BQuick On Feb. 18: Top 10 Stories In Under 10 Minutes

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

1. RBI’s Rs 28,000-Crore Gift To Modi

The Reserve Bank of India will transfer an interim dividend of Rs 28,000 crore to the government of India, it said after the central board met on Monday.

• The decision was taken based on a “limited audit review and after applying the extant economic capital framework,” said the RBI in a release.
• This is the second consecutive year that the RBI has transferred an interim dividend.
• Since the RBI’s financial year runs from July to June, it typically transfers the surplus that it earns in the form of a dividend in July or August every year.

The transfer will help the government meet its fiscal deficit target.

2. Three Mutual Funds With Anil Ambani’s Debt

Franklin Templeton Mutual Fund has the highest exposure among asset managers that have agreed to a standstill with Anil Ambani promoter group companies if the value of pledged shares falls below the required level.

• The standstill relates to the collateral offered for Rs 1,225-crore non-convertible debentures issued by Ambani’s two privately held promoter entities.
• Disclosures by asset managers show that nearly all those NCDs of the two companies were held by three mutual funds as of January end.
• Franklin Templeton Mutual Fund contributed nearly 90 percent, followed by DHFL Pramerica Mutual Fund and Indiabulls Mutual Fund.

Here’s the exposure these mutual funds have.

3. Expensive Air Tickets

Airfares for flights to major cities have spiked up to 80 percent in February because of runway shutdowns and cancellations, hurting demand when passenger traffic growth is already slowing.

• Even through the rest of the month, the average airfares will remain up to 67 percent costlier, according to the data provided by online travel search engine ixigo.
• While the Mumbai-Hyderabad one-way fare has more than doubled to Rs 4,666 (all inclusive) for travel between Feb. 10 and 28, flying between Mumbai and Delhi is 35 percent pricier.

See how much fares have spiked on popular domestic flying routes.

4. Sensex’s Losing Streak Continues

Indian equity benchmark—S&P BSE Sensex registered its longest losing streak since August 2013. The benchmark index fell for the eighth consecutive trading session.

• The gauge ended 0.87 percent lower at 35,498.
• The NSE Nifty 50 Index ended below 10,650, down 0.78 percent. The 50-stock index ended lower for the seventh day, clocking its longest losing streak in over a year.
• Yes Bank Ltd. stock fell over 2.5 percent after the RBI reprimanded it for selectively revealing a private report that had earlier caused a surge in shares.
• Stocks of firms controlled by Anil Ambani also surged on Monday after 90 percent of the lenders agreed to not sell pledged shares until September-end.
• Nine out of 11 sectoral gauged compiled by NSE ended lower, led by the NSE Nifty PSU Bank Index’s 1.25 percent fall.

Follow the day’s trading action here.

5. Rupee Goes From First To Last

India’s rupee has gone from being the best-performing Asian currency last quarter to the worst this year as rising crude prices and tensions over Kashmir weigh on sentiment.

• The currency has slumped 2.4 percent since the end of December, missing the rally in its regional peers on optimism over U.S.-China trade talks.
• It slid to 71.515 per dollar Monday, from as strong as 69.23 in early January, and closed at 71.3425 in Mumbai.
• The risk stems from higher oil prices, tensions in Kashmir and political uncertainty.

If these factors stay, rupee could soon touch 73.

6. Supreme Court Snub For Vedanta

The Supreme Court today refused to allow Vedanta Ltd. to reopen its copper smelter in Tamil Nadu.

• A two-judge bench headed by Rohinton Nariman set aside the National Green Tribunal’s order allowing Sterlite Copper to reopen its smelter unit in Thoothukudi.
• The National Green Tribunal on Dec. 15 had asked the Tamil Nadu government to order the “consent to operate” and issue authorisation to handle hazardous substances required for restarting the plant.
• The apex court said the Anil Agarwal-led mining conglomerate can approach the Madras High Court again to restart the plant, adding that the company can seek expeditious hearing of the case.

Here are the details of the Supreme Court’s order.

7. JLR Is Headed For A Cash Crash

Jaguar Land Rover suffered a $4 billion loss this month. Credit investors need to start worrying about what’s coming next. The loss announced by the Tata Motors Ltd.-owned company earlier this month was driven by a 3.1 billion pound ($3.9 billion) impairment charge. Though that’s non-cash, it has already-elevated yields on some of the U.K. unit’s bonds spiked.

It’s not hard to see why, writes Bloomberg Opinion’s Anjani Trivedi

• Half of the value of the writedown – some 1.55 billion pounds – comes out of tangible assets, which now won’t generate the value the company previously thought due to weak market conditions in China, technology disruptions, and rising debt costs.
• The rest is on intangibles, representing money that’s already flowed out of the business.
• Of the cash spent on products and investments, a big chunk relates to expenditure on intangibles such as technology and intellectual property.

The pertinent question is why the management waited so long to write down these investments.

8. Will RBI’s Fines Work?

The Reserve Bank of India’s actions against regulatory violations by banks have risen substantially over the past two years, ever since it set up a dedicated enforcement division to act against such lapses.

• In April 2017, the RBI set up an internal Enforcement Department to oversee regulatory compliance and violations by banks, non-bank finance companies and other entities.
• In its near two-year existence, the department has issued 128 penalties against financial institutions of all types, resulting in penal collections of around Rs 147.3 crore.

BloombergQuint compiled a list of penalties disclosed.

10. Will Modi Pull Off An Indira Or Fall Like Vajpayee?

In 1971, the Tigress remained unconquered; in 2004, the Colossus fell. Will 2019 be like 1971 or 2004 for Modi, the mighty incumbent, asks Raghav Bahl.

• As with Narendra Modi in 2019, both elections were fought by towering incumbents against a bevy of disparate, but united, opponents.
• Arithmetically, it was a one-on-one contest in most Lok Sabha constituencies. But the two outcomes were like chalk and cheese.

The key differentiator is that Indira Gandhi entered the 1971 polls as the underdog.