BQuick On Feb. 12: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. CPI Eases, IIP Recovers
Retail inflation in India dropped further in January on falling food and fuel prices.
- The inflation rate for services like education and health also fell, bringing down the level of core inflation, after excluding volatile items like food and fuel.
- Retail inflation stood at 2.05 percent in January 2019 compared with a revised 2.11 percent in December 2018, according to data by the Ministry of Statistics and Program Implementation.
- A Bloomberg poll of 38 economists had estimated inflation at 2.5 percent for January 2019.
- At just above 2 percent, CPI inflation is now at the lower bound of India’s inflation target of 4 (+/-2) percent.
Here are the inflation internals.
Growth in industrial production in India recovered in December from a steep fall in November.
- The Index of Industrial Production rose 2.4 percent in December against a 7.1 percent rise a year ago, according to data released by the Ministry of Statistics and Programme Implementation.
- A Bloomberg poll of economists had projected a growth rate of 1.6 percent.
- Growth between April and December now stands at 4.6 percent.
Output in 13 of the 23 industry groups saw positive growth.
2. A Win For JSW Steel
JSW Steel Ltd. has been declared as the winning bidder for Bhushan Power & Steel Ltd., after the committee of creditors sent a letter of intent to the Sajjan Jindal-owned company, three people in the know told BloombergQuint.
- JSW Steel has accepted the bid and the resolution professional will now approach the National Company Law Tribunal for the final approval this week, they said requesting anonymity.
- According to the plan submitted by JSW Steel, the company has offered an upfront payment of Rs 19,300 crore to financial creditors of Bhushan Power & Steel, as compared with dues more than Rs 46,000 crore.
- Operational creditors will be paid Rs 350 crore, against their claims worth Rs 621 crore.
The financial creditors will be taking a 58 percent haircut on their total dues.
3. Earnings: Sun Pharma, Hindalco, Coal India
Sun Pharmaceutical Industries Ltd.’s quarterly profit beat estimates on a higher margin, providing relief to India’s largest drugmaker as it grapples with corporate governance concerns.
- Net profit rose 286 percent year-on-year to Rs 1,242 crore, according to its regulatory filing. That compares with the Rs 980-crore consensus estimate of analysts tracked by Bloomberg.
- The bottom line in the corresponding quarter last year was adversely impacted by a Rs 513-crore one-time tax expense.
- Adjusted for that, Sun Pharma’s net profit grew 49 percent year-on-year.
- Revenue rose 16.3 percent to Rs 7,740 crore, compared to the Rs 7,415-crore estimate.
Operating margin expanded 600 basis points to 27.8 percent.
Hindalco Industries Ltd. posted a 47 percent increase in quarterly profit driven by higher copper sales and lower finance expenses, helping offset an increase in input costs.
- Net income, including that of its Utkal Alumina unit, rose to Rs 713 crore in the three months through December from Rs 484 crore a year earlier, billionaire Kumar Mangalam Birla’s Mumbai-based company said Tuesday.
- Sales rose 8.1 percent to nearly Rs 1,200 crore.
- Hindalco’s U.S. unit Novelis Inc. reported a 6 percent increase in adjusted earnings before interest, taxes, depreciation and amortization in the third-quarter on higher shipments, better product portfolio mix and favorable metal costs.
Here are the key risks flagged off by Hindalco.
Coal India Ltd. reported December quarter numbers that surpassed analysts’ expectations. Coal production for the world's largest coal miner grew 7.4 percent from a year earlier to 412.50 million tonnes in the April-December period.
- Revenue rose 15.4 percent year-on-year to Rs 25,045.8 crore.
- Net profit jumped 50.1 percent to Rs 4,566.7 crore.
- Ebitda improved 55 percent to Rs 6,787.8 crore.
- Margins spiked to 27.1 percent from 20.2 percent.
4. What India’s Top 3 Mutual Funds Bought And Sold In January
Inflows into Indian equity mutual funds in January were the smallest in two years as heightened market volatility and political uncertainty cooled demand for riskier assets.
- Stock funds took in a net Rs 6,160 crore ($866 million), the least since January 2017, and a seven percent decline over the previous month, data from the Association of Mutual Funds in India show.
- India’s largest money manager - HDFC - held Rs 1.2 lakh crore in equities, with financials accounting for about 32 percent of stock assets followed by industrial companies at 14 percent.
Find out how ICICI Prudential and SBI Fund Management fared in January.
5. Sensex Slips, Dow Jumps
Indian equity benchmarks closed lower for the third straight trading session, clocking their worst three-day fall since Dec. 24.
- The S&P BSE Sensex closed 0.66 percent lower at 36,153.
- The NSE Nifty 50 Index ended at 10,831, down 0.53 percent.
- The market breadth was tilted in favour of sellers, with about 1,002 stocks declining to 733 stocks advancing on the National Stock Exchange.
