BQuick On July 10: Top 10 Stories In Under 10 Minutes

India Knocked Out!

The Indian men’s cricket team was knocked out of the ICC World Cup 2019 after they lost to New Zealand in the semi finals.

• India was bowled out for 219 while chasing 240 in the rain-interrupted that was played over two days .
• India lost four quick wickets with Rohit Sharma, KL Rahul and Virat Kohli all getting dismissed after scoring just one run each.
• Ravindra Jadeja and Mahendra Singh Dhoni raised hopes of an improbable win after adding 116 runs for the seventh wicket, after coming together at 92 for six.

And here’s a roundup of all the other top stories of the day in brief.

1. Government’s Message To Foreign Investors

The apex direct tax body said foreign portfolio investors and alternative investment funds can get registered as corporates instead of a non-corporate structure or trust to avoid payment of a higher surcharge.

• The clarification by the Central Board of Direct Taxes is aimed at addressing the ambiguity around the government’s proposal to raise surcharge on individuals earning Rs 2 crore and above.
• It wasn’t clear whether this would cover FPIs and alternative investment funds that are registered as non-corporate entities with the market regulator. This spooked the markets and triggered a selloff.

The taxman thinks imposing higher tax on super rich will help in nation building.

2. How Lenders Want To Resolve DHFL’s Stress

Lenders to Dewan Housing Finance Corporation Ltd., who are finalising a resolution plan to save the beleaguered housing financier, are mulling to take over its operations, two people in the know said.

• While the resolution plan is still in the preliminary stages, lenders led by State Bank of India could end up becoming majority owners of DHFL and appoint their representatives to run the company, the people said on condition of anonymity as the discussions are confidential.

An initial assessment by the lenders pegged the net present value loss at 35-40 percent in DHFL.

4. Sensex Drops, S&P 500 Tops 3,000

Indian equity benchmarks ended lower, dragged by Bajaj Finance Ltd., Axis Bank Ltd. and Larsen & Toubro Ltd.

• The S&P BSE Sensex closed 174 points or 0.45 percent lower at 38,557.04.
• The NSE Nifty 50 ended at 11,498, down 57 points or 0.49 percent.
• The broader market index represented by the NSE Nifty 500 Index closed 0.59 percent lower.
• All the 11 sectoral gauges compiled by NSE ended lower.

Follow the day’s trading action here.

The S&P 500 surged above 3,000 for the first time, and Treasuries rose with gold after Jerome Powell signaled an openness to rate cuts amid ongoing uncertainty in the economy, cementing market bets for easing at July’s Federal Reserve meeting.

• The Dow Jones Industrial Average joined the S&P 500 at an all-time high after the Fed chairman said in prepared remarks that downside risks to the economy remain, even after Friday’s strong jobs report forced investors to recalibrate rate-cut expectations.
• The yield on 10-year Treasuries fell to 2.04 percent after climbing above 2.10 percent for the first time in a month.
• The dollar weakened.
• Oil rose above $59 a barrel in New York.

Get your daily fix of global markets here.

5. Trade Settlement Reputation At Risk?

An options dispute sent back to the market regulator by an appellate tribunal may have a bearing on how foreign investors view India’s securities trade settlement record.

• This month, the Securities and Exchange Board of India is scheduled to pass its order on the call options sold by stockbroker Allied Financial Services Ltd.
• The dispute stems from illegal use of mutual fund units as a collateral, and the regulator will rule if such contracts should be annulled or settled.
• While the amount involved is Rs 400 crore, foreign investors including Citigroup Mauritius had bought the contracts.
• Every day, the regulator delays its decision adds to the reputation risk, said a senior executive at a brokerage firm providing custodial services. He spoke on the condition of anonymity since an investigation is on.

SEBI had rejected the demand to annul the trades before the Securities Appellate Tribunal sent the matter back to it.

6. SIAM Hints At ‘Critical’ Measures

Indian automakers may have to resort to “critical” measures, including a hiring freeze, as demand for passenger vehicles and two-wheelers is yet to pick up, industry body Society of Indian Automobile Manufacturers said on Wednesday.

• “If this kind of situation continues, then the industry will have to take all kinds of measures, including not hiring,” Vishnu Mathur, director general of SIAM, told BloombergQuint when asked whether the industry is contemplating job cuts.
• He didn’t elaborate on what other critical measures would be.
• Mathur, however, said there have been reports of dealerships closing, leading to job losses. “As of now, we don’t have reports of OEMs (original equipment makers) laying off people,” he said.

Here’s how auto sales fared in June, according to SIAM data.

7. Brookfield Eyes Majority Stake In Suzlon

Brookfield Asset Management Inc. is planning an offer for a majority stake in India’s debt-laden Suzlon Energy Ltd., people familiar with the matter told Bloomberg News.

• The Toronto-based investment firm is working with a financial adviser for due diligence on Suzlon, the people said, asking not to be identified as the details are private.
• Brookfield proposes to start with buying new shares issued by the company, followed by purchasing stake from the existing holders under an open offer, the people said.
• As part of the proposed deal, the Canadian company is in discussions with Suzlon’s creditors to restructure the outstanding bank loans of more than Rs 11,000 crore, under a so-called one-time settlement plan, the people said.

Here’s what Brookfield is demanding of the State Bank of India-led lenders’ consortium.

8. Axis Bank Pick Banks For $1.3 Billion Share Sale

Axis Bank Ltd. has picked banks including Citigroup Inc. and JPMorgan Chase & Co. to arrange a planned share sale of at least $1.3 billion, people with knowledge of the matter told Bloomberg News.

• India’s third-largest private sector lender has also selected Credit Suisse Group AG, BNP Paribas SA, HSBC Holdings Plc., UBS Group AG and Axis Capital Ltd. for the proposed offering, the people said.
• Axis Bank can add more arrangers later, they added.
• The share sale could raise as much as $2 billion, one of the people said.

A deal would help the lender led by CEO Amitabh Chaudhry bolster loans and boost overall capital buffer.

9. Walmart’s $10-Billion India Surprise

When Walmart Inc. paid $16 billion for control of India’s e-commerce pioneer Flipkart Online Services Pvt. last year, the American retail giant got a little-noticed digital payments subsidiary as part of the deal. Now the business is emerging as one of the country’s top startups, a surprise benefit for Walmart from its largest-ever acquisition.

• Flipkart’s board recently authorized the PhonePe Pvt Ltd. unit to become a new entity and explore raising $1 billion from outside investors at a valuation of as much as $10 billion, people familiar with the matter told Bloomberg, asking not to be named because the discussions are private.
• The funding may close in the next couple of months, although the talks are not finalised and terms could still change, they said.
• The unit would then become independent with a distinct investor base, although Walmart-owned Flipkart would remain a shareholder.
• Walmart and Flipkart didn’t respond to emails seeking comment.

PhonePe’s volume and value of transactions have roughly quadrupled over the past year.

10. When Investing, Bow To Process, Not Personality

Instead of relying on some market expert’s predictions, learn some probabilities and range of returns, writes Kalpen Parekh.

• When it comes to investing, many seek assurance in comforting views and not real data and actual drivers of asset prices or returns.
• Acknowledge that most views and forecasts by experts can be fully discounted.

Invest in an asset class on the basis of your time horizon, and your ability to withstand fluctuations.