BQuick On Aug. 30: Top 10 Stories In Under 10 Minutes

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

1. Economic Slowdown Deepens

The Indian economy continued to slow down in the April-June quarter, as private consumption in the economy weakened further.

• Gross domestic product rose by 5 percent in the first quarter of 2019-20 compared to 5.8 percent in the previous quarter.
• In gross value added terms, the economy grew at 4.9 percent in the April-June period, compared to 5.7 percent last quarter.
• A Bloomberg poll of 39 economists had estimated first-quarter GDP growth at 5.7 percent. GVA was estimated at 5.5 percent, according to a poll of 27 economists.
• At 5 percent, GDP growth is the lowest since the fourth quarter of FY13, when it fell to 4.3 percent.
• It is also the first time since then that India has recorded two consecutive quarters of sub 6 percent growth.

Consumption — a bulwark for the Indian economy in recent years — saw pronounced and sharp weakness.

2. PSU Bank Consolidation: Merging Ten Into Four

The government on Friday said that it would merge 10 public sector banks into four, bringing down the number of PSU banks to 12 from 21.

The PSU bank mergers would help in better management of capital, said Finance Minister Nirmala Sitharaman while announcing the proposal as a part of a package of ‘reforms’ for the economy.

According to the plan:

• Punjab National Bank will take over Oriental Bank of Commerce and United Bank
• Canara Bank will take over Syndicate Bank
• Union Bank of India will take over Andhra Bank and Corporation Bank
• Indian Bank will be merged with Allahabad Bank

Find out the fineprint on each of the PSU bank mergers announced today.

3. Friday Gains For India, U.S. Stocks

Indian equity benchmarks ended higher in anticipation of another set of measures from the government to support the slowing economy.

• The S&P BSE Sensex rose 0.71 percent or 264 points to close at 37,332.79.
• The NSE Nifty 50 gained 0.68 percent to 11,023.25.
• The broader markets represented by the NSE Nifty 500 Index rose 0.80 percent.
• "Trade disputes, currency movements and foreign flows could be the prime driver for the markets in the coming weeks," said Sanjeev Zarbade, vice president (PCG Research) at Kotak Securities.
• The market breadth was tilted in favour of buyers.
• All 11 sectoral gauges compiled by NSE traded higher.

Follow the day’s trading action here.

U.S. equities climbed alongside European and Asian stocks on the final trading day of a tumultuous month dominated by the trade war.

• The S&P 500 got off to a positive start on Friday, building on the previous day’s rally, spurred by a pause in the escalation of tariff threats between the U.S. and China.
• Treasuries stayed lower and the dollar slipped after a key measure of inflation came in as expected.
• West Texas Intermediate crude fell 0.7 percent to $56.34 a barrel.

Get your daily fix of global markets here.

4. No Sign Of Auto Revival In August

Sales of cars and two-wheelers showed no signs of revival in August as heavy rains and liquidity constraint kept buyers away ahead of the festival season, according to a BloombergQuint survey of 10 large dealerships across India.

• “Dealers have been offering cash discounts and exchange bonuses but customers are just not looking to buy at the moment,” said Vinkesh Gulati, director of United Automobiles—a dealer of Mahindra & Mahindra Ltd—told BloombergQuint.
• Last week, the government announced several measures to boost auto sales.
• While these measures will boost sentiment in the near term, automakers reeling under the worst slowdown in more than a decade said more sops are required to revive sales.

Here’s why wholesale volumes are expected to fall.

5. DHFL Approves Converting Debt To Equity

The board of directors of Dewan Housing Finance Corporation Ltd. approved the conversion of whole or part of its outstanding debt into shares and securities, besides raising its authorised share capital as part of its resolution plan.

• The housing finance company, which faced tough market conditions since September last year when the collapse of IL&FS Group took place, has been in talks with bankers and other lenders for over a month on a resolution plan.
• The company first informed investors on Aug. 6, that it had formulated a draft resolution plan under the Reserve Bank of India’s June 7 stressed assets resolution framework.

Here are the complete set of decisions approved by DHFL board.

6. Reliance Jio’s Peak Market Share

The wireless carrier controlled by Indian billionaire Mukesh Ambani will probably keep drawing users away from rivals, reaching a market share of as much as 45 percent by fiscal year 2022, from 30 percent as of March, a unit of Fitch Group said.

• Reliance Jio Infocomm Ltd., which has been offering data tariffs that are as much as 30 percent lower than competitors, is in a position to take advantage of intensifying competition, the unit, India Ratings and Research.
• Bharti Airtel and Vodafone idea will probably see their slice of the market drop to between 25 percent and 27 percent, India Ratings predicted.

Any incremental capital expenditure toward spectrum or 5G technology will derail the fragile recovery of the sector.

7. What FPIs Want More Than Tax Relief

India needs serious reforms to revive investor appetite and materialise equity returns, according to Enam Holdings Pvt. Ltd.’s Sridhar Sivaram.

• The government thinks it is the foreign-portfolio-investor issue leading to outflows, but unless the growth comes by, foreign investors’ outlook towards India is unlikely to change, Sivaram told BloombergQuint on a special series—Navigating Through Uncertainty.
• “I don’t think it is the FPI that is the issue. I think it is the growth that is the bigger thing,” he said.

The broader market, according to Sivaram, is throwing up some good investing opportunities.

8. Will Repo Rate Linkage Finally Make Loans Cheaper?

Borrowers faced the full brunt of rate hikes but rarely the full benefit of rate cuts. Repo-linked loans should end this, writes BankBazaar’s Adhil Shetty.

• The transmission of rates, in this case, is absolute, which wasn’t the case with even MCLR-linked loans.
• With rates falling regularly, a repo-linked loan will work to the borrower’s advantage.
• The era where existing customers continue to pay high rates while the lowest rates are reserved for new customers will end.

Borrowers may no longer have to deal with multiple benchmarks.

9. Modi's Principal Secretary Steps Down

Prime Minister Narendra Modi's Principal Secretary Nripendra Misra has decided to step down from his post after serving as a key aide of Modi for over five years.

• Misra has been asked by the Prime Minister to continue for two weeks, principal government spokesperson Sitanshu Kar said on Friday.
• Modi has appointed PK Sinha, who superannuated as cabinet secretary on Friday, as Officer on Special Duty in the PMO.

Misra has been in the PMO since 2014 after BJP-led National Democratic Alliance came to power and Modi became the Prime Minister.

10. The Army Of Women Behind Your Next iPhone

Foxconn, also known as Hon Hai Precision Industry Co., opened its first India factory four years ago. It now operates two assembly plants, with plans to expand those and open two more.

• India has become an important manufacturing base as the Taipei-based company looks to diversify its operations beyond China.
• Succeeding in India has become all the more urgent since U.S. President Donald Trump launched a trade war last year and announced tariffs on thousands of products manufactured in China, including the gadgetry Foxconn makes for Apple Inc., Amazon.com Inc. and others.
• “It’s a good business principle not to put all your eggs in a single basket,” says Josh Foulger, who runs Foxconn’s India operations. “We have to find viable and reliable alternatives. Obviously the alternative location has to be competitive. We can’t put a factory in Mexico for manufacturing mobiles. It might have worked 10 years ago, it just won't work today.”

Here’s a look into the army of women earning Rs 300 per day who could be behind your next iPhone.