BQuick On Dec. 12: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. CPI Inflation Surges, IIP Falls For Second Month
Retail inflation surged to the highest in over three years in November, led by a steep rise in prices of vegetables, such as onions, and pulses.
- Consumer Price Index inflation jumped to 5.54 percent in November compared to 4.62 percent in October.
- The CPI food index surged to 10 percent compared to 7.89 percent, as vegetable prices increased by 36 percent over last year.
- In November, core inflation remained modest at close to 3.5 percent.
Read about the inflation internals and what it means for the monetary policy here.
India’s industrial output contracted for the second straight month, led by weakness across segments.
- The Index of Industrial Production contracted 3.8 percent over a year ago in October.
- It was, however, better than the estimates and the previous month’s reading.
- The IIP had contracted 4.3 percent in September. And thirty-two economists polled by Bloomberg had forecast IIP to contract by 5 percent in October.
Majority of the manufacturing industry saw a contraction in October.
2. Top Mutual Funds’ November Shopping Basket
Inflows into Indian equity funds shrunk to the lowest in more than three years last month as some investors exited after the nation’s $2.1 trillion market powered to a record despite a faltering economy.
- Stock plans received Rs 1,310 crore ($184 million) in November, according to the Association of Mutual Funds in India.
- The flow compares with Rs 6,000 crore received in October, and is the smallest since June 2016.
- HDFC Mutual Fund, India's largest money manager, held $21 billion in equities with financials being 34 percent of its stock assets. Godrej Consumer, Sun TV, Muthoot Finance were among its top buys,
- ICICI Prudential too remained heavily invested in financials with the sector making up 28 percent of their assets. It bought into newly listed CSB Bank.
3. Metal Stocks Lift Nifty, But Bonds Remain Under Pressure
Indian equity benchmarks closed higher driven by a rally in metal stocks such as Vedanta Ltd., Tata Steel Ltd. and Hindalco Ltd.
- The S&P BSE Sensex rose 0.42 percent or 169.14 points to 40,581.70.
- The NSE Nifty 50 rose 0.52 percent to 11,971.80.
- The broader markets represented by the NSE Nifty 500 Index rose 0.57 percent.
- The Nifty Index may move conclusively beyond 13,000-mark by end of June next year on account of earnings growth, according to Mahantesh Sabarad, head of retail research at SBICAP Securities.
- Ten out of 11 sectoral gauges compiled by NSE traded higher.
Follow the day’s trading action here.
Ujjivan Small Finance Bank Ltd. capped a stellar debut day on the stock exchanges. Shares rose as much as 70 percent after the lender raised funds in the most-subscribed initial public offering of 2019.
Read more about the listing day of the small finance bank and what's behind the enthusiasm in microfinance.
Sovereign Indian bonds fell for a third day, with yields on benchmark 10-year notes touching the highest in more than two months, ahead of the November CPI inflation data release.
- Yields on benchmark 10-year bonds rose 1 basis points to 6.78 percent after surging by 6 bps on Wednesday after S&P Global Ratings warned of a downgrade.
- Yields have climbed 30 bps since Dec. 4, a day before the central bank unexpectedly left interest rates unchanged
Here’s why global funds may have turned cautious on Indian bonds.
4. Lagarde’s Policy Debut, China’s Signal And U.S. Stocks Rise On ‘Big’ Trade Deal
The European Central Bank kept monetary stimulus unchanged at President Christine Lagarde’s first policy meeting, shifting the focus to when she’ll announce her review of the institution’s strategy for safeguarding the euro-zone economy.
- The ECB kept its deposit rate at a record-low minus 0.5 percent, and bond purchases at 20 billion euros ($22 billion) a month, sticking to a controversial package unveiled in September.
- Lagarde also said the upcoming strategic review will start some time in January and will conclude by the end of next year. The last such review was in 2003.
Lagarde said there are signs that the growth slowdown is stablising.
The Chinese government said it would improve the effectiveness of fiscal policy in 2020, while monetary settings remain “prudent,” signaling a fine-tuning of support measures as the world’s second largest economy slows.
- The Communist Party’s annual economic planning meeting declared that the government would maintain economic growth next year within a “reasonable range,” according to a summary of decisions carried by state media.
The government and central bank will also ensure reasonably ample liquidity.
U.S. stocks rose after President Donald Trump said he’s close to a “big deal” on a trade ahead of a tariff deadline. European bonds climbed as policy makers kept rates unchanged.
- The S&P 500 Index jumped 0.4 percent as of 9:42 a.m. New York time.
