The Sun sets over a barbed wire fence (Photographer: SeongJoon Cho/Bloomberg)

BQuick On Dec. 19: Top 10 Stories In Under 10 Minutes

This is a roundup of the top stories of the day.

1. Relief For PSU Banks?

Economic Affairs Secretary Subhash Chandra Garg, on Wednesday said that the government would be announcing a new recapitalisation plan for public sector banks on Thursday.

  • According to a Bloomberg news report quoting an anonymous government official, the centre may announce an additional Rs 40,000 crore worth recapitalisation for state-owned lenders.
  • Shares of state-owned banks rose after the news report. The recapitalisation will be funded via bonds in fiscal year 2019, according to the Bloomberg report.
  • Most state-run banks—except State Bank of India, Punjab National Bank, Bank of Baroda and Indian Bank—will get additional infusion.
  • The second supplementary demand for grants may be tabled in the Parliament Thursday.

The official said lenders including Allahabad Bank and Bank of India will soon exit the Reserve Bank of India’s so-called prompt corrective action framework that restricts them from expanding business.

2. Indian Markets Rally For Seventh Straight Session

Indian equity benchmarks rose for seventh straight day on the back of sharp drop in crude oil and a day after the Reserve Bank of India announced hike in bond purchases to boost liquidity.

  • The S&P BSE Sensex rose 0.38 percent or 137 points to 36,484
  • The NSE Nifty 50 Index climbed 0.54 percent or 59 points to 10,967.
  • In the last seven sessions Nifty has advanced 4.57 percent and clocked its longest stretch of gains since April.
  • Seventeen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index's 3 percent gain.

Follow the day’s trading action here.

Oil traded near its lowest closing level in 15 months as fears over slowing global economic growth compounded concerns that the market faces a supply glut in 2019.

  • Futures rose 0.8 percent in New York after tumbling 12 percent over the past three sessions, the biggest three-day slump since 2016.
  • Doubts persist over the effectiveness of output cuts pledged by the OPEC+ coalition, even as Saudi Arabia expressed confidence in a long-term reduction.
  • India’s currency and sovereign bonds rallied as sliding oil prices improved the outlook for the nation’s finances and the central bank extended support via its open-market debt purchases.

The rupee is on course for its biggest three-day advance since September 2013.

3. India’s IPO Boom Halted

It’s been the dullest three months for initial public offerings in more than four years as the stock market volatility turned companies cautious.

  • There have been no IPOs in the last quarter of the calendar year—the worst phase since May 2014.
  • In fact, the entire second half of 2018 has been tepid with six companies raising closed to Rs 7,500 crore.
  • That compares with Rs 23,000 crore mopped up in 18 offers in the first six months, continuing the boom from 2017—the best year for IPOs yet.
BQuick On Dec. 19: Top 10 Stories In Under 10 Minutes

4. Suresh Prabhu Talks Angel Tax With Finance Ministry

The Commerce and Industry Ministry has taken up the issue of “angel tax” notices being sent to startups with the Finance Ministry, Union Minister Suresh Prabhu said.

  • Several startups have raised concerns on taxation of angel funds under Section 56 of the Income Tax Act, which provides that if a closely held company issues its shares at a price more than its fair market value, the amount received in excess of the fair market value will be charged to tax.
  • An income tax official said, “Notices issued on angel tax to startups may be for those that are not recognised by the Department of Industrial Policy and Promotion.”
  • Earlier in April, the government gave relief to certified startups by allowing them to avail tax concession if total investment, including funding from angel investors, does not exceed Rs 10 crore, among other conditions.

Here’s more on the tax that venture capitalists have termed draconian.

5. Flipkart To Go Video Shopping

Borrowing from the Amazon playbook, Flipkart plans to offer a video streaming service to attract more loyal users as cheap data has triggered an explosion in the online consumption of soaps to movies.

  • “Our customer segment today is heavily skewed towards 18-35 age group, and that audience watches a lot of video, both in terms of time spent, frequency, and it is disproportionately high,” Kalyan Krishnamurthy, group chief executive officer at Flipkart, told BloombergQuint in an interview.
  • “Do we want to have a partnership with leading players in the industry to offer some of the services in video? We probably want to do that.” He said it could be in the form of acquisitions or partnerships.
  • The online retailer’s interest in content comes as India’s streaming market, according to a report by Boston Consulting Group, is expected to touch $5 billion by 2023.

