BQuick On Jan. 16: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. No Reprieve For Airtel, Vodafone-Idea From Rs 50,000 Crore Dues
The Supreme Court dismissed the review petitions of telecom operators on the definition of adjusted gross revenue that makes them liable to pay thousands of crores in pending dues.
- “Having perused the review petitions and the connected papers with meticulous care, we do not find any justifiable reason to entertain the review petitions,” a bench headed by Justice Arun Mishra said in response to pleas by Bharti Airtel Ltd. and Vodafone Idea Ltd.
- The apex court in October had ruled that the operators would have to include non-core revenue to calculate levies.
- That left them with a bill of more than Rs 50,000 crore as adjusted gross revenue dues comprising spectrum usage charges and licence fees, among others.
- Vodafone Idea and Bharti Airtel posted losses running into thousands of crores in the second quarter as they provisioned for AGR dues.
Find out how Bharti Airtel and industry experts reacted to the order.
2. SBI Eyes Resolutions Worth Rs 1 Lakh Crore
Ten large corporate accounts, with at least Rs 1 lakh crore in loans, are likely to face a final decision on whether their debt can be restructured before March 31. This, as the country’s largest lender, State Bank of India, tries to finalise resolution plans under the Reserve Bank of India’s June 7, 2019 circular.
- A failure to decide on a resolution plan within 180 days from the signing of an inter-creditor agreement will mean higher provisioning unless the account is referred for insolvency.
- According to two people in the know, SBI is currently in the process of finalising the resolution plan for the 10 largest cases where inter-creditor agreements were signed during the June-July period.
- For most of these accounts, the 180-day deadline ended in the first week of January.
Here are the top SBI accounts currently under discussion for resolution or referral to insolvency.
3. Operation Twist: Round Four
The Reserve Bank of India will conduct a fourth round of simultaneous purchase and sale of government bonds on Jan. 23, under its special open market operations being dubbed as ‘Operation Twist’.
The central bank will once again simultaneously buy and sell up to Rs 10,000 crore worth of government securities, it said in a notification on Thursday.
The RBI will buy:
- 7.32 percent government bond maturing on Jan. 28, 2024
- 6.45 percent government bond maturing on Oct. 7, 2029
Simultaneously, the RBI will sell:
- 7.8 percent government bond maturing on April 11, 2021
- 7.94 percent government bond maturing on May 24, 2021
But the central bank’s efforts have been only partially successful.
4. Sensex Retreats After Hitting 42,000, U.S. Stocks Climb To Record Highs
Indian stocks closed resumed gains after a one-day blip, led by the gains Reliance Industries Ltd. and Kotak Mahindra Bank Ltd.
- The S&P BSE Sensex rose 0.14 percent to end at 41.932.56.
- The 30-share index crossed a new milestone in the opening trade—surpassing 42,000 for the first time.
- The NSE Nifty 50 closed flat at 12,355.50.
- The broader markets represented by the NSE Nifty 500 Index rose 0.23 percent.
- Ten out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
India’s weak economy and impending economic reforms have cemented “polarisation” as the theme for Indian markets in the decade ahead, according to Saurabh Mukherjea, founder of Marcellus Investment Managers—the second-best portfolio manager in 2019.
In every sector you end up with one or two dominant leaders who scoop up the lion’s share of spoils in the sector.Saurabh Mukherjea, Founder, Marcellus Investment Managers
Mukherjea, however, said paying a premium for growth and quality will still work beyond 2020.
American equities opened at all-time highs and European shares drifted in the wake of the U.S.-China trade deal.
- All three main U.S. stock gauges began trading at intraday highs after setting records a day earlier.
- Banks and chipmakers gained after solid earnings reports from Taiwan Semiconductor Manufacturing Co. and Morgan Stanley.
- Treasuries fell and the dollar pared a small decline after data showed U.S. retail sales strengthened in December.
- West Texas Intermediate crude jumped 0.6 percent to $58.14 a barrel, the biggest increase in almost two weeks.
Get your daily fix of global markets here.
5. Big Bulls’ Shopping List
Indian equities posted their best gains in three quarters in October-December, defying a slowing economy and global worries. And a few big investors used this opportunity to buy or pare some of their holdings in the small and mid-cap categories.
- Radhakishan Damani pared his stake in Avenue Supermarts Ltd. while adding more in India Cements Ltd. and VST Industries Ltd.
