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 Tumbles; IIP Jumps

Consumer price inflation fell to its lowest in 17 months in November as food prices continued to decline and lower crude costs brought down fuel inflation.

• Retail inflation stood at 2.33 percent in November compared with 3.31 percent in October, the government data released on Wednesday showed.
• A Bloomberg poll of 35 economists had estimated inflation at 2.56 percent for November.
• Inflation is at its lowest since June 2017.

Here are the inflation internals.

India’s industrial production growth rose sharply in October getting a boost from demand ahead of the festival season.

• The Index of Industrial Production rose 8.1 percent over last year in October, compared with a revised 4.5 percent growth in July, data released by the Ministry of Statistics and Programme Implementation showed.
• That’s the fastest since November 2017.

Here’s a breakdown of which sectors saw output rise the most.

2. Das Promises To Protect RBI’s Autonomy

Each governor brings along his touch to the Reserve Bank of India. Bimal Jalan was seen as quiet and pragmatic. YV Reddy had a way with words, leaving you wondering about the real meaning of what he said. D Subbarao was precise and concise. Raghuram Rajan took a professorial approach to many of the questions posed to him. Urjit Patel’s answers were prepared and to-the-point. In comes Shaktikanta Das.

• After taking over on Wednesday morning, without the customary picture of the handover ceremony, Das quickly called for a press conference.
• Das, used to all the flashbulbs and shout outs from photographers to pose, seemed ready to take all questions but gave away little in his answers.
• Das started by saying that he will uphold the credibility and the autonomy of the Reserve Bank of India.
• However, he added that “every institution has its autonomy but also has to be accountable”.
• Das also stressed on the need for consultations with stakeholders.

Consultations with bankers are also on the agenda.

3. Kotak’s Challenge To RBI’s Power

Earlier this week, private sector lender Kotak Mahindra Bank Ltd. moved Bombay High Court after the Reserve Bank of India restricted it from reducing promoter holding using preference shares. If successful, Kotak’s petition could force a rethink of the ownership restrictions that have governed Indian banks for decades.

• The petition came ahead of a Dec. 31 deadline given to the bank to reduce promoter shareholding from the current 29.7 percent to 20 percent. The bank was hoping to meet this requirement by issuing preference shares but the regulator said no.
• However, Kotak is not just challenging the RBI’s disapproval of the use of preference shares in reducing promoter shareholding.
• The petition, a copy of which has been seen by BloombergQuint, shows that the lender is challenging whether the RBI has the powers to dictate promoter shareholding.
• The petition argues that there is no provision in the Banking Regulation Act, 1949, which makes a reference to the level of promoter shareholding allowed in a bank.

Here are the other arguments made in the petition.

4. SEBI Board Meet Decisions

The market regulator’s board today approved a slew of measures at its meeting that range from easier rules for clubbing foreign portfolio investment limits to allowing mutual funds to segregate illiquid and distressed assets.

• Now clubbing of investment limit for FPIs will be on the basis of common ownership of more than 50 percent or common control. This is not applicable to public retail funds.
• SEBI also allowed mutual funds to create segregated portfolios of debt and money market instruments in case of credit events.
• It has widened the scope of offer-for-sale allowing companies with market capitalisation of Rs 1,000 crore and above to use the mechanism.

Here are the other key decisions SEBI announced.

5. Nifty’s Two-Day Rally

Indian equity benchmarks extended gains and posted their best two-day rally since Oct. 15 as investors welcomed a quick appointment of a central bank governor who’s expected to shift away from a hawkish view.

• The S&P BSE Sensex Index rose 1.8 percent or 629 points to 35,779.
• The NSE Nifty 50 Index climbed 1.8 percent or 188 points to 10,738.
• Brokerages expect the appointment of Shaktikanta Das as the Reserve Bank of India governor to address a few market concerns emerging from the sudden resignation of Urjit Patel.
• All the 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index's 4 percent surge.

Follow the day’s trading action here.

