BQuick On Jan. 10: Top 10 Stories In Under 10 Minutes

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

1. Yes Bank Says No To Braich, Spars With Former Director

Uttam Prakash Agarwal, Yes Bank Ltd.’s independent director and audit committee chairman, resigned today with immediate effect. In his resignation letter sent via mail on Friday morning, which BloombergQuint has reviewed, Agarwal cited the following reasons:

• Deteriorating standards of corporate governance.
• Failure of compliance, management practices.
• The manner in which the state of affairs of the bank are being conducted by Ravneet Gill, the lender’s managing director and chief executive officer; Rajeev Uberoi, senior group president governance and controls; and Sanjay Nambiar, legal head of Yes bank.

What Agarwal had to say about his resignation may spark further concerns for the lender.

Watch what M Damodaran, Anil Singhvi had to say about Agarwal’s resignation.

The private sector bank has also failed to conclude its fundraising once again as it rejected one large offer it had previously received while leaving the fate of second investment proposal hanging.

• Following a board meet on Friday, Yes Bank said it has decided not to proceed with a $1.2 billion investment offer it had received from Canadian investor Erwin Singh Braich and SPGP Holdings in November.
• Instead, the lender said it would now look to raise Rs 10,000 crore via a qualified institutional placement in one or more tranches.

With the failure to conclude the preferential issue as planned, the bank continues to hunt for capital.

2. Infosys Hikes Revenue Forecast, Gives Clean Chit To CEO Salil Parekh

Infosys Ltd.’s quarterly profit beat estimates and margin expanded on account of a weaker rupee and cost cuts.

• Net profit rose 10.9 percent sequentially to Rs 4,457 crore.
• Revenue rose 2 percent over the previous quarter to Rs 23,092 crore.
• Revenue is expected to rise 10-10.5 percent in 2019-20 in constant currency terms, higher than 9-10 percent growth it had forecast in the previous quarter.

Here’s what helped Infosys beat estimates in the third quarter.

Meanwhile, an independent investigation into whistleblower allegations of “unethical practices” at Infosys has found no evidence of financial impropriety or misconduct by its Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy.

• The committee found that no substantial merit in the allegations.
• In October, an anonymous whistleblower letter had alleged that Parekh had dressed up the company's books to improve profits.
• The investigation also found that allegations regarding treasure policy are unsubstantiated.

Here are the key findings of the audit committee’s report.

3. Supreme Court Puts Cyrus Mistry’s Win Over Tata On Hold

The Supreme Court today stayed the National Company Law Appellate Tribunal’s judgment to reinstate Cyrus Mistry as the executive chairman of Tata Sons and director on the board of group companies.

• Chief Justice of India SA Bobde observed that the appellate tribunal granted reliefs which weren’t even sought by the ousted chairman.
• “We must say our first impression isn’t very good’’ said the Chief Justice referring to the NCLAT judgement.
• Mistry’s side asked the court to pass a status quo order instead of temporarily setting aside the NCLAT judgment.
• Until the apex court pronounces its final verdict, Tata Sons has given an undertaking to not use Article 75 of its articles of association—which allows the company to force a shareholder to sell their shares.

This adds another twist to a long-standing boardroom battle between Ratan Tata and Cyrus Mistry.

4. Industrial Activity Rebounds. But Will It Sustain?

India’s industrial output rebounded in November after three consecutive months. The rebound, along with other high-frequency indicators, suggests some stability in the economy even though signs of recovery remain modest.

• The Index of Industrial Production rose 1.8 percent in November over a year ago, compared to a contraction of 3.84 percent in October.
• The cumulative year-on-year growth for the April-November period stands at 0.6 percent.
• A break-up of the index shows that 13 of 23 manufacturing industry groups saw growth in November.
• Overall, the manufacturing segment saw expansion as well.
• However, industrial output, when broken up by the end-use of goods, showed contraction across most major categories.

Can the revival be seen as a green shoot for the economy?

5. Edelweiss Under The Scanner

Edelweiss Financial Services Ltd. said that it received communication from the Enforcement Directorate to appear and provide information about group companies' dealings with a firm called Capstone Forex Pvt. Ltd.

• "We would like to state that none of our companies have any transactions with this company - Capstone Forex," Edelweiss Financial Services said in a statement.
• The firm denies the "wild and baseless allegations" and the inference drawn from them, the statement added.
• Earlier in the day, Bloomberg News reported citing an unnamed official, that the Enforcement Directorate had summoned Edelweiss Group Chairman Rashesh Shah in connection with an alleged foreign-exchange violation by his firm.

