BQuick On Feb. 4: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Sensex, Nifty Recoup Budget Day Losses
Indian equities gained for the second straight trading session, paring losses clocked on the Budget day.
- The S&P BSE Sensex and the NSE Nifty 50 rose 2.3 percent and 2.32 percent, respectively, to end at 40,789.38 and 11,979.65 on Tuesday.
- The benchmarks—that had posted their worst Budget day performance in 11 years—gained more than 2.7 percent in two days.
- The broader markets represented by the NSE Nifty 500 Index advanced 2.10 percent on Tuesday.
- The rebound witnessed in markets is ‘purely’ cyclical as markets bottomed out last week on account of lacklustre budget and coronavirus scare, according to Chakri Lokapriya, Managing Director, TCG Asset Management.
- All the 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. stocks rallied with crude and copper, while Treasuries plunged as investors speculated the global economy can withstand the impact from the still-spreading coronavirus after China’s market sell-off eased.
- The S&P 500 jumped 1.2 percent as of 9:31 a.m. in New York.
- The Nasdaq 100 added 1.3 percent.
- The Stoxx Europe 600 Index surged 1.3 percent.
- The MSCI Asia Pacific Index surged 1.2 percent.
- West Texas Intermediate crude jumped 2.3 percent to $51.27 a barrel.
Get your fix of global markets update here.
2. How Bharti Airtel, Titan And Adani Ports Fared In Q3
Bharti Airtel Ltd. reported a bigger-than-expected loss in the quarter ended December even as revenue bounced back with a rise in tariffs and customer additions.
- Net loss narrowed to Rs 1,035 crore—it’s a third-straight quarter of being in the red.
- Revenue rose 3.86 percent to Rs 21,947 crore.
- Average revenue per user rose to Rs 135 from Rs 128 in the previous quarter.
Airtel’s operational metrics improved even as the uncertainty around government dues remain.
Titan Company Ltd. profit rose and operating performance improved, driven by its jewellery business during the festival quarter.
- Net profit rose 13 percent year-on-year to Rs 470 crore.
- Revenue rose 9.4 percent to Rs 6,206 crore.
- Revenue was aided by a 10 percent growth in its jewellery business.
Here’s how aggressive expansion in tier-II and tier-III cities helped Titan.
Adani Ports and Special Economic Zone Ltd.’s profit fell in the quarter ended December even as other incomes rose. Still, the bottom line beat estimates.
- Net profit dropped 4 percent year-on-year to Rs 1,352 crore.
- Revenue rose 2.8 percent over last year to Rs 2,902 crore.
- Other income jumped 44 percent to Rs 494 crore.
Cargo volumes handled by Adani Ports increased.
3. Over 20,000 Cases Confirmed As Coronavirus Outbreak Spreads
Major governments across the world asked its citizens to leave China, while Hong Kong reported a death from the coronavirus, confirming the second fatality outside the mainland. More than 20,600 cases have now been reported, an increase from about 17,000 the previous day.
- The World Health Organization said the virus hasn’t caused a pandemic, but the U.S. said it was preparing for one.
- Economists cut China’s growth forecasts as the impact on businesses grew.
- Macau has asked casinos to shut for half a month, Cathay Pacific plans to slash flights to China and BP Plc predicted a slump in oil demand this year.
Bloomberg is tracking the outbreak. Follow latest updates here.
4. Is The Budget Not Growth Supportive? Jahangir Aziz Has A Contrarian View
Concerns that Union Budget 2020 has not done enough to support growth are unfounded, according to Jahangir Aziz, head of emerging market economics at JPMorgan.
Aziz argues that adequate fiscal stimulus has been provided even though the headline fiscal deficit is budgeted to come down from 3.8 percent of GDP in FY20 to 3.5 percent in FY21, suggesting fiscal consolidation.
This is how Aziz sees it:
- If you take out privatisation from this year and next year, you get budget deficit of 4.1 percent in FY20 and a deficit of 4.5 percent next year.
- So there is a 0.4 percentage point increase in stimulus rather than a consolidation.
We do need to take out privatisation because that’s an asset swap and an asset swap does not effect income of corporations or households. So this concern, particularly in the equity markets, that there is no stimulus in the budget is not justified.Jahangir Aziz, Head - Emerging Market Economics, JPMorgan
Aziz added that the budget does have small measures to help the cyclical recovery, including steps to push the clean-up of the financial sector.
Watch the full interaction with Aziz where he explains rising global risks, opening up of India’s bond market and the fiscal escape clause.
