BQuick On Dec. 9: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Yes Bank Poised To Say No To $1.2 Billion
Yes Bank Ltd. is likely to reject an offer that made up more than half of its planned $2 billion capital raising, and is talking to institutional investors about making up the shortfall, a person familiar with the matter told Bloomberg News.
- At a meeting on Tuesday, the board is expected to reject an offer from Canada’s Erwin Singh Braich and Hong Kong-based SPGP Holdings to contribute $1.2 billion toward the fund raising, according to the person, who asked not to be identified because the discussions are private.
- After initially dropping on the news, Yes Bank shares reversed the losses to trade as much as 1.9 percent higher. The stock closed 0.36 percent higher.
- Doubts over key foreign bidders have triggered concerns that the Reserve Bank of India might not allow them to take ownership stakes in the lender.
Here’s why Yes Bank is leaning towards rejecting the mega bid.
2. Mutual Fund Inflows Tumble
Inflows into mutual funds declined by more than half in November as investors ploughed in less money into liquid schemes because of exit load, and investments into equity schemes tumbled to lowest in more than three years.
- Net inflows into liquid funds—used by companies to park surplus cash for the short term—plunged 92 percent over the preceding month to Rs 6,938 crore in November.
- That came as the market regulator, starting Oct. 20, imposed an exit load on investors withdrawing funds within seven days of their investment.
- Investments in equity mutual funds, too, fell to the lowest in more than three years even as Indian stocks rallied to hit fresh record highs, trade tensions between the U.S. and China eased and foreign investors turned buyers.
Get the complete mutual fund flow picture for November here.
3. Nifty Halts Losing Streak, U.S. Stocks Mixed
Indian equity benchmarks ended marginally higher, led by the gains in Housing Development Finance Corporation Ltd. and Reliance Industries Ltd.
- The S&P BSE Sensex rose 0.1 percent to close at 40,487.43.
- The NSE Nifty 50 rose 0.13 percent to end at 11,937.50.
- The market breadth was tilted in favour of sellers.
- Six out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Meanwhile, investors are starting to weigh the merits of rotating into small- and mid-sized Indian stocks after a few large companies drove a record-breaking rally in the main equity index.
Some of the quality largecaps are overvalued and perhaps in a “bubble zone”. Read more to find out.
U.S. stocks were little changed as investors prepared for a week brimming with potential catalysts, from central bank meetings to the looming America-China tariff deadline.
- The S&P 500 fluctuated near an all-time high after weak China export data, with investors awaiting news on whether Washington will go ahead with a planned Dec. 15 tariff hike.
- The pound edged upward as polls continued to show the U.K. Conservative Party on course to win a majority in Thursday’s election, which would likely mean Britain leaving the European Union by Jan. 31.
- Gold and the yen were also slightly higher.
Get your daily fix of global markets here.
4. How To Build Portfolios That Can Weather Storms
Gains made in a bull market by beating the benchmark could prove to be fleeting unless they are protected during a downside.
- “The trouble with the Indian markets is that when we fall, we fall very badly. The corrections are very severe,” Prabhakar Kudva, director at Samvitti Capital Pvt. Ltd., told BloombergQuint on the latest episode of its special series Alpha Moguls.
So, if you can build a portfolio that can withstand corrections, then you will be able to retain the money you were able to make in the bull market.Prabhakar Kudva, Director, Samvitti Capital
- Picking stocks that are resilient to downside helped the five-year-old portfolio management firm, which manages Rs 700 crore worth of client money, consistently outperform the benchmark in the last couple of years amid severe volatility.
For Samvitti Capital, three key things are crucial to build a resilient portfolio.
5. Sharp Rebound In Pharmaceutical Sales
Domestic pharmaceutical sales in November grew at its fastest pace in the last 32 months with the onset of winter.
- Sales jumped 14.5 percent year-on-year to Rs 12,624 crore in November, as per data released by AIOCD Pharmasofttech AWACS Pvt. Ltd., a pharmaceutical market research firm.
- In October, growth in India’s pharma sales had slipped to a two-year-low of 5.1 percent.
- Calling the bounce-back a “good sign of revival”, the research firm said it was led by a mix of volume, price and new product growth.
- Product pricing improved 5.7 percent while volume growth and new product growth were the highest in nearly a year-and-a-half.