Edelweiss shares fell 9.99 percent following the reports.

6. Nifty Rises, S&P 500 Heads Toward Record High

Indian stocks halted their two-week losing streak after an early surge in trade took the benchmark indices to record highs.

• The S&P BSE Sensex rose 0.35 percent this week to close at 41,599.72.
• The NSE Nifty 50 rose 0.24 percent during the period to end at 12,256.50.
• On Friday, the 30-stock index rose 0.36 percent and the 50-share gauge rose 0.33 percent.
• Ten out of 11 sectoral gauges compiled by NSE ended higher.

Follow the day’s trading action here.

U.S. stocks edged higher, while Treasuries rose after the latest jobs report confirmed that the world’s largest economy remains on solid footing.

• The S&P 500 inched toward a fresh record after hiring data slightly missed estimates for December, while the unemployment rate remained unchanged at 3.5 percent.
• The benchmark is on track for a weekly gain as the situation in the Middle East held a tenuous calm.
• Treasuries pushed higher as the wage data erased any inflation worries. Futures traders maintained the amount of easing they expect from the Federal Reserve.
• West Texas Intermediate crude fell 0.6 percent to $59.23 a barrel.

Get your daily fix of global markets here.

7. Internet Access Is A Fundamental Right, Rules Supreme Court

The Supreme Court on Friday ruled that the freedom of speech and expression and the right to carry on any trade or business using the internet is constitutionally protected.

• The apex court also directed the Jammu & Kashmir authorities to immediately restore internet services in all institutions providing essential services, including hospitals and banks.
• The freedom of speech and expression and the freedom to practice any profession or carry on any trade, business or occupation over the medium of internet enjoys Constitutional protection under Article 19(1)(a) and Article 19(1)(g) respectively, ruled the three-judge bench headed by Justice NV Ramana.
• The verdict came on a batch of pleas which had challenged curbs imposed in Jammu & Kashmir after the Narendra Modi government’s abrogation of provisions of Article 370 on Aug. 5, 2019.

What does this mean for the legality of the multiple internet shutdowns placed on Kashmir?

8. How Kerala Plans To Tide Over Its Revenue Problem

The economic slump that India finds itself in the midst of has led to ‘severe’ pressure on state finances and the government’s decision to cut corporate tax rates hasn’t helped, said Thomas Isaac, finance minister of Kerala.

• According to Isaac, poor implementation of the goods and services tax along with a series of GST rate cuts and now the corporate tax cut has led to a dwindling of revenues.
• The delays in transferring GST compensation due to states has only added to the pain.
• The situation is worse for states for two reasons, Isaac told BloombergQuint in a recent interview. “One, the share in the central taxes; that is drastically going down because of all these tax breaks and corporate tax cuts as 42 percent belongs to states. So, the central transfers are declining,” he said.
• For Kerala, this has meant that revenue growth has fallen to less than 10 percent, while expenditure is growing at 15-16 percent, Isaac said. “This is a big gap.”

This is the second part of a BloombergQuint series on ‘Managing State Finances’

9. Policymakers’ Catch-22 With Bank Capital

It would appear that there is an inherent conflict in the objectives of monetary policy and banking regulation when it comes to bank capital, argues Harsh Vardhan.

• Monetary policy transmission would be improved with lower levels of regulatory capital.
• Whereas banking regulation guided by financial stability would want higher levels of bank capital.
• There is an added layer of complexity where two-thirds of the banking sector is owned by the government.

So, fuller transmission of policy action will require fiscal moves to shore up capital levels in PSU banks.

10. Byju’s Raises Funds At $8 Billion Valuation

Byju’s is raising about $300 million in a funding round led by New York-based Tiger Global Management, securing new capital at a valuation of $8 billion for the online education startup’s global expansion.

• Tiger has invested about $150 million in Byju-parent Think and Learn Pvt, people familiar with the deal told Bloomberg News.
• Existing investors will likely contribute about the same amount though that is in flux, one of the people said, asking not to be identified discussing a sensitive matter.
• Separately, Tiger is also looking to buy shares from other stockholders and could eventually invest a further $100 million depending on availability, one of the people said.
• The new funding round confers on Byju’s the title of India’s most valuable startup after Ant Financial-backed fintech firm Paytm and the budget hotel rooms startup OYO.

Byju’s, last valued at about $5.7 billion, overtakes online retailer Snapdeal.