BQuick On Dec. 24: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief
1. Three Months Left As India Scurries To Meet Divestment Target
With just three months to go, India has mopped up less than a fifth of the divestment target for the ongoing financial year even as the government struggles to contain fiscal deficit.
- And it could miss the estimates by a wide margin as Bloomberg quoted an unnamed official as saying that the sale of Bharat Petroleum Corporation Ltd. and Air India are unlikely to be completed this financial year.
- The government has raised just Rs 17,364 crore so far by selling its stake in state-run companies, according to data on the website of the Department of Investment and Public Asset Management.
- That’s 16.6 percent of the targeted Rs 1,05,000 crore.
- About Rs 1,881 crore of this year’s divestment collection so far has come from sale of enemy shares—assets left behind by people who have moved to Pakistan or China.
The government has missed its selloff target for most years barring the previous three fiscals. Can it meet the target this year?
2. Stressed Assets In The System Are Rising Again
After the decline in bad loans seen in 2018-19, weak macroeconomic conditions are leading to fresh signs of stress, shows data released by the Reserve Bank of India on Tuesday.
- Loans that are overdue between 30 to 90 days, known as special mention accounts, have inched up in the first half of the current financial year, the RBI said in its report on Trend and Progress of Banking in India.
- Gross non-performing assets, which are loans overdue by more than 90 days, remained in check for public sector banks but rose for private lenders.
Notwithstanding the enhanced resolutions through the insolvency and bankruptcy code, the overhang of NPAs remains. The health of the banking sector hinges around a turnaround in macroeconomic conditions.RBI Report - Trends & Progress Of Banking
While stress has remained elevated, banks have seen some relief from large resolutions closed under the Insolvency and Bankruptcy Act.
Meanwhile, bad loans under the government’s flagship Pradhan Mantri Mudra Yojana rose sharply in the 12 months ended March 31, 2019, showed data accessed by BloombergQuint under the Right To Information Act.
- Defaults on loans disbursed under the scheme stood at Rs 17,712 crore by the end of March 2019.
- The defaults accounted for 6.8 percent of outstanding loans at the end of FY19 compared with 5.38 percent in FY18.
The rising bad loans appear to have led to caution among lenders with outstanding loans under the scheme declining since then.
3. Cabinet Decisions: Census 2021, NPR And A Restructured Railway Board
The Indian government will launch its massive decadal programme of a national census from April to September 2020. It will also undertake the updating of the National Population Register, which was last updated in 2015.
- “No proof or document will have to be submitted,” Union Minister Prakash Javadekar said while announcing decisions taken at the Cabinet meeting today. “Anyone who lives in India will be counted in it. This will help with the delivery of targetted benefits.”
- Javadekar also clarified that there will be no requirement of any biometric data. The complete process will be one of self-declaration through a mobile app.
- Javadekar added categorically that the NPR is different from the controversial National Register of Citizens.
- The Cabinet has provisioned a total outlay of nearly Rs 13,000 crore for the NPR and Census.
The Cabinet has also approved a restructuring of the Railway Board by consolidating eight separate service cadres into one.
- These eight organised services will be merged into the Indian Railway Management Service, Railway Minister Piyush Goyal said.
- Indian Railways will now have only one cadre instead of current eight services for various departments, including Engineering, Traffic, Mechanical and Electrical.
Read more about all the decisions taken at the Union Cabinet meeting today.
4. No Christmas Cheer For Sensex, Nifty
Indian equity benchmarks ended lower for the second consecutive trading session ahead of F&O expiry, led by the declines in Reliance Industries Ltd., HDFC Ltd. and HDFC Bank Ltd.
- The S&P BSE Sensex fell 0.44 percent to close at 41,461.26.
- The NSE Nifty 50 fell 0.39 percent to end at 12,214.55.
- The broader markets represented by the NSE Nifty 500 Index fell 0.3 percent.
- The markets will remain shut on Wednesday on account of Christmas Day.
- Seven out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
5. Are The Economy’s Animal Spirits Reviving?
India’s economy showed nascent signs it may be turning a corner after six straight months of anaemic activity.
- Two of the eight high-frequency indicators compiled by Bloomberg News came in stronger in November based on a three-month weighted average reading, although that wasn’t enough to move the needle on a gauge measuring overall activity.
- Despite the green shoots, the economy is set for another quarter of sub-par growth, and still in need of support from the government and the central bank heading into 2020.