- Billionaire investor Rakesh Jhunjhunwala, along with his wife Rekha, pared holding in three companies while adding more of one of his favourite bets.
- Ashish Kacholia, who usually bets on small caps, was listed among shareholders with 1 percent or more stake in Birlasoft Ltd. and specialty chemicals maker Paushak Ltd.
Here’s what veteran investors including Dolly Khanna, Akash Bhansali, Vijay Kedia and Mukul Agarwal bought and sold in the December quarter.
6. SEBI’s Fourth Shot At Splitting Advisory And Distribution Services
The market regulator made a fourth attempt to remove the conflict of interest that exists for an entity that distributes an investment product and advises on the same.
- The Securities and Exchange Board of India released a fresh discussion paper following investor complaints over exorbitant fees charged by investments advisers, false promises and mis-selling of products.
- The regulator had come out with similar consultation paper in October 2016, June 2017 and January 2018.
- SEBI has sought public comments by Jan. 30, 2020.
Here’s what the fourth discussion paper proposes.
7. Bezos Is ‘Not Doing A Favour’ To India: Piyush Goyal
A day after Jeff Bezos said Amazon.com Inc. will invest $1 billion more in India to help small businesses go online, the nation’s commerce minister said the retail giant was not doing a favour.
- “Amazon may have put in a billion dollars but if they are making a loss of a billion dollars every year, then they will have to finance it,” Piyush Goyal, in charge of the commerce ministry along with railways, said during a statement at Raisina Dialogue in New Delhi on Thursday.
- “It’s not that they are doing a favour to India when they invest that billion dollars,” Goyal said.
- Goyal said investments in warehousing and other areas were welcome but warned that if Amazon and others are making investments to largely finance the losses, it needs to be investigated.
Goyal said that allegations of predatory pricing and unfair trade practices against Amazon are questions that need answers.
8. GMR Infra: Bigger Stake Sale, And Supreme Court Relief
GMR Infrastructure Ltd. will sell 49 percent stake in GMR Airports Ltd. to Tata Group firm TRIL Urban Transport as against 44.44 percent planned earlier.
- The company will offload the stake “in one or more tranches" to a consortium of TRIL Urban Transport, an affiliate of Singapore sovereign fund GIC Pte Ltd. and SSG Capital Management.
- An amended and restated shares subscription and purchase agreement, and shareholders agreement has been executed for the revised deal, the filing said.
This is part of the steps GMR is taking to reduce debt.
Meanwhile, the Supreme Court on Thursday cleared the decks for an international airport at Mopa, about 43 kilometers from Panjim, Goa, by lifting the suspension of environmental clearance on its construction, providing relief for GMR Infrastructure Ltd. which was executing the project.
- The order came on a petition filed by environmentalists who had challenged the airport’s construction, citing threat to green cover and natural water channels in the region.
- Construction came to a halt after the court issued a status quo order on Jan. 18, 2019.
- The apex court has also appointed the National Environmental Engineering Research Institute to ensure compliance of its directions during construction of the Mopa airport.
The first phase of the Goa airport has already been delayed by at least two years.
9. Avoiding The Stagflation Trap
Nearly all arguments favouring an expansionary budget assume that inflation will continue to be benign in the foreseeable future, worries Sabyasachi Kar.
- Even if we are lucky with rainfall this year, there are two more sources of inflation lurking.
- Together with the weak growth rates, this might mean India is looking at a stagflationary situation in 2020.
- On the supply side, the two most frequently-debated policies—land and labour reforms—are both politically-contested and seem impossible
- The chop and change after Budget 2019 clearly underscores the importance of keeping contingency plans for alternative economic scenarios.
Here are some politically palatable solutions to prevent ugly surprises later in 2020.
10. Privatisation Not A Panacea: Chidambaram
Former Finance Minister P Chidambaram said privatisation was not the panacea to government’s troubles with the economy.
- Privatisation must be done with goals in mind, Chidambaram said, questioning the Modi administration’s plan to sell stake in state-run refiner Bharat Petroleum Corporation Ltd.
I can understand if you want to privatise Air India because it is a perpetual loss maker. I cannot run an airline, let a private player come and run, I understand that. Why should we privatise an oil company?P Chidambaram, Former Finance Minister
The Modi government doesn’t understand how the macro-economy functions, said Chidambaram.