BQuick On Jan. 24: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief
1. RBI Governor Calls For Structural Reforms, Fiscal Measures
Reserve Bank of India Governor Shaktikanta Das has called for structural reforms and fiscal measures to help give a “durable push” to demand. Das’ comments come days ahead of the Union Budget which is expected to strike a tough balance between fiscal prudence and the need to support the economy at a time when demand is weak.
- Das said that the central bank has been making a constant assessment of the economy based on incoming data and forward-looking information.
- This helped the central bank recognise the imminent slowdown and act early, Das said.
- Monetary policy, however, has its own limits, Das said.
Structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth.Shaktikanta Das, Governor, RBI
Here are the sectors that Das wants the government to prioritise.
2. How JSW Steel, Bank Of Baroda And UltraTech Cement Fared In Q3
JSW Steel Ltd.’s quarterly profit missed estimates as construction activity fell due to a heavy and extended monsoon season.
- Net profit declined 87 percent year-on-year to Rs 211 crore.
- Revenue fell 11.1 percent to Rs 18,055 crore.
- Operating performance fell 45.5 percent to Rs 2,451 crore.
Here’s why profit was at a near four-year low.
UltraTech Cement Ltd.’s quarterly profit rose as energy costs fell. Still, it missed estimates.
- Net profit rose 48.6 percent year-on-year to Rs 643.15 crore.
- The rise in profit was mostly aided by a 15 percent fall in energy costs.
Read what the management had to say about the outlook for the rest of the fiscal.
Bank of Baroda reported a loss as provisions against stressed assets continued to rise.
- Net loss stood at Rs 1,407 crore.
- Provisions rose 47 percent to Rs 6,621 crore.
- Total advances during the quarter rose 1 percent.
The bank is focussing on retail loans to tide over issues.
3. Selling One Part Of DHFL's Book At A Premium
Lenders to Dewan Housing Finance Corporation Ltd. are in talks with at least three private equity funds to sell the beleaguered home financier’s retail lending business, two people aware of the matter said.
- The State Bank of India-led lender consortium reached out to these investors—including AION Capital, Cerberus Capital Management and Broad Peak Capital Advisors—this month after their previous attempts to find a bidder for the housing financier failed to yield any result, the people cited earlier told BloombergQuint on the condition of anonymity as the conversations are confidential.
- The lenders, under the Insolvency and Bankruptcy Code, have been considering splitting the company’s loan book into retail, wholesale and slum rehabilitation projects to find more bidders, and sell each at different prices.
Previous attempts to split DHFL’s book and finding bidders didn’t get the RBI’s approval.
4. Why Institutions Are Rushing To Sell NSE Shares
Shares of India’s largest bourse are flooding the private market as three large investors look to sell a combined 2 percent stake amid lack of clarity over its much-delayed initial public offer.
- Earlier this month, State Bank of India said it was looking to sell 50 lakh shares, or 1 percent stake, in the National Stock Exchange as part of its fundraising exercise, according to a tender document on its website.
- The SBI group is the NSE’s largest shareholder after Life Insurance Corporation of India, together holding close to 20 percent stake as of December.
Institutions have been selling stake in the private market since 2016.
5. Nifty Gains For Second Day, U.S. Stocks Advance
Indian indices ended higher for the second consecutive trading session, led by the gains in Kotak Mahindra Bank Ltd. and ICICI Bank Ltd.
- The S&P BSE Sensex rose 0.5 percent or 226.79 points to end at 41,613.19.
- The NSE Nifty 50 gained 0.5 percent to end at 12,248.25.
- The broader markets represented by the NSE Nifty 500 Index rose 0.62 percent.
- Nine out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. stocks rose and European shares rallied as investors set aside fears over a deadly virus spreading from China to focus on supportive corporate news and economic data.
- Technology stocks led U.S. gains after Intel Corp. gave bullish revenue forecasts. The Stoxx Europe 600 Index pushed toward a record close on its biggest advance in five weeks.
- The dollar edged higher before a U.S. purchasing-managers’ report due later Friday.
- Treasury yields dipped, while the yen and gold held steady.
- Oil fell for a fourth day to $54.76 a barrel.
Get your daily fix of global markets here.
