BQuick On Dec. 26: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Reliance Retail’s Unusual Exit Plan For Employees
Reliance Retail Ltd., the retail arm of India’s largest company by market capitalisation, valued itself at Rs 2.8 lakh crore, a discount of nearly 14 percent compared to analyst estimates, according to disclosures made on its website and BloombergQuint’s calculations.
- This comes after Reliance Retail received requests from its employees holding equity shares for providing them options to exit, according to the company’s disclosures. India’s largest retailer said it doesn’t have any plan for listing its equity shares on the stock exchanges.
- As per the scheme of arrangement uploaded on Reliance Industries Ltd.’s website, the shareholders of Reliance Retail holding shares in physical form on record date will get one share of RIL for every four shares.
- To be clear, the scheme of arrangement doesn’t involve RIL. A firm set up by two Reliance group employees will acquire these shares from the market and swap them with the specified shareholders of Reliance Retail.
Here’s what may be the value of Reliance Retail.
2. RBI’s ‘Operation Twist’: Round Two
The Reserve Bank of India will conduct the second round of government bond purchases and sales as part of its open market operations at the end of this month to boost liquidity and ease borrowing conditions.
- The central bank announced that it would purchase an aggregate of Rs 10,000 crore worth of government bonds maturing in 2029, while at the same time it will sell Rs 10,000 crore worth of short-term government bonds maturing in 2020.
- On Dec. 30, RBI will buy Rs 10,000 crore worth of 6.45 percent government securities maturing in 2029.
- The first round of auction was conducted on Dec. 23 with the RBI receiving Rs 20,826 crore worth of bids for the 10-year government bonds.
This is part of the central banks’ strategy to push up short-term bond yields while lowering long-term yields.
3. Nifty Declines, U.S. Markets Inch Higher
Indian equity benchmarks extended declines for the third consecutive trading session.
- The S&P BSE Sensex fell 0.72 percent or 297.5 points to end at 41,163.76.
- The NSE Nifty 50 declined 0.72 percent to close at 12,126.55.
- The broader markets represented by the NSE Nifty 500 Index fell 0.52 percent.
- Both the 31-stock index and the 50-share gauge logged their steepest fall in 20 days.
- The Nifty index’s futures and options snapped its three-series gaining streak in December.
- Nifty fell 0.17 percent and Nifty Bank fell 0.39 percent in the December series.
Follow the day’s trading action here.
U.S. stock indexes ticked higher in holiday-thinned trading as investors looked ahead to January and a promised trade breakthrough between the world’s biggest economies. Treasuries held steady and the dollar drifted lower.
- The S&P 500 Index gained 0.2 percent as of 9:32 a.m. New York time.
- The MSCI Asia Pacific Index rose 0.2 percent.
- The Bloomberg Dollar Spot Index dipped 0.1 percent.
- West Texas Intermediate crude futures increased 0.6 percent to $61.50 a barrel.
Get your fix of global markets update.
4. Why Maruti Suzuki Remains An Investor Favourite
Maruti Suzuki India Ltd. sold fewer cars this year, intermittently halted its assembly lines as demand fell and its stock price plunged. Yet, it remains the world’s most expensive large carmaker.
- Investors retained faith and shares of India’s largest automaker have pared nearly all the losses of the year.
- The stock surged nearly 33 percent from its July lows, aided by corporate tax cuts.
- Analysts expect new models from the maker of Swift Dzire and a potential revival in rural demand to aid rebound.
- Twenty-seven of the 52 analysts tracking the stock recommend a ‘Buy’, while 10 suggest ‘Hold’ and 15 have a ‘Sell’ rating, according to Bloomberg data.
- The stock trades at 27 times its earnings, higher than its five-year average of 23 as well as at a premium to peers in India and around the world.
Here are some other factors that may have helped Maruti Suzuki.
