BQuick On Jan. 6: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Rs 3 Lakh Crore Wiped Out!
Indian equity investors lost around Rs 3 lakh crore of wealth today with the benchmark S&P BSE Sensex and Nifty logging their worst fall in four months amid fears of sustained high crude oil prices and geopolitical tensions.
- The S&P BSE Sensex clocked its worst fall since Sept. 3, 2019.
- The 30-share index closed 1.9 percent or 788 points lower at 40,676.63.
- The NSE Nifty 50 closed 1.91 percent lower to end below 12,000.
- The broader markets represented by the NSE Nifty 500 Index ended 1.95 percent lower.
- The vertical decline is greater than what we had anticipated, said Ajit Mishra, vice president and senior technical analyst, Equity Research, Religare Broking.
- All the 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Market experts, however, say that crude oil prices are unlikely to keep rising and hence, unless there’s a disruption, India will remain largely insulated.
- It’s highly unlikely that the current rally in crude oil prices will sustain and hence it will not have any impact on India’s fiscal situation as an oil importer, Chakri Lokapriya of TCG Asset Management Company said.
- “We do not expect the fall to sustain unless there is a massive disruption seen globally,” Deven Choksey of KRChoksey told BloombergQuint in an interaction.
Read what market experts had to say about today’s fall.
2. Geopolitical Tensions Rattle Global Investors
Stocks fell for a second session as rising tensions in the Middle East rattled investors. The dollar dropped and treasuries rose. Investors continued to move into haven assets as gold touched the highest in more than six years.
- The S&P 500 Index fell 0.4 percent as of 9:33 a.m. New York time.
- The Stoxx Europe 600 Index sank 0.7 percent.
- West Texas Intermediate crude advanced 1.2 percent to $63.83 a barrel.
Get your fix of global markets update here.
As geopolitical tensions escalate, Mohammed Apabhai, Citigroup global markets head of Asia Trading Strategy, said any dip in the global equity market will be used as buying opportunities by investors.
- “Any pullback you will see in the first couple of months will be aggressively bought into,” he told Bloomberg News in an interview.
- “As long as there isn’t a significant escalation, we should be okay. If there is a significant escalation, Asia will fall into the pattern we have seen before," he added,
Watch Citigroup’s Mohammed Apabhai speak on the global equity market, gold prices and more.
Also read: Will Oil Become a Weapon of Choice for Iran?
3. No Demand For Godrej, While Things Remain Tight For Bajaj Finance
Godrej Consumer Ltd. said its domestic demand faced challenges even in the quarter ended December as Indians curbed spending on biscuits to cars amid the worst consumption slowdown in nearly a decade.
- The Adi Godrej Group’s flagship consumer goods company reported mid-single-digit volume growth in India during the third quarter, according to its quarterly update on the bourses.
- The maker of ‘Cinthol’ soaps witnessed relatively mixed demand across some geographies of operations, the filing said.
The Godrej group company expects a gradual improvement in consumer demand.
Bajaj Finance Ltd.’s assets under management in the October-December period grew at its slowest pace in five quarters after the non-bank lender tightened its lending norms earlier this fiscal.
- The company’s AUM grew 35.1 percent year-on-year to Rs 1.42 lakh crore in the third quarter, according to its stock exchange filing.
- On a sequential basis, its AUM rose 7 percent.
- Bajaj Finance said it acquired 2.5 million customers in the third quarter as against 1.9 million customers in the previous quarter.
The AUM growth is still “healthy” given the overall slowdown, one brokerage said.
4. Bezos & Biyani Strengthen Alliance
Amazon India has become the authorised online sales channel for Future Retail Ltd., including Big Bazaar and FoodHall, as the Jeff Bezos-led e-commerce platform aims to take on the emerging challenge from Reliance’s JioMart and Walmart-backed Flipkart in one of the world’s fastest-growing retail markets.
- Customers will be able to order a wide range of food, groceries, fashion, footwear and homeware online from Amazon, the Kishore Biyani-founded retail entity said in an exchange filing.
- Future Retail will list on the Amazon Prime Now programme, allowing customers to get food, grocery and general merchandise delivery within two hours in Delhi, Mumbai, Bengaluru, and Hyderabad.
- The companies have already launched the service across 22 centres in the country.
The partnership comes nearly five months after Amazon picked up an indirect stake in Future Retail.