5. Gold Imports Halve In India
India’s gold imports tumbled by half in January as record domestic prices and a slowdown in economic growth curbed demand in the world’s second-biggest buyer.
- Imports fell to 21.7 tons last month from 45.9 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information isn’t public.
- The drop in January comes after the World Gold Council said full-year purchases slumped 14 percent in 2019.
India’s lackluster gold demand is set to last through the first half as prices remain elevated.
6. Two-Wheeler Makers Go For The Early BS-VI Push
Two-wheeler makers have started pushing Bharat Stage-VI compliant vehicles ahead of the April 1 deadline for stricter emission norms even as carmakers focus on exhausting the existing inventory.
- Of the nearly 16 lakh vehicles sold at auto dealerships in January, 66,950 units were compliant with the newer BS-VI standards, according to the vehicle registration data available on the website of the Ministry of Road Transport and Highways.
- Nearly all the retail sales complying with the stricter norms were two-wheelers, data showed.
- Two-wheeler makers, however, pushed more inventory in January.
- Factory-gate dispatches disclosed by Hero MotoCorp Ltd., TVS Motor Company Ltd., Honda Motorcycle and Scooter India, Suzuki Motorcycle India surpassed retail sales during the month.
- For carmakers, wholesales lagged demand at dealerships, implying that they want to exhaust existing inventory before rolling out newer vehicles.
Demand marginally picked up in January even as some automakers hiked prices of popular models with the start of the year.
7. Non-Salaried Taxpayers Have An Edge In New Income Tax Regime
Finance Minister Nirmala Sitharaman’s new income tax regime that offers lower rates to individuals who give up exemptions and deductions could benefit non-salaried taxpayers more than their salaried counterparts. That’s because such taxpayers enjoy fewer exemptions.
- Assuming a non-salaried individual with an annual income of Rs 6 lakh makes tax-saving investments of Rs 50,000 in a year, such a person would pay the same tax under both the old and the new regime, according to BloombergQuint’s calculations.
- Assume a non-salaried taxpayer with 10 lakh annual income who completely uses the Section 80C deductions and has a health insurance with annual premium of Rs 15,000.
- The individual will have to pay Rs 82,680 tax under the old regime, about Rs 4,680 more than the tax payable under the new regime.
- But a salaried taxpayer earning the same amount of money and making the same investments would pay only Rs 41,080 in tax under the old regime—about half of the non-salaried individual pays.
BloombergQuint’s calculations found non-salaried individual with an income of Rs 20 lakh a year would again stand to gain by moving to new regime.
The Narendra Modi government also decided to tax dividends received by unitholders of real estate and infrastructure investment trusts, putting at risk fund-raising plans of developers and road-to-port builders looking to monetise assets through such instruments.
- While nothing changes for special purpose vehicles and the trusts as they still won’t pay tax, unitholders of InvITs and REITs are no longer exempt.
- They will now pay tax on the dividend income at the applicable income tax rate.
The REITs and InvITs will also withhold 10 percent as tax deducted at source while giving dividends.
8. The Most Underestimated Investment Risk In India
Nearly half the stocks which were in the BSE 500 ten years ago, have exited the index since, find Saurabh Mukherjea and Ashvin Shetty.
- The primary driver of these exits is shoddy corporate governance and poor capital allocation
- In contrast, the number of companies which have significantly enriched their shareholders are a handful.
- Avoiding dubious companies is as important as identifying great companies.
Evaluate the accounting quality of a company. Here’s how to do that.
9. There Still May Be Space For More Monetary Easing
Even if the possibility of a rate action is virtually ruled out in the February meeting, RBI might not have necessarily exhausted policy space for more action, writes Siddhartha Sanyal.
- Core CPI inflation is still soft, in the sub-4 percent zone.
- Pricing power for several industrial commodities remains modest.
- The negative output gap looks set to persist for several quarters.
That said, the bar for further easing has certainly moved higher, Sanyal writes.
10. Google Under EU’s Scanner Again
Google is facing one more probe in the European Union over concerns the company’s processing of user location data could violate the bloc’s tough privacy rules.
- Armed with the power to levy hefty fines, Ireland’s data protection commission on Tuesday also opened a separate investigation into Match Group Inc. and the “ongoing processing of users’ personal data” on its popular dating app Tinder.
- The probes add to more than 20 investigations by the Irish authority into big tech companies, including Facebook Inc., Twitter Inc. and Apple Inc.
- The investigation concerning the Alphabet Inc.-owned search giant will look into “the legality of Google’s processing of location data and the transparency surrounding that processing”.
The latest Google case follows a series of complaints in 2018 from consumer associations.