- Eight out of 11 sectoral gauge compiled by NSE fell, led by the NSE Nifty PSU Bank Index’s 1.6 percent decline.
- On the flipside, the NSE Nifty Media Index was the top secoral gainer, up 1.33 percent.
Follow the day’s trading action here.
Stocks rose in the U.S. and across Europe and Asia on optimism over global trade and a tentative deal among American lawmakers to avert a government shutdown.
- The S&P 500 Index opened higher, as did the Dow Jones Industrial Average and Nasdaq 100, after U.S. lawmakers said they reached an “agreement in principle” on border security funding that would avert a second government shutdown. President Donald Trump is said to be undecided on whether to accept the deal.
- On trade, Trump wants to meet his Chinese counterpart “very soon,” a White House adviser said in a TV address.
- The Bloomberg Dollar Spot Index dipped 0.2 percent, the first retreat in almost two weeks.
- West Texas intermediate crude increased 2.8 percent to $53.87 a barrel.
Get your daily fix of global markets here.
6. Axis Bank OFS: Strong Demand
The government's share sale in Axis Bank Ltd., held through the Specified Undertaking of the United Trust of India, witnessed a strong start.
- Institutional investors put in bids worth over Rs 8,000 crore on the first day of the offer for sale.
- Institutional investors bid for over 11.69 crore shares, or 2.56 times the 4.56 crore shares on offer for them, according to data from the National Stock Exchange.
- The issue will open for retail investors on Wednesday.
- At the floor price of Rs 689.52 a share fixed for the share sale, the bids by these investors are worth Rs 8,062 crore.
The stake sale will help the government move closer to its Rs 80,000-crore disinvestment target.
7. City Union Bank’s Secret Sauce
A policy of cautious lending to the silk weavers and shopkeepers of Tamil Nadu has allowed a small local bank to outpace the largest Indian banks in terms of share price performance.
- City Union Bank Ltd., a small lender based in Kumbakonam, has risen more than 27 percent over the last twelve months, the best performance of any Indian lender in the Bankex index after Axis Bank Ltd.
- It has beaten out larger rivals such as HDFC Bank Ltd. and State Bank of India thanks to its successful record in lending to small and medium sized enterprises, or SME sector, while keeping a lid on bad loans.
- “They are the gold standard in SME lending,” said Yuvraj Choudhary, an analyst at Anand Rathi Financial Services. “They have very good insight into how small industries work in their region.”
Here are the factors helping City Union Bank outperform.
8. ‘Go To One Corner Of The Court And Sit Down’
The Supreme Court convicted and punished then acting Central Bureau of Investigation Director M Nageswara Rao and agency’s legal advisor S Bhasuram by imposing a fine of Rs 1 lakh each.
- The apex court held them guilty of contempt for wilfully disobeying its order by transferring CBI Joint Director AK Sharma, who was probing the Bihar shelter home sexual assault cases, as additional director general of Central Reserve Police Force on Jan. 17.
- The three-judge bench headed by Chief Justice of India Ranjan Gogoi also sentenced the duo to sit in the courtroom till the rising of the court for committing contempt of its orders.
- Rao’s “attitude is ‘I have done what I thought was required’, is a blatant contempt of court. If this is not contempt of court then what is,” asked the bench.
The court did not accept the unconditional and unqualified apology.
9. Inside Apple’s ‘Black Site’
Apple’s new campus in Cupertino, California, is a symbol of how the company views itself as an employer: simultaneously inspiring its workers with its magnificent scale while coddling them with its four-storey café and 100,000-square-foot fitness center. But one group of Apple contractors finds another building, six miles away on Hammerwood Avenue in Sunnyvale, to be a more apt symbol.
- This building is as bland as the main Apple campus is striking. From the outside, there appears to be a reception area, but it’s unstaffed, which makes sense given that people working in this satellite office—mostly employees of Apple contractors working on Apple Maps—use the back door.
- Workers say managers instructed them to walk several blocks away before calling for a ride home. Several people who worked here say it’s widely referred to within Apple as a “black site,” as in a covert ops facility.
- Places like Hammerwood undermine the mythology of Silicon Valley as a kind of industrial utopia where talented people work themselves to the bone in exchange for outsize salaries and stock options.
Find out what it’s like to work inside Apple’s ‘black site’
10. It’s Hard For Modi To Be PM Again If BJP Falls Below...
The assumptions on Narendra Modi and his chances of another term are based on his ‘score’ on the ‘likeability’ index among allies and potential supporters of the BJP in the post-poll scenario, writes Nilanjan Mukhopadhyay.
- As yet, there is no discernible national issue, a wave in favour of any party or individual to ensure a ‘lamppost election’ as in 2014 when the identity of candidates became irrelevant because people voted in the name of Modi.
- Modi remains in the ‘completely safe’ zone until the BJP tally continues to be in the 220-plus region.
Thereafter, with every loss, the chances of his return start becoming increasingly difficult.