5. Indian Life Insurers Don’t Want To Rely On Bancassurance So Much
Indian life insurers, which derive a chunk of their sales through banks, are increasingly trying to push plans through their own distribution networks.
- Sales via bancassurance, or banking channels, of most listed insurers fell in the first six months of the ongoing fiscal, according to their exchange filings. Contribution from other sources rose gradually.
- The push for other channels of sales comes as banks are adopting an open architecture or selling products of multiple insurers.
- That increases competition even as insurers, particularly private companies, hunt for a larger share in a market of 1.3 billion people with low insurance penetration.
Some experts say that cutting reliance on bancassurance is a positive trend for the industry.
6. The Origins Of Indian Citizenship
The Citizenship (Amendment) Act, 2019, carries forward the old discrimination against Muslim immigrants that was prevalent at the founding of India’s republic, writes Abhinav Chandrachud.
- After the second wave of immigration from West Pakistan in 1948, India introduced a permit system.
- Before the permit system, some 20,000 Muslims from West Pakistan had arrived in Delhi between March and July 1948 alone.
- By August 1949, only around 2,000 to 3,000 such permits were issued.
- Meanwhile, in the Constituent Assembly, citizenship provisions of the Constitution were prepared on the basis of two hidden premises.
However, those times were different. Today, the CAA is unconstitutional for several reasons, Chandrachud argues.
7. Data Protection Bill: Higher Onus On Social Media Platforms, But A Concern For Users
A provision in the proposed data protection law could mean increased obligations for social media intermediaries like Facebook, WhatsApp, Twitter, YouTube, etc.
- In discharging these obligations, experts fear intermediaries could mandate Know-Your-Customer requirements for users, though the bill proposes it as a voluntary requirement.
- The Personal Data Protection Bill, 2019, categorises social media intermediaries as data fiduciaries. Platforms that enable online interaction and allow users to create, upload, share, disseminate, modify or access information will qualify as social media intermediaries.
- Within social media intermediaries, those with users above the prescribed threshold or whose actions are likely to impact electoral democracy, the security of the state, public order or the sovereignty and integrity of India can be notified by the government as a significant data fiduciary.
Here’s why the requirements for users are a worrying aspect.
8. Complete Railway Electrification Is Still Far Off
India is likely to miss its target of railway electrification of broad-gauge routes this financial year, which could delay the government’s deadline of bringing all train routes in the nation under the grid by 2021-22.
- Indian Railways has electrified less than a third of its targeted 7,000 route kilometres of railroad as on November, the transporter said in response to queries by BloombergQuint under the Right to Information Act.
- The Ministry of Railways now plans to electrify 7,000 route km of train routes in the next two fiscals each and 7,800 route km in the year ending March 2023, according to its response.
- That’s a significant step down from its previous targets.
Read more on how Indian Railways has a poor track record of meeting its targets.
9. Boeing Reveals ‘Disturbing’ Messages On 737 Max Development
A new batch of messages between Boeing Co. employees on the development of the 737 Max paints a “very disturbing picture” of concerns about the plane, according to an aide to a U.S. House committee.
- The documents were turned over to the Federal Aviation Administration on Monday, the agency said in a statement.
- The disclosure came the same day that Boeing ousted its chief executive officer.
- At least some of them were written by the same Boeing pilot whose 2016 messages were released in October and were the subject of sharp questioning by lawmakers, according to a person familiar with their contents who wasn’t authorised to discuss them.
The new incident adds to the challenges awaiting the new boss at Boeing.
10. The Warning Signs Of Financial Abuse
An oppressive breach of trust, especially a financial breach, does not always involve your closest relative or friend, it can also come from someone you choose to transact with, cautions Dilshad Billimoria.
- Within families, this can happen with the indiscriminate use of credit cards, when someone takes control of a partner’s financial activities, or a death occurring without a will.
- With providers of financial services, you could be mis-sold a misrepresented product.
- Building a healthy relationship with money is the first step towards creating awareness around financial abuse.
Here’s how to do it.