BQuick On Dec. 13: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Why The Ultra-Rich Are Pulling Out From These Funds
India’s super-rich withdrew commitments made to hedge funds and other such short-term investment vehicles for the first time in nearly seven years.
- Commitments by high-net-worth investors to Category-III alternative investment funds fell Rs 4,832 crore quarter-on-quarter to Rs 42,223.4 crore in the three months ended September.
That’s the first quarterly decline since SEBI started registering such funds in December 2012.
- The wealthy also redeemed money during the quarter. Investments raised by such funds fell Rs 2,933 crore to Rs 36,912.3 during the quarter.
Here’s why the returns on such short term investments may have become unviable.
2. How India Inc.’s Top 100 Club Has Changed
More than half the companies that were among India’s 100 most valued firms two decades ago no longer belong to the club.
- Fifty-four percent of the constituents among the 100 biggest companies by market value have been replaced in the last 20 years, according to Edelweiss Securities, which analysed 4,800 firms for which data was available between 2000 and 2019.
- The research firm classified the top 100 as large caps, the next 150 as mid caps and the rest as small caps.
- On average, the composition of top 100 changed 11 percent every year—3 percent led by fresh listing and 8 percent due to the change in market capitalisation.
Since 2000, there’s only one company which has held its spot in the top 10 most valued Indian companies.
3. Nifty Caps Best Week In A Month; Bumper 2020 For IPOs?
Indian equity benchmarks registered their best weekly gains since the first week of November.
- The S&P BSE Sensex advanced 1.4 percent this week to end at 41,009.
- The NSE Nifty 50 rose 1.35 percent this week to close at 12,086.70.
- Today, the 31-stock index closed 1.05 percent or 428 points higher.
- The 50-share gauge ended 0.96 percent or 114.90 points higher.
- The broader markets represented by the NSE Nifty 500 Index advanced 0.95 percent.
- Ten out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
India’s market for initial public offerings is expected to gather pace in 2020 after this year’s relatively small crop saw strong gains in the stock market.
- The 14 mainboard IPOs this year have risen by an average of more than 50 percent since listing, data compiled by Bloomberg show.
- The S&P BSE IPO Index, a gauge of shares in their first two years of trading, has climbed 36 percent in 2019, compared with a gain of 13 percent for the benchmark S&P BSE Sensex Index.
- Companies planning IPOs include SBI Cards and Payment Services Ltd., UTI Asset Management Co., Computer Age Management Services Pvt. and Fincare Small Finance Bank Ltd.
The outperformance of recent debutants is notable given the sluggish performance of smaller Indian shares in general.
4. Boris Is Back In The U.K. And Investors Are Rejoicing
Boris Johnson won an emphatic election victory that redraws the political map of Britain and gives the prime minister the mandate he needs to pull the U.K. out of the European Union next month.
- The result spectacularly vindicated Johnson’s gamble on a snap election to break the deadlock in Parliament over Brexit, as his Conservatives won their biggest majority since 1987 under Margaret Thatcher.
- The outcome was a repudiation of the main opposition Labour Party under Jeremy Corbyn and his program of state intervention, nationalisation of industries and tax rises for the better off.
Johnson’s success in traditional Labour strongholds was the breakthrough that secured his victory.
The pound surged with U.K. stocks on Friday and corporate bonds rallied after Prime Minister Boris Johnson’s Conservative Party won a huge majority in the British general election.
- Sterling hit the highest level against the dollar since May 2018, at one point on course for the biggest gain in more than two years.
- The FTSE 250 index of equities soared to the highest on record on trading volumes about 360 percent above the 100-day average.
The resounding victory fueled investor hopes the political gridlock and uncertainty will be brought to an end.
Renewed trade jitters rattled financial markets, sending U.S. stocks lower and Treasuries higher as investors grew anxious over the details in a partial pact with China.
- The S&P 500 Index swung between gains and losses amid conflicting signals from both sides on the extent and possible terms of any trade deal, unnerving investors who sent stocks to all-time highs just Thursday on reports that a deal was all but done.
- West Texas Intermediate crude advanced 0.3 percent to $59.40 a barrel.
Get your daily fix of global markets here.
5. No Discussion On Hiking GST Rates Yet, Says Sitharaman
Ahead of the crucial meeting of the GST Council, Finance Minister Nirmala Sitharaman said the buzz of an increase in rates is everywhere other than her office.