U.S. stocks joined a global rally as the outlook for trade took a positive turn and confidence grew that the British prime minister will defeat a challenge to her leadership.

Chipmakers and energy producers led the S&P 500 Index higher following gains in Europe and Asia after the chief financial officer of Huawei Technologies Co. was granted bail and President Donald Trump said he’d consider intervening in the case if it helps get a trade deal with China.

• The S&P 500 Index advanced 1.2 percent as of 9:32 a.m. New York time.
• Sentiment was also bolstered by a report that Chinese officials are drafting a plan that would give foreign companies more access to local markets.
• The British pound surged the most in a month on speculation Theresa May will survive the vote of confidence.
• West Texas Intermediate crude climbed 1.4 percent to $52.37 a barrel.

Get your daily fix of global markets here.

6. 2019 Elections Won’t Affect Markets, Says Neelkanth Mishra

Elections do not really have an impact on the Indian markets, according to Credit Suisse’s India Equity Strategist Neelkanth Mishra.

• “We shouldn’t overemphasise the impact of election on the market,” he told BloombergQuint. “Even the elections in May will not have an impact on a short-term investment of six to 12 months. The only impact would be on a long-term basis when we consider the policy changes.”
• That’s in contrast with other market veterans who said the state assembly election results could be taken as a reflection of what will happen in May 2019.

Here’s what Mishra said about the new RBI Governor Shaktikanta Das.

7. What Investors Need To Worry About

Narendra Modi, the Indian prime minister, took two big blows in less than 24 hours. Investors should worry less about the bruises, and more about what he might do to recover from them before next year’s general elections, writes Andy Mukherjee.

• The first knock came on Monday evening when besieged Reserve Bank of India governor Urjit Patel abruptly resigned. Although he cited personal reasons, nobody is in any doubt that it was New Delhi’s incessant harassment that led to the monetary chief’s early exit.
• Votes counted on Tuesday handed defeats to the ruling party in three key state elections. The fact that Modi’s personal popularity is struggling to pull votes puts a big question mark around the outcome of next year’s parliamentary polls.
• That’s where the whack of Patel’s departure is related to the thwack Modi got from voters.

What Modi might do in response could please speculators, but long-term investors should be nervous.

8. What India’s Top Three Mutual Funds Bought And Sold

Inflows into equity and equity-linked mutual funds fell the most in seven months in November amid rising volatility and uncertainty ahead of the state election outcome.

• ICICI Prudential Mutual Fund neither made any new purchases nor exited any company.
• HDFC Mutual Fund bought stakes in three new companies, and sold off its stakes in four companies.
• Aditya Birla Sun Life Mutual Fund’s new buys included Reliance Communications Ltd.

Click here for more details.

9. In Electoral Politics, No One Is Invincible

Not even self styled Bahubalis and political Chanakyas. And yet, such has been the aura around the Modi-Shah duo that a sense of defeatism and the inevitability of loss has appeared to grip the opposition over the last four years in every election, writes Rajdeep Sardesai.

Here are the other key takeaways from elections 2018, according to Sardesai.

• Congress is out of the ICU, but is far from resurgent.
• The BJP is losing its grip over the Hindi heartland.
• Rahul Gandhi has arrived as a politician to reckon with.

10. Colgate’s Ayurvedic Bet Starts To Pay Off

Colgate Palmolive India Ltd.’s offensive to protect its domination has started paying off.

• Market share of the maker of namesake brand rose 40 basis points over the previous quarter to 52.7 percent in September, according to a report by SBI Cap Securities.
• That’s the biggest jump in nine quarters and the first gain in five.
• That came as the company aggressively pushed its herbal variants—Swarna Vedshakti and Cibaca Vedshakti launched in August 2016—to counter the challenge from Yoga guru Ramdev-backed Patanjali Ayurved Ltd.
• To be sure, the company’s market share jumped at least twice in the past two years, only to resume the slide.

This time, Colgate Palmolive is far more aggressive.