Here are the key highlights of the domestic pharmaceutical market in November.
6. SBI Cuts Lending Rate For The Eighth Time
Country's largest lender State Bank of India announced the reduction in its marginal cost of fund based lending rate by 10 basis points across all one-year products, effective Tuesday.
- This is the eighth consecutive cut in MCLR by the lender this fiscal.
- “To pass on the benefit of our falling cost of funds to customers, we have reduced MCLR by 10 bps across all tenors,” a statement from the bank said.
- The new one-year MCLR has been cut to 7.90 percent from 8 percent.
The reduction comes even after RBI left the key policy rates unchanged last week.
7. Controversial Citizenship Bill Tabled While BJP Sweeps Bypolls
India’s parliament is set to approve legislation preventing Muslim migrants from neighbouring countries from receiving citizenship -- the next step in Prime Minister Narendra Modi’s hardline Hindu nationalist programme and one that’s seen to go against the nation’s secular constitution.
- The Citizenship Amendment Bill was introduced amid opposition protests and government cheers in the Lok Sabha or lower house of Parliament on Monday.
- The controversial citizenship bill has sparked protests and fear around India, with lawyers working overtime to help millions at risk of being left stateless in the world’s largest democracy.
The proposed changes will allow citizenship for Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians who illegally migrated to India from Afghanistan, Bangladesh, and Pakistan.
The Bharatiya Janata Party swept the Assembly bypolls in Karnataka winning 12 of the 15 seats to help the Yediyurappa government retain majority in a morale booster for the saffron party after its recent setback in Maharashtra.
- The BJP sweep had an immediate fallout in the opposition Congress with its Legislature Party leader and former Chief Minister Siddaramaiah and State Congress chief Dinesh Gundu Rao quitting their posts.
- The BJP's tally goes up from 105 to 117, which is well ahead of the halfway mark of 111 in the 223-member Assembly.
The bypolls were held to fill the vacancies caused by the disqualification of 17 rebel MLAs.
8. India’s Problems Were Always Bigger Than Narendra Modi
A new narrative about India is suddenly emerging. Until very recently, India appeared a great democracy as well as a rising economic power, a potential partner of the West in its policy of containing China. However, the latest, radically different narrative about India holds that the country is flailing, its politics and civil society captured by a Hindu supremacist movement, and its economy trapped in a potentially long slowdown.
- Such a dramatic reversal of reputations — “from hero to zero,” as the Indian wisecrack goes — is not new in India’s case.
- For much of India’s seven decades, when it appeared to be on the wrong side of the Cold War, Western commentators regarded the country as a basket case.
- As India suffers another downgrade in global reputation, it is worth asking: How do fundamentally defective narratives acquire outsize influence?
And is the new narrative about India as simplistic and misleading as the old, asks Pankaj Mishra.
9. These Are India’s Richest Realty Tycoons
Macrotech Developers Ltd.’s Mangal Prabhat Lodha and family has been named India's richest real estate entrepreneur with a wealth of Rs 31,960 crore, according to the GROHE Hurun India Real Estate Rich List 2019.
- Lodha family's wealth increased 18 percent during 2019 and was 12 percent of the cumulative wealth of the remaining 99 Indians featured on the list.
- "At number two is Rajiv Singh of DLF Ltd. (up one rank) with a wealth of Rs 25,080 crore - up 42 percent as compared to 2018," the report said.
- Jitendra Virwani of Bengaluru-based Embassy Property Developments bagged the third spot with a wealth of Rs 24,750 crore.
Here’s the full list.
10. Russia Banned From Global Sporting Events
Russia was banished from the Olympics and other international competitions for four years over a persistent doping scandal, a decision that also threatens to turn President Vladimir Putin and top Kremlin officials into global sporting pariahs.
- The World Anti-Doping Agency banned Russia’s national team after officials in Moscow were accused of fabricating evidence to cover up the use of banned substances by the country’s athletes.
- Individual athletes who comply with strict conditions will be allowed to compete only under a neutral flag, while WADA ordered a ban on any Russian government officials or representatives attending events.
Russia will miss next year’s Summer Olympics in Tokyo, the 2022 Winter Olympics in Beijing and the 2022 football World Cup in Qatar.