- The focus will now turn to the government’s annual budget due Feb. 1, with Finance Minister Nirmala Sitharaman saying she’s working toward improving consumption.
Here’s how business activity, exports and consumer activity panned out in November
6. The Tata Group Stock That’s Outperforming Everyone Else
Shares of Tata Global Beverages Ltd. have returned the highest gains among fast-moving consumer goods peers this year, driven by growth in core brands and restructuring to cut costs in international operations.
- Shares of the world’s second-largest maker of branded tea have risen 44 percent year-to-date, beating the Nifty FMCG Index, which has fallen nearly 1 percent.
- The benchmark Nifty 50 Index has gained 13 percent during the period.
- The share price surge reflects the improvement in the company’s near-term revenue and profit projections.
- Bloomberg consensus indicates an annualised 12 percent growth in consolidated revenues through 2020-21. The beverage maker’s operating margin is expected to expand by nearly 220 basis points over the next two years, aiding its earnings per share.
Find out what has helped Tata Global Beverages outperform peers.
7. The Wait Continues For Bharti Infratel-Indus Tower Merger
Bharti Infratel Ltd.’s merger with unlisted Indus Towers Ltd. to create the largest tower company outside China was deferred as it still hasn’t received the government’s approval, delaying India’s struggling operators’ plan to unlock value.
- Bharti Airtel Ltd.’s tower unit was unable to complete the merger, announced in April last year, within the extended timeline, according to an exchange filing.
- The company is still awaiting the Department of Telecommunications’ nod for enhancement of foreign direct investment limit.
- Hence, the board has extended the long stop date till Feb. 24, 2020, the filing said.
- “There can be no assurance that the merger can be completed within the extended time frame,” Bharti Infratel said in its filing. Each party retains the right to terminate and withdraw the scheme.
Repeated delays could be another cause of worry for Bharti Airtel, Vodafone Idea Ltd. and Vodafone Plc.
8. Warren Buffett’s 2020 New Year’s Resolution
He’s making a list and checking it twice, but can’t find a takeover target that’s nice.
- Warren Buffett is the jolly man of the stock market. However, the chairman and CEO of Berkshire Hathaway Inc. has also been a bit of a Scrooge this year, as he continues to pass up acquisitions and instead hoard his money.
- The billionaire has long been seeking a really big deal on which to spend some of his company’s $128 billion of cash, except everything is overpriced in his view.
- To make matters more frustrating, Berkshire’s own shares are lagging behind the broader U.S. market by the most since 2009.
- While 2019 wasn’t Buffett’s worst year, it was surely one of his dullest.
For one of the most celebrated investors and dealmakers of all time, the deal dry spell isn’t much fun, writes Tara Lachapelle.
9. The Software Development Approach To Investing
At first glance, software development and investing seem to be poles apart. But we find a common and interesting thread in the process that investment managers and software developers follow, write Saurabh Mukherjea and Salil Desai.
- Testing iterations of software, getting customer response and incorporating the feedback in the next round of iterations is a process increasingly followed by software developers, who call this the ‘Agile’ methodology.
- We routinely see the agile method at work in investment management too.
- The sensible—and that is why the obvious and usual—approach to investing is to undertake thorough research on a stock or business and convince yourself if it is worth committing money to.
- How much time to spend on the research is a function of one’s own investing style and more crucially, the fund’s mandate.
Here’s why the next time you meet your software engineer friend, you should explore the commonalities in the way you work.
10. Meet The Worst Cars Of 2019
What makes a bad car the worst car isn’t often about just one bad thing. It’s usually a mix of several near-misses wrapped into a poorly designed or over-priced package, one that doesn’t even live up to the automaker’s own promises about the car—whatever those may be.
- Let’s start with the ridiculously expensive Nissan GT-R Nismo. Yes, it has a cult following and a laudable pedigree.
- But it is thinly built and badly designed with an oversized rear wing, eye-jarring proportions and the general squariness of a Rubik's cube.
- Bloat can come in many forms, though. Take the Fiat 500L. Fiat has expanded the 500 range to include four-door offerings like the 500L it advertises as “equipped for anything, especially fun.”
- But to make it practical for daily life, the model costs much more than the $22,160 base model price. And you need add-ons worth $5,000 to make it feel close to spunky and ready for fun.
Yet, none of these take the cake of being the ugliest car of the year.