BQuick On Jan. 2: Top 10 Stories In Under 10 Minutes
Commuters walk near the Terreiro do Paco ferry terminal as the sun sets in Lisbon, Portugal (Photographer: Mario Proenca/Bloomberg)  

BQuick On Jan. 2: Top 10 Stories In Under 10 Minutes

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

1. ‘A Recipe For Unmitigated Disaster’

Tata Sons Pvt. Ltd. has moved the Supreme Court against the National Company Law Appellate Tribunal’s judgment to reinstate Cyrus Mistry as executive chairman of Tata Group’s holding company, terming it a “recipe for unmitigated disaster”.

  • In its judgment on Dec. 18, NCLAT had ruled that Mistry’s dismissal as chairman of Tata Sons was illegal.
  • It had restored Mistry to his original position as executive chairman of the company and set aside the change of Tata Sons from public to private company.
  • Tata Sons, in its petition to the top court, argued that the NCLAT had no jurisdiction to reinstate Mistry and this wasn’t even sought by him.
  • The removal was done only because there was “an untenable trust deficit” between Tata Trusts and Mistry, the petition said, adding that the judgment is untenable in law and has undermined corporate democracy and rights of the board of directors.

Here are the other key arguments that Tata Sons made.

2. Auto-psy

Retail auto sales resumed their decline in December, after two months of recovery on account of the festive season, indicating that the makers of cars and two-wheelers are yet to recover from the worst slowdown in more than two decades.

  • The full-year data shows that while the auto industry did suffer a sales contraction, it wasn’t as severe as the decline in wholesales.
  • This indicates that a significant part of the problem, at least for passenger vehicles, was lower inventory holding capacity at dealerships.
  • Of course, that’s an outcome of sluggish sales and credit difficulties. But maybe, and we’ll know better once industry-wide wholesale data for the calendar year is published by SIAM, millennials got a bad rap for little reason.

Millennials may have gotten a bad rap for little reason.

3. RBI Plans A Third Twist

The Reserve Bank of India has announced its third round of simultaneous purchase and sale of government securities.

  • While in the earlier rounds, the central bank had said it would purchase and sell Rs 10,000 crore worth of government bonds and notified the same government securities, the RBI said in a statement today that it would purchase two new longer-dated government securities next week.
  • This includes longer-dated government bonds which mature in 2024 and 2026, in addition to the 10-year bond maturing in 2029.
  • In the first special OMO auction which took place on Dec. 23 last year, the RBI purchased Rs 10,000 crore worth of 2029 government bonds for which it had received bids worth Rs 20,826 crore.
  • The RBI purchased another Rs 10,000 crore worth of 2029 bonds in the second round of special OMO auctions on Dec. 30.
  • It had received Rs 25,698 crore worth of bids.

Here’s what RBI is hoping to achieve from Operation Twist.

4. Manufacturing Activity Picks Up

India’s manufacturing activity improved in the last month of 2019 as a “solid rise” in factory orders boosted production growth.

  • The Nikkei India Manufacturing Purchasing Managers’ Index rose to 52.7 in December from 51.2 in November, according to a statement.
  • This was the 29th straight month when India’s manufacturing PMI remained above the 50-point mark.
  • In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The improvement was driven by new orders that rose at the fastest pace since July.

5. A New Year, A New High For Nifty

NSE Nifty 50 extended gains for the second consecutive session and closed at a record high.

  • The 50-stock index rose 0.82 percent or 99.7 points to end at an all-time high at 12,282.95.
  • The S&P BSE Sensex rose 0.78 percent to close at 41,626.64.
  • The broader markets represented by the NSE Nifty 500 Index rose 0.92 percent.
  • Ten out of 11 sectoral gauges compiled by NSE ended higher.

Follow the day’s trading action here.

Meanwhile, Nilesh Shah of Kotak Mahindra Asset Management advised investors to take a bottom-up approach instead of the top-down approach if they want to make money in India’s equity market In 2020.

Here are the areas where Shah sees opportunities in the new year.

U.S. Stocks Rise; Dollar Gains

Stocks started the year on the front foot, building on strong gains for many asset classes in 2019 as investors cheered the latest policy move by China’s central bank to support its economy.

