BQuick On Dec. 3: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. Under Review: GST Rates, Compensation Cess

The government is planning to review compensation cess and goods and services tax rates in an effort to boost revenues from indirect taxes, according to an official who spoke on the condition of anonymity.

• In a letter to state GST officers, the government has sought suggestions from state governments to increase GST revenues.
• This is being done when compensation to states has increased ‘significantly’ and is unlikely to be met through compensation cess collections, the letter said.
• Compensation cess is levied on luxury and sin goods, and the proceeds are used to compensate states for any loss they incur within the first five years of GST implementation.
• Some states had raised the issue of not receiving the compensation cess from the central government, which they said was impacting their finances.

The government is also considering rationalising GST rate structure to three slabs.

2. Modi’s Gambit To Sell Air India

India is considering amending a rule to allow overseas control of local airlines, a person familiar with the matter told Bloomberg News, which may help its indebted national carrier lure a foreign suitor after multiple failed attempts for a sale.

• At a meeting in early November, India’s Department for Promotion of Industry and Internal Trade asked the aviation ministry if it would be feasible to change the so-called “substantial ownership and effective control” clause, the person said, asking not to be identified as the details aren’t public.
• The rule mandates that control of an airline always remain in Indian hands, one of several reasons global firms have been wary of bidding for Air India Ltd.
• Doing away with the “substantial ownership” clause will enable an overseas stakeholder to weigh in on major decisions of local airlines.

That may lure investors without forcing the government to go down a politically contentious route.

3. Nifty Slips, Dow Slumps

Indian stocks dropped on concern the country’s slowing economic growth outweighs the effect of policy efforts to boost demand and will be a drag on corporate earnings.

• The S&P BSE Sensex fell 0.3 percent to close at 40,675.45, retreating from a record close on Thursday.
• The NSE Nifty 50 fell 0.45 percent to end below 12,000.
• Nine out of 11 sectoral gauges compiled by NSE ended lower.
• Meanwhile, the initial public offering of Ujjivan Small Finance Bank was subscribed five times on the second day of the share sale. Demand was led by retail and non-institutional investors.

Follow the day’s trading action here.

Stocks slumped and bonds rallied after President Donald Trump aimed his tariff weapon on economies from South America to Europe and China, denting hopes for a global recovery.

• The S&P 500 Index extended a three-day rout to 2.5 percent after Trump indicated he’d be willing to wait another year before striking an agreement with China -- casting doubt on the likelihood of a phase-one accord this month.
• He also threatened tariffs on France after hitting steel from Brazil and Argentina.
• Treasuries, gold, the yen and Swiss franc paced gains among haven assets.

Get your daily fix of global markets here.

4. Has Steel Found Its Lustre Again?

Profits of Indian steelmakers fell to multi-quarter lows in the three months through September as higher supply and weaker demand, coupled with fears over the U.S.-China trade war, led to lower steel prices.

• But analysts and companies expect a revival soon.
• Utilisation levels of the steel industry grew since 2016 on the back of limited capacity addition and revival of demand. Analysts said the levels are expected to rise further between FY20 and FY23.

Read this BQ Blue Exclusive to find out the other reasons why the next few quarters may be better for Indian steel companies.

5. Biocon Makes Inroads Into $3-Billion Market

Biocon Ltd. hopes to make a “major impact” in the $3-billion market for Trastuzumab biosimilar in the U.S., Chairman and Managing Director Kiran Mazumdar-Shaw said a day after the drug’s launch.

• “The U.S. stamp of approval itself offers us a larger global opportunity. What’s also important for us is the U.S. market which will not have too many competitors," Shaw told BloombergQuint.

• Biocon is the second drugmaker to launch the breast cancer drug in the U.S. despite being the first to receive approval from the country’s drug regulator.

Amgen was the first company to launch the drug “at risk”—or while patent litigation is ongoing—in July 2019.

6. SAT Reserves Order In Appeal Against Karvy

The Securities Appellate Tribunal reserved its order in appeals filed by three banks seeking to secure shares pledged to them by Karvy Stock Broking Ltd.

• HDFC Bank Ltd., ICICI Bank Ltd. and IndusInd Bank Ltd. moved the appellate tribunal against National Securities Depository Ltd., National Stock Exchange and Securities and Exchange Board of India for transfer of pledged shares to beneficial owners.
• The market regulator had passed an order on Nov. 22 barring Karvy from taking on new customers and dealing with their money for allegedly selling clients’ securities and using funds for its own purposes.
• The regulator had also restrained transfer of securities from Karvy’s depository participation account with immediate effect, except to those beneficial owners who had made full payments for the securities.

Here are the key arguments made by the banks in their case against NSDL and NSE.

7. HDFC Bank Consumers Face Technical Glitches

Some customers of India’s largest private lender HDFC Bank Ltd. have been unable to access net banking services for the second straight day. On attempting to log-in or conduct transactions, customers have been faced with error messages.

• Not all customers have faced such a problem but many have taken to social media to complain about these error messages since Monday.
• On Tuesday, some continued to face difficulties in logging in, while others were seeing slower access to online platforms.
• The problems have continued through the day, with users taking to social media platforms like Twitter to launch their complaints.

This is not the first time that the HDFC Bank’s customers faced such issues.

8. RBI-MPC Wall Blurring The Central Bank’s Vision?

India’s Monetary Policy Committee announces its latest review this Thursday, with another interest rate cut widely expected.

• Needless to say, that decision to cut rates again, if taken, would be fully justified in the face of evidence of weakened demand conditions.
• But the more complex issues that need to be tackled are well beyond the official remit of the MPC.
• Few believe that one more rate cut will make a material difference to the economy at this stage.

The real problem is that of fund flows, with vast swaths of the economy seeing a decline in availability of funding, writes Ira Dugal.

9. Chandrayaan-2 Debris Found

NASA has found the Indian spacecraft Chandrayaan-2 that crashed in September while attempting to land near the moon’s south pole during a mission that captivated millions in the nation.

• The U.S. agency released images showing an impact site and debris from the Vikram lander, which disappeared with a rover minutes before a scheduled touchdown that would’ve made India just the fourth nation to pull off a soft landing on the moon.
• The attempt, watched by Prime Minister Narendra Modi, came 50 years after Neil Armstrong’s historic first steps on the lunar surface.
• “Despite the loss, getting that close to the surface was an amazing achievement,” NASA said in a statement on its website.

The discovery came with the help of an Indian mechanical engineer called Shanmuga Subramanian. Find out how.

10. It’s Getting Hotter Faster Than You Thought

The world’s average temperature is headed toward a gain of 3 degrees to 5 degrees Celsius by the end of the century.

• The findings by the World Meteorologic Organization are another indication of how far off track the planet is in meeting its target to contain global warming to 1.5 degrees Celsius since the dawn of the industrial revolution.
• That was the target in the 2015 Paris Agreement on climate change, a level that scientists identify as one where the worst impacts on the environment could be avoided.
• While a fluctuation of that level hardly registers during the course of a day, when applied to the climate it would mark the biggest shift in temperatures since the last ice age ended some 10,000 years ago.

The past five years and the past decade were almost certainly the hottest on record. And humans are to blame.