However, Flipkart won’t build a video content platform on its own from scratch.

6. Glaxo-Pfizer Mega Deal

It’s a deal that creates the world’s biggest supplier of over-the-counter medicines with brands of painkillers such as Advil and Panadol.

GlaxoSmithKline Plc will first split into two companies, one for prescription drugs and vaccines, the other for over-the-counter products. It has also agreed to create a consumer-health joint venture with Pfizer Inc. to be listed on the stock market.

Glaxo will have a 68 percent controlling stake in the new entity, with combined sales of $12.7 billion and led by Brian McNamara, the CEO of the U.K. pharmaceutical giant’s consumer arm. The deal lets Pfizer exit a business after a yearlong sale process failed to find a buyer.

The transaction will let Glaxo focus on developing drugs for cancer, HIV and other diseases, taking it out of the business of selling low-priced products in the competitively squeezed consumer field. The news sent the U.K. company’s shares to their biggest gains in a decade.

How will competitors react?

7. Fossil-Fuel Cess Might Hit Small Car Sales

India’s largest carmaker is worried about the government’s reported push for electric vehicles by imposing levies on new petrol and diesel-powered vehicles. A Times of India news report today said the government has drafted a plan—under the “polluter pays” principle—to impose a fee of Rs 12,000 on the purchase of new petrol and diesel cars to raise money for incentivising electric vehicles and battery manufacturing

  • “It will certainly have an impact on sales of small cars,” RC Bhargava, chairman of Maruti Suzuki Ltd., told BloombergQuint in Delhi today. “The levy of Rs 12,000… is a substantial increase for cars which cost Rs 2.5-3 lakh.”
  • Bhargava questioned whether the move will benefit all people.
While the lower middle-class will be impacted by the costs, the subsidies will go to people who buy electric cars, which most likely at this stage will be (by) well-to do people.
RC Bhargava, Chairman, Maruti Suzuki

8. Why MPC Is On Wait And Watch Mode

The recent volatility in inflation figures forced India's monetary policy committee to consider a wait and watch approach even as the Reserve Bank's forecast expects headline inflation to decline over the next 12 months, according to minutes of the recent policy review meet.

  • While all members noted that the inflation outlook remained stable, they agreed that more data was needed before the MPC could take comfort from it.
  • Members Chetan Ghate and Pami Dua noted that upside risks to inflation still exist and need to be watched closely.
  • RBI Deputy Governor Viral Acharya pointed at a rare variation in food prices that has rarely been noted before
  • Moreover, inflation, excluding food and fuel, remains persistently high, Acharya said.

Also read: Fed Seen Making Dovish Hike With 2019 Pause: Decision Day Guide

9. NITI Aayog’s Plan To Make India $4 Trillion Economy

Niti Aayog said India should lower both personal and corporate tax rates as the nation’s planning think tank suggested ways for the government to sustain an average GDP growth of 8 percent, raising the economy’s size to $4 trillion in real terms by 2023.

This was one among several suggestions the think tank made in its ‘Strategy for New India @ 75’ document. The document has been divided under four sections, namely Drivers, Infrastructure, Inclusion and Governance, and was prepared after consultations with over 800 stakeholders from within the government - central, state and district levels.

Read the full story here.

10. BJP, 2019, And The Durability Of The ‘Modi Factor’

Will the ‘Modi Factor’ still bring home the swing vote for the BJP in 2019? Political consultant Amitabh Tiwari does a data dive to find out.

  • The Modi factor fetched the BJP 4.6 crore votes out of the 17 crore-odd votes it received in 2014.
  • The decline in the BJP’s 2018 MP-Rajasthan-Chhattisgarh vote share is higher than the 2013 to 2014 increase. Is that reason to worry?
  • In the urban assembly seats in three states, the BJP suffered a near-50 percent drop.

So what are the big risks for the BJP going into 2019? Tiwari spells them out here.