6. Silver Lining For Farm Sector
India’s rural economy, which has been hit by weakness across the farm sector, could see support from rising prices and an improvement in reservoir levels.
- India’s nominal GDP growth is estimated to fall to a 42-year low of 7.5 percent in 2019-20, showed advances estimates released by the government earlier this month.
- Farm sector nominal growth, however, is expected to rise to 9.8 percent — the highest in three years.
- The pick-up in nominal growth, which is closely linked to incomes, comes as food inflation spiked to 12.2 percent in December—the highest in five years.
While the spike in prices hurts consumers of food, it helps those who produce and sell these items.
7. Arbitrary Or Excessive Tax Results In Social Injustice: Chief Justice Bobde
Chief Justice of India SA Bobde made a case for speedy resolution of tax disputes saying it will act as an incentive for tax payers and free the funds locked in litigation.
- The Chief Justice said tax judiciary plays a very important role in resource mobilisation of the country and expressed concern over pendency of cases.
- "A just and speedy dispute resolution is perceived as a tax incentive by the taxpayer. To the tax collector, an efficient tax judiciary assures that demands arising out of legitimate assessment are not strangled in delayed litigation," Bobde said at the 79th foundation day celebrations of Income Tax Appellate Tribunal.
While tax evasion is a social injustice to fellow citizens, arbitrary or excessive tax also results in social injustice by the government itself.Justice SA Bobde, Chief Justice of India
8. The NBFC Problem Exists Across Nations, Says Bain Capital’s Steve Pagliuca
An industry-wide funding squeeze crippled India’s non-bank lenders in the last two years, prompting the government and regulator to spring to action. But Bain Capital’s Steve Pagliuca said the problem wasn’t unique to India.
- “The NBFC sector is an interesting issue because it has transcended many countries,” Pagliuca, co-chair at the private equity firm, which manages more than $100 billion in assets globally, told BloombergQuint at the annual meeting of the World Economic Forum in Davos, Switzerland.
There wasn’t as much regulation earlier, there was more freewheeling. They got reined in the U.S. with the new financial regulations and I think they are getting reined in India.Steve Pagliuca, Co-Chairman, Bain Capital
- Pagliuca thinks that the RBI has acted “reasonably aggressively” to make things better
Bain Capital will continue to hunt for deals in the financial services sector in India.
9. On Democracies And The ‘Splinternet’
2019 was a year when the people took to the streets across the globe. From climate change to economy and minority rights, protests raged in various countries demanding change and upheaval of existing systems.
- That shouldn’t be viewed as a negative thing but rather a dynamic force of democracies, according to noted historian and author Adam Tooze.
- “I don’t measure the success or failure of democracy by the level of protests. I would think of that as an integral part of a deep flourishing democratic culture,” Tooze told BloombergQuint.
- “Those sorts of things are anchoring for a democratic process. Even if you don’t win, you at least make a public statement of what your position was which then allows you to chain forward from there,” he said.
Tooze explains the changing nature of democracy and why it in itself could be dangerous.
The world is on the cusp of a “technology war”, where global powers are engaged in a data race, the signs of which will first emerge in the 5G debate, according to John Chipman, director general and chief executive officer at International Institute for Strategic Studies, London.
- If the world fails to accommodate all the 5G suppliers, it faces a situation where nations will try to have their own, Chipman told BloombergQuint.
- If the internet is not free-flowing and “bumps up against walls of different kinds, then the advantage that 5G would deliver to economies is lost”, he said.
If that happens, we move from an internet to a splinternet.John Chipman, CEO, International Institute for Strategic Studies
Chipman wants India to have an extroverted personality.
10. China In Lockdown As Virus Fear Grows
China is struggling to contain rising public anger over its response to a spreading coronavirus even as it took unprecedented steps to slow the outbreak, restricting travel for 40 million people on the eve of Lunar New Year.
- The government ordered travel agencies to suspend sales of domestic and international package tours after imposing transport curbs on cities near the center of the outbreak.
- The turmoil comes as the virus stymies efforts to track infected patients. While the death toll continues to rise -- and now includes someone as young as 36 -- some infected patients aren’t showing a fever, a symptom governments around the world have been using to screen for the pathogen.
The pressure is rising on China as it tries to come to grips with a disease that some fear could rival SARS, that claimed almost 800 lives.