5. Urban Cooperative Banks: Tighter Supervisory Framework
The Reserve Bank of India has tightened its supervisory action framework to better manage stressed urban cooperative banks.
- The new guidelines include threshold limits for asset quality, profitability and capital adequacy to determine whether a UCB should be put under a corrective active framework, similar to the one imposed on scheduled banks.
- Under the revised rules, an urban cooperative bank may be placed under the framework, if it meets any one of the three conditions set by the RBI.
- Net non-performing asset ratio of over 6 percent.
- Two consecutive years of losses.
- Capital adequacy ratio below 9 percent.
This is the third recent circular aimed at improving the functioning of cooperative banks.
6. A Glimmer Of Resurgence In Services Sector?
India’s main services index rose to the highest level in five months in December as improving new work orders helped boost activity in the country’s dominant sector.
- The seasonally adjusted Markit India Services PMI index climbed to 53.3 from 52.7 in November, suggesting a strong end to the calendar year.
- The level was the highest since July.
- While the pick-up in activity signaled an uptick in business confidence, it was accompanied by a rise in inflationary pressures, the survey showed.
That trend may keep monetary policy makers from resuming interest-rate cuts anytime soon.
7. Don’t Cite Pending Cases To Stall: Supreme Court Tells Vijay Mallya
The Supreme Court on Monday clarified that Vijay Mallya cannot use the proceedings pending in the Supreme Court to prejudice or stall proceedings going on against him in other jurisdictions.
- The top court bench headed by Chief Justice of India SA Bobde, while passing the clarification order, said it will be applicable for proceedings going on anywhere in the world.
- That comes after the central government approached the Supreme Court on the matter. Solicitor General Tushar Mehta informed the apex court that State Bank of India has initiated insolvency proceedings against Mallya in a U.K. court and the judgment, in that case, has already been reserved.
The U.K. court has reserved its judgment on the insolvency plea by SBI for Dec. 11, 2020.
8. Innovate To Survive—The New FMCG Mantra?
Companies from ITC Ltd. to Godrej Consumer Products Ltd. are increasingly relying on innovation to sustain growth or create newer markets even as India’s slowing consumption has dragged the GDP growth to the lowest in more than six years.
- The number of new launches actually fell during the slowdown—down to 13,800 in 12 months through June 2019 from 16,100 in the year-ago period.
- But the fresh products launched in the last few years helped create new growth avenues, particularly in the premium category.
- “India is experiencing a wave of premiumisation, with opportunities not only centered around metros or upper social class but also among the rural consumers,” Nidhi Srivastava, BASES Lead, South Asia, Nielsen Global Connect, told BloombergQuint.
- Breakthrough innovations in the FMCG categories command a much higher price premium compared to the category, she said.
Here’s how that has helped Nestle beat the economic slowdown in the last two quarters.
9. Insurers’ Product Mix Is Changing
India’s worst auto slowdown in over two decades has prompted general insurance companies to look at ways to reduce dominance of motor business in their product mix.
- While the motor business remains the biggest contributor to premium, insurers are focusing on ramping up the non-motor business including health, fire and other segments.
- Motor business posted a muted gross direct premium growth—the lowest across categories—during the first eight months of the ongoing fiscal as Indians bought fewer vehicles.
- In comparison, the gross direct premium income underwritten by insurers through non-motor business continued to register double-digit growth until November.
Not surprising then that while the motor segment still dominates the gap with the rest of the categories is narrowing.
10. Delhi Election Dates Declared As Protests Rage In National Capital
The Election Commission said today that assembly elections in Delhi will be held on Feb. 8 while the results will be declared at Feb. 11. The election dates were announced on a day when students across the country once continued to protest in solidarity for Jawaharlal Nehru University where masked goons entered the campus and attacked pupils.
- In Mumbai, students and citizens occupied the promenade at Gateway of India in an indefinite protest that began at midnight.
- In Delhi too, there were multiple protests at various campuses including JNU, Aligarh Muslim University and Jamia Millia Islamia.
- Students organised protests in Jadavpur University in Kolkata, Savitribai Phule University in Pune, Indian Institute of Management-Ahmedabad and at the townhall in Bengaluru.
- The Indian diaspora at U.K.’s Oxford University also protested.
- The Delhi police, on the other hand, said that they found some vital clue regarding the perpetrators and a special committee is investigating the incident at JNU.
Follow developments around the violence at JNU and the student protests here.