- She was responding to a question on reports of current GST rates being raised to make up for the fall in revenues that has even hampered giving compensation to states for loss of revenue from implementation of the indirect tax regime.
- Sitharaman, however, did not rule out a hike in GST rates, saying her ministry is yet to apply its mind to it.
The finance minister also said she does not want to give out any growth "predictions" for the second half of the year.
Meanwhile, India’s trade deficit widened as estimated, as exports contracted for the fourth straight month while the decline in imports eased.
- The gap between exports and imports was at $12.1 billion in November from $11 billion in October, data released by the Commerce Ministry showed.
- That was broadly in line with the median estimate of $12.3 billion in a Bloomberg survey of 21 economists.
Imports declined in double-digits due to lower oil shipments.
6. Another Bureaucratic Reshuffle
Senior Indian Administrative Service officer TV Somanathan was appointed Expenditure Secretary, the post lying vacant since October, as part of a top-level bureaucratic reshuffle effected by the Narendra Modi government.
- Somanathan, a 1987-batch IAS officer, is at present serving in his cadre state Tamil Nadu.
- He has been appointed as the Expenditure Secretary, a Personnel Ministry order said.
- In another appointment, Ravi Mittal has been named Information & Broadcasting Secretary in place of Amit Khare.
Khare will now serve as the secretary of the department of higher education.
7. Solving JSW Steel’s Bhushan Power Problem
The bankruptcy code is set to be amended yet again—this time to the advantage of bidders set to take over insolvent companies facing criminal action, as well as those corporate debtors who feared losing government licences and approvals after being admitted to insolvency. The threshold for triggering insolvency against real estate companies is proposed to be increased as well to prevent potential abuse.
- This amendment puts to rest the question that first arose in Bhushan Power and Steel Ltd.’s insolvency process.
- While approving JSW Steel Ltd.’s resolution plan, the National Company Law Tribunal had refused to grant any immunity to Bhushan Power from ongoing criminal investigations.
- At the heart of it, the question of law that needed answering was whether the Prevention of Money Laundering Act would prevail over IBC.
- If this was answered in affirmative by court, resolution applicants of companies facing criminal action would continue to have a Damocles sword hanging over their heads.
This has now been addressed by the proposed amendments, with certain safeguards.
8. Can A Poor Family Use 20 LPG Cylinders In A Day?
The Comptroller and Auditor General of India flagged misuse of Prime Minister’s scheme to provide cooking gas to the poor as it found cases of multiple refills by a single beneficiary in a day.
- There have been 3.44 lakh instances when two to 20 liquefied petroleum gas cylinders were issued to one beneficiary in a day under the Pradhan Mantri Ujjwala Yojana, according to CAG’s audit.
- The Modi government has called its Ujjwala scheme a success, claiming that it achieved the target of distributing eight crore LPG connections seven months before the March 2020 deadline.
- CAG report, however, found 19.8 lakh instances of three-nine LPG refills a month among high-consumption households.
Read more about the curious case of impossibly highly daily consumption of LPG.
9. Citizenship Amendment Act Protests And The Fallout
Angry protests spread across India’s tea-growing state of Assam, where opposition to a new law that grants citizenship to undocumented migrants based on religion has the potential to reignite long dormant unrest.
- The fallout from the contentious bill and the protests against it has been swift.
- A planned three-day visit by Japanese Prime Minister Shinzo Abe, who was scheduled to land in Guwahati on Sunday, has been postponed.
- This is the second foreign visit to be called off amid the protests. Bangladesh’s Foreign Minister AK Abdul Momen also canceled a scheduled visit to India.
It’s the first time since 1979 that Assam has witnessed protests of this scale. Read more about the fear and anxiety from Modi's citizenship drive.
Also read: India Is Abandoning Its Founding Principles
10. YouTube Music Pips Spotify In India
YouTube has signed up more than 8,00,000 subscribers for its paid services in India since debuting in March, people familiar with the matter told Bloomberg News, vaulting it past competitors in one of the world’s fastest-growing media markets.
- The services are growing faster than rival paid music offerings in India, including Spotify and local players Gaana and JioSaavn, according to the people, who asked not to be identified because the subscriber data hasn’t been released.
- The one paid service that could have more users than YouTube is Apple Music, which has been tight-lipped about its subscriber figures.
India has emerged as a battleground for online music services.