- The Stoxx Europe 600 Index rose 0.3 percent.
- The euro gained 0.1 percent to $1.114.
- West Texas Intermediate crude climbed 0.2 percent to $58.86 a barrel.
Get your fix of global market update.
5. Wealth Creators Vs Wealth Destroyers
Indian markets are on track for their longest winning streak since 2007, gaining for a fourth successive year and shrugging off concerns over falling GDP growth, a non-bank lending crisis and uncertainty about the U.S.-China trade war.
- Still, more than half of the stocks lost money as the sentiment in 2019 swung between extreme optimism and pessimism.
- While the Sensex gained 12 percent, it was driven by a few heavyweights even as the broader market declined.
- That’s the second straight year of lacklustre performance for stocks with just four mega wealth creators or stocks that doubled investor money.
- Of the 169 companies that returned gains, more than a third (58 companies) underperformed the benchmark S&P BSE Sensex’s 11.9 percent rise. And just four doubled investor money.
Find out which were the best and worst Indian stocks in 2019.
6. Indian Government’s Double GST Trouble
Slowing Goods and Services Tax revenue collection has substantially increased the compensation the central government pays to states for revenue loss on account of the nation-wide implementation of the indirect tax.
- In April-July, the Centre paid states Rs 45,745 crore in compensation—that’s a 143 percent jump over the Rs 18,829 crore paid in the same period last year, according to a report issued by the Parliamentary Standing Committee on Finance.
- The total GST compensation to states was Rs 17,789 crore in April-May, and Rs 27,956 crore in June-July, showing a year-on-year increase of 356 percent and 87 percent, respectively.
- This makes it clear that due to lower overall GST collections, the states’ GST revenue through state GST and integrated GST is also low and hence the compensation is much higher than in the previous year.
So how will the government fund compensation amid lower collections?
7. Ghost Of Nirav Modi Scam Still Haunts Diamond Makers
When Avdhesh Pandey reported for work five months ago at one of the thousands of diamond polishing factories in Surat, he found the doors were locked. The owner had fled overnight without informing his 40 workers.
- Pandey is a victim of a severe slump that’s taken hold in India’s gems and jewellery industry, a key sector of the economy employing almost 50 lakh workers.
- It’s the latest pillar of the economy to wobble, as a funding crisis at home hurts everyone from carmakers to retailers.
- For the gems industry though, it’s been made worse by an alleged $2 billion fraud involving diamond mogul Nirav Modi.
- Banks have been scared off from lending to jewellers after the scandal broke, with credit to the sector down 14 percent in October from March 2018, around the time the Modi fraud was discovered.
Diamond makers have seen slowdowns before. But none like this.
8. Data Protection Bill: Localisation Watered Down
One of the most keenly watched and debated provisions in the Personal Data Protection Bill was data localisation.
- The bill makes it clear that personal data can be transferred outside India, subject to fulfillment of certain conditions.
- It also provides for different methods of transfer depending upon the class such data fall into—sensitive and critical personal data.
Read the third part in the series of BloombergQuint’s coverage of the Personal Data Protection Bill, 2019.
9. Financial Plans For Ageing Parents
While improved medical care has improved the quality of life in old age, it also means longer time spent in medical care, writes Renu Maheshwari.
- Subsequently, the cost of old age care has gone up.
- Today, caring for elders should be treated as a financial goal.
- Holistic planning along with smart product selection can keep their lives the family’s financial planning stress-free.
10. Assam Rises In Defiance Of Citizenship Amendment Bill
Angry protestors took to the streets for a third day in many parts of the country to oppose the controversial Citizenship Amendment Bill which was passed by the Parliament yesterday.
- Assam, the hotbed of the anti-citizenship amendment bill protests, defied a curfew with protestors staging flag marches and clashing with the police force.
- The police open fired in Lalung Gaon in Guwahati after protesters hurled stones at its personnel.
- Guwahati resembled a garrison town with Army, paramilitary and state police personnel stationed in every nook and corner as frenzied mobs blocked roads with burning tyres.
- Prime Minister Narendra Modi appealed for calm and insisted his government was committed to safeguarding their rights.
- Airlines cancelled flights to Assam, while a scheduled football game was postponed.
- In Tripura, too, schools and colleges remained shut during an agitation.
- Protests were also held in New Delhi and Madhya Pradesh.
- Meanwhile, Bangladesh Foreign Minister cancelled his visit to India after calling “untrue” Home Minister Amit Shah's comments on persecution of minorities in Bangladesh.
Follow the developments here.