BQuick On Jan. 28: Top 10 Stories In Under 10 Minutes
This is a roundup of the top stories of the day.
1. Jet’s Bet
Jet Airways India Ltd. is seeking shareholder nod for allowing banks and financial institutions to have a say in the operations of the airline by converting loans into shares.
- The airline is seeking shareholder approval through a special resolution to increase its authorised share capital to Rs 2,200 crore from Rs 200 crore, according to its stock exchange filing.
- The move will give it more room to issue fresh shares to lenders.
- The company is seeking approval from shareholders to increase the limit of authorised share capital from:
- 18 crore equity shares to 68 crore.
- 2 crore preference shares crore to 152 crore.
The extraordinary general meeting will be held on Feb. 21 in Mumbai.
2. Zee Promoters Get A Breather
Subhash Chandra’s Essel Group said that lenders having a pledge on the Zee Group promoters’ shares have granted time until April to repay dues after they sold 0.6 percent stake in the group’s flagship on Friday.
- The controlling shareholder of the broadcaster arrived at an understanding with lenders on Sunday.
- Essel Group met executives of mutual funds, non-bank lenders and banks to allay concerns over the debt held by them in its infrastructure companies after shares of group entities tumbled, eroding Rs 14,000 crore of market value.
- That came after a report said the Essel Group’s name emerged in a probe linked to large deposits made after demonetisation—the company denied any links.
Zee is in advanced stages of discussion with the strategic partner to sell stake.
3. Congress Promises Minimum Income For Poor
Congress President Rahul Gandhi announced that his party would ensure minimum income guarantee for every poor citizen in the country if it returns to power after the Lok Sabha polls due in April-May.
- “The Congress has decided to take a historic decision... The Congress-led government is going to give minimum income guarantee. This means, each poor person in India will have minimum income. This means there will be no hungry, poor people in India,” Gandhi said.
- Gandhi made the remarks at the ‘Kisaan Abhaar Sammelan' held at Raipur to express gratitude to Chhattisgarh's people, particularly farmers, for voting the party to power in the state after 15 years.
Will Rahul’s promise be a game changer ahead of elections? Watch this to find out.
4. Indian Market Declines For Second Straight Day
Indian equity benchmarks declined for the second consecutive session led by losses in ICICI Bank Ltd., Reliance Industries Ltd. and Housing Development Finance Corporation Ltd.
- The S&P BSE Sensex fell 1.02 percent or 369 points to 35,657.
- The NSE Nifty 50 Index dropped 1.10 percent or 119 points to 10,662.
- Seventeen of 19 sector gauges compiled by BSE ended lower led by S&P BSE Finance Index's 2.1 percent decline.
- On the flipside, S&P BSE Teck Index was top gainer, up 0.8 percent.
Follow the day's trading action here.
U.S. stocks fell after Caterpillar and Nvidia blamed slowing global growth for disappointing results, adding to concern the trade war with China is hitting corporate profits.
- The S&P 500 began a crucial week for trade and monetary policy sharply lower as the sector bellwethers doused enthusiasm over the young earnings season.
- The Dow Jones Industrial Average sank almost 400 points, with all 30 members in the red.
- Investors will also grapple with trade negotiations, a Federal Reserve policy decision and there will be another series of potentially key votes in the U.K. Parliament about Brexit.
- West Texas Intermediate oil futures fell 1.7 percent to $52.78 a barrel.
Get your daily global markets fix here.
5. What Mobius Eyes In Indian Companies
Investment guru Mark Mobius likes to stick with companies that focus on getting a better return on capital, now perhaps more than ever.
- If a company has healthy returns on capital, it means they'll have enough money to reinvest and to pay dividends, he pointed out. “Of course we're interested in dividends, not for the sake of dividends, but to show that the company is capable of paying back shareholders,” he said.
- Emerging markets will increasingly become a favoured destination for global equity investors in 2019 as the U.S. equity market enters a bear cycle, Mobius said.
- Within the emerging market basket, India looks particularly attractive, he said.
In talking to the management of some companies, I’m so impressed by their frugality. They are so cautious on spending, they have a very cautious view of where to put their capital. They’re looking at and focusing on return to capital and that’s a very healthy sign.Mark Mobius, Co-Founder, Mobius Capital Partners
Here are the pockets Mobius prefers at the moment.
6. Dismal January Despite Discounts
Discounts failed to boost sales in the new year as the slowdown in auto sales continued because of weak demand and a high base, according to a BloombergQuint survey.
- Automobile sales growth has slowed and demand remained subdued during the festival quarter last year because of higher fuel prices and increased upfront insurance costs.
- Most companies offered year-end discounts but that didn’t help and inventory piled up. They have continued the offers.
Here’s what dealers told BloombergQuint about January sales.
7. Investigative Adventurism Or Covering All Bases?
The first information report filed in the ICICI Bank Ltd.-Videocon Group case drew censure from Union Minister Arun Jaitley, who termed it as ‘investigative adventurism’. “If we include the entire who’s who of the banking industry – with or without evidence – what cause are we serving or actually hurting,” Jaitley asked in a blog post on Friday.
- The Central Bureau of Investigation, in its FIR, said that it may investigate members of various credit committees at the private lender.
- The committee members include veteran banker KV Kamath and current ICICI Bank CEO Sandeep Bakhshi.
- Senior bankers and sector experts that BloombergQuint spoke to said that credit committees rarely provide much of a counter-balance to management decisions. So while, on paper, the buck stops with these committees, in practice it stops with the top management of the bank.
Do the rules need to be tightened?
8. Tata Steel's Debt Reduction
Tata Steel Ltd. is looking at lowering debt by nearly Rs 3,800 crore by selling majority stake in its southeast Asia business.
- TS Global Holdings Pte Ltd. inked a pact with HBIS Group Co. Ltd. to divest its entire stake in NatSteel Holdings Pte Ltd. and 68 percent in Tata Steel (Thailand) Public Company Ltd., according to the steelmaker’s exchange filing.
- The divestment, according to the agreement, will be made to a company in which 70 percent will be held by the Chinese entity—formed by the merger of Tangshan Iron & Steel Group and Handan Iron & Steel Group of Hebei Province—and the remaining by Tata Steel.
The business contributed 7.2 percent to Tata Steel’s consolidated revenues.
9. India Doesn’t Need A Bold Budget
On Feb. 1, Prime Minister Narendra Modi’s government will present its last budget before general elections are held in a few months. Unlike most other budgets, this typically isn’t a high-octane affair; governments are discouraged from locking their successors into any new spending or taxes.
- But, Modi’s finance minister seems ready to break with that requirement.
- The reason’s obvious: They want to pack in as many big-ticket, populist announcements as they can before the election campaign.
Populist spending is expected ahead of election but Modi has left it too late, writes Mihir Sharma.
10. U.S.-Taliban Agreement?
Six days of marathon talks between the Taliban and U.S. representatives have pushed the parties close to an agreement on the framework of a peace deal aimed at ending the 18-year war in Afghanistan.
Key issues under discussion include a pledge from the Taliban to prevent Afghanistan from being used by terrorist groups such as Islamic State, the withdrawal of foreign troops, a ceasefire and direct Taliban talks with the Afghan government.
There was not yet any agreement on the ceasefire or the troop withdrawal, according the U.S. special representative on Afghan reconciliation Zalmay Khalilzad, who led the talks.
In an interview with the New York Times on Monday, Khalilzad said an agreement in principle to the framework of a peace deal had been reached, including a pledge to keep al-Qaeda and Islamic State out of Afghanistan.
The withdrawal of foreign troops remains the bone of contention.