BQuick On July 12: Top 10 Stories In Under 10 Minutes

Here’s a roundup of all the top stories of the day in brief.

1. CPI At 8-Month High; IIP Holds Steady

Retail inflation continued to rise in June, led higher by food prices, particularly in urban areas.

• Consumer Price Index inflation stood at 3.18 percent in June compared to 3.05 percent in May. A Bloomberg poll of 38 economists had estimated inflation at 3.13 percent for June.
• Despite the consistent pick-up in inflation, it remains well below the target of four percent (+/-2), leaving room for the Monetary Policy Committee to cut rates further.
• Break-up of the inflation data shows a widening gap between rural and urban price increases, perhaps an indication of low wage growth in rural areas.

Here are the inflation internals.

After a sharp rebound in April, India’s factory output growth held steady in May from faster growth in electricity generation while manufacturing and mining growth moderated slightly.

• The Index for Industrial Production rose 3.1 percent in May, compared with 3.4 percent increase in April. That compares with the 2.9 percent that economists polled by Bloomberg were expecting.
• Output of capital goods and consumer durables, in April, had grown after declining sharply in March. However, growth in both slowed once again in May.

Here's a sectoral breakdown of factory output.

2. Infosys Raises Guidance; IndusInd Beats Estimates

Infosys Ltd. raised its revenue forecast for the full year even as higher costs led to a contraction in margin and decline in profit in the quarter ended June.

• The software services exporter expects revenue to grow 8.5-10 percent in 2019-20, according to its exchange filing. That’s higher than its 7.5-9.5-percent guidance in the previous quarter.
• Higher revenue guidance comes at a time the company’s margin fell on account of wage hikes, visa costs and rupee appreciation.
• Operating margin narrowed 90 basis points to 20.5 percent.

Infosys has also changed its shareholder payout policy.

IndusInd Bank Ltd.’s profit beat analyst estimates in a quarter when it completed its merger with microlender Bharat Financial Inclusion Ltd.

• The lender reported a profit of Rs 1,432.5 crore, according to its exchange filing. That’s higher than the Rs 1,235-crore estimate of analysts tracked by Bloomberg.
• Net interest income, or the bank’s core income, stood at Rs 2,844 crore—matching the Rs 2,850-crore estimate.
• The lender’s provision against bad loans was Rs 430 crore.

Here are the other key takeaways from IndusInd Bank’s quarterly results.

3. Aditya Puri’s 15-Day Challenge

HDFC Bank Ltd.’s long-time Chief Executive Officer Aditya Puri steps down in October next year but the lender is yet to name a successor. While investors are fretting about when a new successor would be identified, Puri is not concerned.

• He has set the bar high for any aspiring candidate: learn the job in two weeks.
• “If my replacement wants to be mentored for 1 year, I don’t want that replacement,” Puri said at the lender's annual general meeting.

• HDFC Bank has already started a global search for its next CEO as Puri is set to retire in October 2020, when his term ends.
• They are looking at both internal and external candidates.

Here are other highlights from Puri's AGM address.

4. Growth? Not Now, Says SBI Chief

Public sector banks should be cautious about chasing growth even as balance sheets are improving, according to State Bank of India Chairman Rajnish Kumar.

• Most public sector banks took the last one year to repair their books and may take two quarters of 2019-20, Kumar told BloombergQuint in an interview.

Kumar cautioned that banks should not jump into a trap where they want to show progress and earnings.

5. Sensex Drops, U.S. Stocks Advance

Indian equity benchmarks clocked their worst weekly losses since May 12.

• The S&P BSE Sensex closed 1.9 percent lower this week at 38,736 and the NSE Nifty 50 closed at 11,552, down 2.2 percent.
• The broader market index represented by the NSE Nifty 500 Index closed 2.1 percent lower during the period.
• On Friday, the 31-share index and the 50-stock gauge closed 0.22 percent and 0.26 percent lower respectively.
• The 500-share index closed 0.1 percent lower.
• The market breadth was tilted in favour of buyers.

Follow the day’s trading action here.

U.S. equities climbed as investors clung to their cautious optimism on prospects for easier monetary policy, despite a bigger-than-projected gain in a key inflation measure.

• The S&P 500 Index rose Friday after finishing at a record high the day before. Industrials led the benchmark, while drug stocks continued to weigh on the index.
• Treasury 10-year yields held close to a one-month peak, even after an unexpected rise in American producer prices.
• In all, the inflation report seemed to do little else to alter investor sentiment toward the Federal Reserve’s next policy move.
• The dollar retreated for a third day.

Get your daily fix of global markets here.

6. What Kenneth Andrade Thinks Will Revive Private Capex

Falling cost of capital will resurrect private sector investments in India over the next couple of years but government spending will have to fill in the gap till then to boost growth, according to Kenneth Andrade.

• “If we have to be excited about anything in the near future, or even the medium term, the lower cost of capital is the one interesting change to the macro,” Andrade, founder and chief investment officer at Old Bridge Capital, said on BloombergQuint’s special series Alpha Moguls.
• That, coupled with increasing capital efficiency of corporate India, augurs well on multiple counts for any investor.

Here’s when Andrade expects private capital expenditure to recover.

7. Bhatia Group Says Gangwal’s Allegations Are Much Ado About Nothing

Terming co-founder Rakesh Gangwal’s allegations of governance lapses at InterGlobe Aviation Ltd. as much ado about nothing, Rahul Bhatia’s group on Friday said the company is well-run, financially sound and managed by a competent set of managers.

• Asserting that “pan ki dukaan” (betel shop) has apparently done well, InterGlobe Enterprises Ltd. said there was no abuse of rights and Gangwal’s proposal for convening an Extraordinary General Meeting was rejected on the basis of a legal opinion obtained by the board of InterGlobe Aviation.
• In the notice for proposed EGM, Gangwal had said that events go far beyond just “poor governance” and even a “paan ki dukaan would have handled these matters with more grace”.

This is the second time in three days that Bhatia camp has issued a statement.

8. ITC To Test New Waters

ITC Ltd. will enter new categories and consider acquisitions as it continues its focus on consumer goods, Sanjiv Puri said in his first speech as chairman of the cigarette-to-hotels conglomerate.

• ITC targets to be the leader in every segment it operates in, Puri said, adding the company aims to be an engine of growth for the Indian economy through a vibrant portfolio of “future-ready businesses”.
• Around a quarter of ITC’s consumer goods revenue comes from newer businesses, he said.
• To accelerate growth, the company will not only fortify the existing categories but will also “foray into newer categories and sub-segments,” he said.
• “This would be supported by multi-dimensional investments as also strategic opportunities for acquisitions,” he said.

Here’s what else Puri said at ITC’s 108th annual general meeting.

9. Government To List 10 State-Owned Entities In FY20

The government will list 10 public sector companies on the stock exchanges in the ongoing financial year after it redefined its holding structure in state-run entities, a secretary in the disinvestment department said.

• Divesting shareholding in state-run entities through listing on the bourses is one of the ways the government can meet its divestment target of Rs 1.05 lakh crore for the current financial year.
• The government has already invited book-running lead managers for divesting its 25 percent stake each in RailTel Corporation of India Ltd. and Tehri Hydro Development Corporation Ltd. through an initial public offering.
• The new holding structure in state-run entities will bring more investments, Department of Investment and Public Asset Management Secretary Atanu Chakraborty said at an industry interaction organised by Confederation of Indian Industry in Delhi on Friday.

“Ownership and control have been separated,” he said.