BQuick On Jan. 23: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Piyush Goyal Named Interim Finance Minister
Piyush Goyal has been given additional charge of the Finance and Corporate Affairs ministries till Arun Jaitley remains indisposed.
- Jaitley will remain a minister without portfolio “during the period of his indisposition or till such time he is able to resume his work”, according to a media statement released by the Rashtrapati Bhavan.
- Goyal will announce the interim budget on Feb. 1, said Finance Ministry Spokesman D.S. Malik.
Jaitley underwent surgery at a hospital in New York on Tuesday, according to PTI.
2. Telecom ‘Hemorrhage’ To Stop In 2019: Sunil Mittal
India’s ailing telecom industry may not recover this year but it will “perhaps” stop bleeding, billionaire tycoon Sunil Bharti Mittal said.
- “I would say given the lay of the land, 2019 should be a year of stopping the dreadful decline. Will it be a year of recovery? Possibly not,” the chairman of Bharti Airtel Ltd. told BloombergQuint on the sidelines of the World Economic Forum in Davos.
This is a year where you have to invest more, get out more into the market for 4G, compete in the new marketplace, hold on to the market share, hold on to your better customer.Sunil Bharti Mittal, Chairman, Bharti Airtel
Sunil Bharti Mittal, Chairman, Bharti Airtel Mittal said the only reason he is slightly unsure of a recovery is because Mukesh Ambani’s Reliance Jio Infocomm Ltd. is dictating the market prices.
“Eventually, one player is playing a low-tariff, high subsidy game. It has to be his call.”
3. Anand Mahindra’s 2019 Prediction
- Mahindra Group Chairman Anand Mahindra said that localisation can bypass protectionist policies that have sparked concerns among business leaders across the globe, and help make profits.
“We're in fact using it to make our businesses local. We don't know how long this protectionist, nationalist thrust may last. I personally don't think it will be a short-term phenomenon,” Mahindra told BloombergQuint on the sidelines of the World Economic Forum in Davos, Switzerland.
May be it is an exaggeration but all I am saying is that it (protectionism) has driven us to recognise that we need to belong to the countries in which we do business.Anand Mahindra, Chairman, Mahindra Group
- Mahindra said that the worst may be past and auto sales may pick up again this year. “We are hoping that the sentiment will revive this year. I am a great believer that there is huge pent up demand waiting to come out,” he said.
Mahindra added that he hopes 2019 will be the year when the money comes out.
4. Q3 Earnings: ITC, Bharti Infratel, IndiGo
ITC Ltd.’s profit rose at the slowest pace in seven quarters because a tax write-back had aided its earnings in the year-ago period.
- Net profit rose 4 percent year-on-year to Rs 3,209 crore in the quarter ended December, the country’s largest cigarette maker said in an exchange filing.
- That’s in line with the Rs 3,129 crore consensus estimate of analysts tracked by Bloomberg.
- The company’s bottom line had benefited from an exceptional gain of Rs 413 crore in the same quarter last year.
- Revenue rose 15 percent to Rs 11,227.7 crore. That compares with the estimated Rs 10,881 crore.
Here’s how ITC’s different segments performed.
Bharti Infratel Ltd.’s third-quarter profit beat estimates as Vodafone India Ltd. and Idea Cellular Ltd. paid exit charges for cutting down on overlapping towers after their merger in August.
- Net profit rose 8 percent sequentially to Rs 648 crore in the December quarter, according to the company’s exchange filing. That’s compares with BloombergQuint’s estimate of Rs 554 crore.
- The company received nearly Rs 55 crore as exit charges during the quarter due to tenancy cancellations. The company had earlier said it expects a monthly loss of Rs 60 crore due to the Vodafone-Idea merger.
- Also, the number of telecom operators per tower (tenancy ratio) declined to 1.89 times. The ratio fell below 2 times for the first time since financial year 2014-15.
Lower energy and operating costs and higher rental fee also helped.
InterGlobe Aviation Ltd., the operator of IndiGo, returned to profitability in the three months ended December, aided by higher other income, a bigger foreign exchange gain and no tax expense.
- India’s largest airline’s net profit fell 74.95 percent on a yearly basis to Rs 191 crore in the third quarter, according to its exchange filings. Analysts had forecast a wide range for bottom line between a net loss of Rs 600 crore and a net profit of Rs 600 crore.
- Revenue rose 28.14 percent on a yearly basis to Rs 7,916 crore in the three months ended December as IndiGo’s air traffic grew 23.7 percent year-on-year to 54.79 lakh during the period.
Ebitdar margin contracted 11.84 percentage points to 20.15 percent.
5. Vodafone Idea’s Rs 25,000-Crore Fundraise
The board of India’s largest telecom operator approved the proposal to raise close to Rs 25,000 crore, the bulk of it coming from promoters—Vodafone Group Plc and the Aditya Birla Group.
