television network.
Here’s how Ambani and Mittal’s content play and war chests match up.
2. MPC Cuts Repo Rate, Maintains Stance
India’s Monetary Policy Committee on Thursday voted to cut its benchmark interest rate for a second consecutive meeting, amidst rising concerns over economic growth.
- The monetary policy stance has been maintained at 'neutral', giving the committee room to move in either direction based on incoming data.
- The MPC voted 4-2 to cut the repo rate by 25 basis points to 6 percent. The reverse repo rate stands reduced to 5.75 percent from 6 percent earlier.
- RBI Deputy Governor Viral Acharya and committee member Chetan Ghate voted for a status quo in rates.
- Five of six members voted to keep the stance unchanged at neutral, while committee member Ravindra Dholakia voted to change the stance to accommodative.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth.MPC Statement
The RBI expects the economy to grow 7.2 percent in FY20 compared to 7 percent in FY19.
3. RBI Mulls Revised Guidelines On Restructuring Loans
The Reserve Bank of India is considering to release a revised set of guidelines on restructuring loans after the Supreme Court decided to strike down its February 2018 circular on stressed assets, Governor Shaktikanta Das said today.
- Das said that the banking regulator’s powers under sections 35AA and 35AB of the Banking Regulations Act, 1949, which enable them to direct banks on restructuring stressed accounts and approaching the National Company Law Tribunal for insolvency proceedings, aren’t under doubt because of the apex court’s judgment.
- The court had only pointed out that these powers must be exercised in a specific manner as stated in law, he said.
- “In light of the Honorable Supreme Court’s order, Reserve Bank of India will take necessary steps including issuance of a revised circular as maybe necessary for expeditious and effective resolution of stressed assets,” Das said.
Bankers are currently in the midst of considerable confusion.
4. Sensex, Bonds, Rupee Drop
Indian equity benchmarks ended lower for the second consecutive trading session after the Reserve Bank of India cut repo rate as per the expectations, but refrained from shifting to a more easy policy stance.
- The S&P BSE Sensex ended 0.49 percent lower at 38,684.
- The NSE Nifty 50 ended at 11,598, down 0.39 percent.
- Seven out of 11 sectoral gauges compiled by the NSE fell, led by the NSE Nifty IT Index’s 1.37 percent decline.
- On the flipside, the NSE Nifty Media Index was the top sectoral gainer, up 1.09 percent.
Follow the day’s trading action here.
- The yield on the most-traded 2028 bonds jumped 10 basis points as the Reserve Bank of India didn’t shift its policy neutral stance to convey aggressive action after delivering its widely expected second rate cut of the year.
- The rupee fell more than 1 percent, the most since Dec. 3, to close at 69.1575 per dollar in Mumbai, ending three days of gains.
U.S. Stocks Mixed; Dollar Gains
U.S. stocks were mixed and the dollar strengthened as investors awaited further news from U.S.-China trade negotiations and key jobs data tomorrow in Washington.
- Boeing propelled the Dow Jones Industrial Average into positive territory for a second day, while Tesla weighed on the Nasdaq after reporting a record decline in first-quarter deliveries.
- Speculation increased that President Donald Trump is likely to announce plans for a future summit meeting with President Xi Jinping of China to resolve remaining trade issues.
- West Texas Intermediate crude fell 0.5 percent to $62.13 a barrel.
Get your daily global markets fix here.
5. Yes Bank Plans $500 Million Share Sale
Yes Bank Ltd. is planning to raise about $500 million through a share sale to institutional investors, people with knowledge of the matter told Bloomberg News.
- The Mumbai-based lender, led by new Chief Executive Officer Ravneet Gill, is talking to potential advisers about the fundraising, said the people, who asked not to be identified because the information is private.
- The bank plans to wait until it reports earnings later this month before it starts marketing any deal, the people said.
Here’s how the offer would help the private lender.
6. Is D-Mart Losing Its Lowest-Price Edge?
The online shopping boom has dented the ability of India’s lowest-price retailer to offer staples to shampoos at cheaper rates.
- D-Mart supermarket chain, operated by billionaire Radhakishan Damani-controlled Avenue Supermarts Ltd., now sells fewer products at lower prices than peers, according to a Kotak Institutional Equities report.
- In October last year, D-Mart offered the cheapest price for 21 of the 30 products under the brokerage’s coverage. The count fell to 12 in March.
- Competition from well-funded online players in the grocery space seems to be on the rise, resulting in some dilution of the retailer’s lowest-price proposition, the report said.
“D-Mart’s core customer base is loyal and less amenable to online shopping.”
7. Walmart’s Unlikely India Allies
Walmart Inc. is making friends in India with the kind of competitors that it spent decades putting out of business in the U.S. -- mom and pop stores.
- These unlikely allies are part of the latest attempt by the Bentonville, Arkansas-based behemoth to crack the country’s giant consumer market, taking on e-commerce arch-rival Amazon.com Inc. and Asia’s richest man, Mukesh Ambani.
- Walmart’s attempt to build an e-commerce business to reach consumers was hampered by new regulations.
- So the U.S. company is now rolling out a plan to more than double its wholesale chain in India over the next four years -- supplying the local storeholders instead of competing with them.
Our single biggest agenda is: ‘How can they become more loyal to us?Krish Iyer, Chief Executive Officer, Walmart’s India
The move intensifies the three-way brawl with Amazon and Ambani.
8. Vijay Mallya May Get Less Pocket Money
Vijay Mallya, the ex-billionaire known as the “king of good times”, may have to prepare for a bout of relative austerity as he fights multiple lawsuits against creditors.
- Mallya’s lawyers told State Bank of India, which is among lenders owed 1.142 billion pounds ($1.5 billion) by his defunct Kingfisher Airlines Ltd., that their client is willing to cut his spending to 29,500 pounds a month, SBI’s lawyers told a London court Wednesday.
- He is currently spending about 18,300 pounds a week.
- The banks are seeking to seize about 258,000 pounds held in Mallya’s ICICI Bank UK Plc account.
- They have accused Mallya of willfully defaulting on debts of Kingfisher Airlines, which was founded in 2005 and folded in 2012.
- The U.K. resident is fighting his extradition to India to face criminal fraud charges.
Mallya continues to live a “lavish lifestyle” in the U.K., according to SBI’s lawyers.
9. Uday Kotak Wants To Know The Future Of Electoral Bonds
Uday Kotak, India’s billionaire banker, has questioned the country’s finance minister about the future of an opaque electoral bonds days after the main opposition party pledged to scrap the controversial instrument if it came to power.
- “Finance minister, we are in political season. Electoral reform has been talked about,” Kotak, founder of Mumbai-based Kotak Mahindra Bank Ltd., asked Arun Jaitley at an industry event in New Delhi on Thursday.
- “In that context, how do you see the path towards electoral reforms and the role of electoral bonds in that journey.”
Jaitley replied to Kotak’s question saying the debate about electoral bonds is “ill informed”.
10. Voting Trends = Crucial Clues For 2019
While opinion polls and surveys may be the closest indicator to how Indians will vote in the upcoming general election, the results of state elections and bypolls over the last five years can give an insight into voter behaviour.
- 2014 was BJP’s ‘honeymoon period’.
- 2015: Bihar and Delhi halted the ‘Modi wave’.
- 2016: BJP made big inroads in the North East, while the importance of regional players were underscored once again.
- 2017: Demonetisation powered BJP’s march in Uttar Pradesh, while Congress improved its tally in Gujarat, and returned to power in Punjab.
- 2018: Congress wrested the three Hindi heartland states
Watch this video to understand what the voting patterns tell us about the 2019 elections.