  • The main U.S. equity benchmarks all opened higher in the wake of one of the best years for American stocks in the past decade.
  • Gauges in Hong Kong and Shanghai jumped more than 1 percent after the People’s Bank of China said it will increase the supply of cheap funding to banks, in line with market expectations.
  • Gold strengthened 0.7 percent to $1,528.32 an ounce, the highest in more than 14 weeks.

Get your daily fix of global markets here.

6. LIC Plays It Safe

India’s largest insurer reduced its exposure to equities and corporate bonds even as it bought more government securities in the six months through September 2019.

  • While Life Insurance Corporation of India’s total investment rose 8.9 percent year-on-year in the first half of the ongoing financial year, the share of equity in its portfolio dipped 1.8 percent and corporate bonds and debentures fell 20.8 percent during the period, according to its latest quarterly filing.
  • The insurer’s Investments in government securities and bonds, however, rose 13.4 percent to 19.72 lakh crore.
  • LIC’s investment book for policyholders rose 8.83 percent year-on-year to Rs 28.92 lakh crore as of September.
  • The return on investment, however, fell marginally to 7.37 percent in the first six months of FY20 compared with 7.42 percent in the corresponding previous period.

Here’s a detailed look at where LIC is investing your money.

7. Rs 2-Lakh-Crore UPI Milestone

The value of transactions made through unified payments interface doubled over last year to breach the Rs 2-lakh-crore mark in December, the first time since its inception.

  • The platform recorded more than 131 crore transactions during the month, according to data released by the National Payments Corporation of India Ltd.—the manager and operator of UPI.
  • The NPCI, in a tweet, said the value of the transaction rose 7 percent month-on-month from Rs 1.89 lakh crore and 122 crore transactions in November.
  • The UPI network had crossed the Rs 1-lakh-crore transaction value in December 2018.

Bulk of the transactions were dominated by the private players.

8. Marico Remains Under Pressure

Marico Ltd. said its hair oil and coconut oil businesses dipped marginally in the quarter ended December, leading to a slight decline in volume growth of its India business.

  • Volume growth of the company’s domestic business fell marginally due to a decline in coconut oil, hair oils and other portfolios, the world’s largest maker of coconut oil said in an exchange filing.
  • Its cooking oil vertical Saffola and foods portfolio, however, delivered healthy double-digit volume growth, the filing said.
  • The Mumbai-based conglomerate also said its international arm posted high single-digit constant currency growth aided by its Bangladesh arm, “while other geographies lacked fervour”.

Growth across personal care continued to struggle.

9. Peninsula Says Government Rent Delay Triggered Default

Mumbai-based developer Peninsula Land Ltd. repaid Rs 2.35 crore to State Bank of India on Thursday, a person privy to the development told BloombergQuint on the condition of anonymity.

  • On Wednesday, the company told the stock exchanges that it was in default of principal payments worth Rs 88 lakh and interest payments worth Rs 1.47 crore to SBI’s Tara Chambers branch in Pune which was part of a secured loan.
  • The Rs 177.72-crore secured loan was borrowed under a lease rental discounting system, where the developer repays the loans from the rent it receives from tenants who occupy the building.
  • In this particular case, the building is Piramal Chambers in Parel, Mumbai, which is occupied by the income tax department.
  • According to the person quoted earlier, Peninsula Land is awaiting rent from the central government for the building, owing to which the loan amount was in default.

For now, the company has made the repayments through its own cash flow.

Also read: Debt Recovery: Creditors To Lose Claim If They Fail To Share Borrowers’ Information

10. How The National Population Register Data Will Be Gathered

While it appears like a smooth exercise of self-certified data collection, the complexities that could arise due to erroneous inputs are endless, given the varying levels of digital literacy in the country, writes Srinivas Kodali.

  • This is not the first time the idea of mobile app-based surveys or real-time registries is being tried out in the country.
  • The NPR app’s collection of identity details like Aadhaar, voter ID, driver’s license, PAN, and mobile number is also a serious problem.
  • With ECI and MoRTH yet to bring laws to link Aadhaar, the collection of these parameters—even voluntarily—for the NPR is outright illegal

Past state surveys hold a lot of lessons in terms of data leaks, voter profiling and deletions of voters.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.