- Vodafone Idea Ltd., with a market capitalisation of about Rs 30,000 crore, is looking to raise funds via rights issue, according to its exchange filing. The infusion is expected to be completed by March.
- While the company hasn’t mentioned the purpose of fundraising, an analyst requesting anonymity told BloombergQuint that it would help it pare its gross debt of more than Rs 1,26,000 crore.
- Vodafone Group and the Aditya Birla Group will contribute Rs 11,000 crore and Rs 7,250 crore, respectively, according to the statement.
The rest will be raised from public.
6. Sensex, Nifty Fall For Second Day
Indian equity benchmarks fell for second day in a row led by decline in ITC Ltd.
- The S&P BSE Sensex fell 0.92 percent or 336 points to 36,108.
- The NSE Nifty 50 Index dropped 0.84 percent or 91 points to 10,831.
- Losses in ITC alone wiped out over 100 points from the Sensex making it biggest drag on the 30-share index.
- Seventeen of 19 sector gauges compiled by the BSE ended lower led by the S&P BSE Fast Moving Consumer Goods Index's 1.4 percent decline.
- On the other hand, S&P BSE Metal Index was top gainer, up 0.63 percent.
Follow the day’s trading action here.
U.S. equities advanced as higher-than-forecast results from IBM, Procter & Gamble and United Technologies helped ease mounting concern over economic growth, trade talks and the government shutdown.
- The S&P 500, Dow Jones and Nasdaq indexes all opened higher, led by shares of consumer-products and information-technology companies.
- White House adviser Lawrence Kudlow said late Tuesday that negotiations between the U.S. and China next week will be “determinative,” leaving traders on edge about the prospects for a deal.
- The yen slid as the Bank of Japan cut its inflation outlook.
- West Texas Intermediatecrude rose 1.2 percent to $53.18 a barrel.
Get your daily fix of global markets here.
7. Preventing Options Misuse
The stock market regulator is considering reducing the number of strikes allowed in an options contract to prevent their misuse for negotiated trading.
- The Securities and Exchange Board of India has sought views from its secondary market advisory committee that met on Monday, said an official aware of the development. The person didn’t want to be identified as he isn’t authorised to speak to the media about regulatory issues.
- That comes after BloombergQuint reported that the futures and options market saw a build-up in open interest—or the number of outstanding contracts—of June 2019 Nifty 50 call options for the 5,000 strike.
- It’s an unusual trade because the benchmark is unlikely to fall by more than half in five months.
It’s tough to reduce strike prices if there are outstanding contracts.
8. India’s Lehman Genie Is Out Of The Bottle Again
First, it was the IL&FS Group that ran out of money. Now that the bankrupt Indian infrastructure lender-operator has been sequestered from creditors, the country’s securitization industry is on borrowed time, writes Andy Mukherjee.
- What makes Jharkhand Road Projects Implementation Co.’s default disturbing is that investors believed its securitized debt would be unaffected by the parent IL&FS’ bankruptcy.
- These bonds were legally backed by annuity income from the Indian state of Jharkhand.
- That assurance was the basic premise on which they invested in the structured debt obligation in the first place.
The damage from the unexpected default is incalculable.
9. The Costliest General Election By Ad Spends
This year’s general election will be the biggest for India’s advertising market.
- Spending by political parties is expected to surge up to 73 percent over 2014 Lok Sabha polls to about Rs 2,500-2,600 crore this time, media buying agencies BloombergQuint spoke with estimated.
- Campaigning by Prime Minister Narendra Modi’s Bharatiya Janata Party, Rahul Gandhi-led Indian National Congress and regional parties has already set the tone.
- The last time parties spent about Rs 1,500 crore on advertising, Tanmay Mohanty, group chief executive officer at Zenith India, a media buying firm, told BloombergQuint.
Political advertising has already been on the rise since September.
10. Priyanka Gandhi Enters Active Politics
Priyanka Gandhi Vadra was today appointed Congress general secretary for Uttar Pradesh East, a move that reflects the party’s intent to go the whole hog in the politically crucial state.
- The appointment also marked Priyanka’s official entry into politics, and is expected to boost morale of party workers in the state which sends 80 MPs to Lok Sabha.
- There has been demands within the Congress for a prominent role for 47-year-old Priyanka, Rahul’s sister, to revive the Congress in Uttar Pradesh which was a Congress bastion till mid 1980s.
- Priyanka, a mother of two and wife of Robert Vadra, has always confined her role in overseeing campaigning in Amethi and Raebareli, the constituencies of Rahul and mother Sonia Gandhi respectively.
Samajwadi Party and Bahujan Samaj Party kept the Congress out of their anti-BJP alliance.