BQuick On July 17: Top 10 Stories In 10 Minutes
This is a roundup of the day’s top stories in brief.
1. IDBI Bank Seeks Government Nod To Bring LIC On Board As Promoter
IDBI Bank is considering bringing Life Insurance Corporation on board in the role of a promoter, the bank said after a board meeting today. The lender will, however, await the government’s decision in the matter, it added.
In a notification to stock exchanges, the bank said that it had received communication from LIC expressing interest in acquiring “51 percent controlling stake in IDBI Bank, as a promoter through preferential allotment of shares/open offer.”
LIC will have a controlling stake of 51 percent and a larger role to play in the state-owned lender, IDBI Bank’s Managing Director and Chief Executive Officer B Sriram said in a press conference. “The intent is to take management control,” he added.
Read more on the possible regulatory hurdles that the deal may face.
2. Government May Infuse Rs 11,336 Crore In State-Owned Banks
The government may infuse Rs 11,336 crore in five state-owned banks in a week’s time to help them make interest payments due on some bonds, a senior government official told BloombergQuint.
The infusion in the five lenders—of which three are under the central bank’s prompt corrective action framework—may be done using recapitalisation bonds, the official said.
The infusion would be part of remaining Rs 65,000 crore out of Rs 2.11 lakh crore capital infusion over two financial years. The government had announced bank recapitalisation in October last year to provide capital to public sector banks saddled with mounting bad loans.
For more on this story, read this.
3. Indian Markets Resume Rally; U.S. Shares Fall
Indian equity benchmarks resumed their uptrend after a two-day blip, led by Reliance Industries Ltd. and ICICI Bank Ltd. The S&P BSE Sensex Index closed 0.5 percent higher at 36,519.96 and the NSE Nifty 50 Index closed at 11,008.05, up 0.7 percent.
The market breadth was tilted in favour of buyers. Ten out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty PSU Bank Index’s 3.9 percent gain. On the flipside, NSE Nifty FMCG Index was the only sectoral loser, down 1 percent.
Read the day’s trading action as it unfolded.
U.S. technology shares opened lower as disappointing subscriber growth from Netflix threw a wet blanket over the rest of the FAANG stocks. The Nasdaq 100 slumped for a second day, as Netflix helped to drag down Facebook, Apple, Amazon and Google parent Alphabet. Results from Goldman Sachs narrowly beat investor expectations, while trading revenue disappointed.
The dollar strengthened amid expectations Federal Reserve Chairman Jerome Powell will make the case for further tightening in testimony before a U.S. Senate panel.
4. Jerome Powell Says Gradual Rate Hikes Are The Best Path ‘For Now’
In his Senate testimony, Powell said the central bank will continue to gradually raise interest rates “for now’’ to keep inflation near target amid a strong U.S. labor market.
The Federal Open Market Committee, the Fed panel that sets interest rates, “believes that -- for now -- the best way forward is to keep gradually raising the federal funds rate,” Powell said in prepared testimony before the Senate Banking Committee.
“We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses,” Powell said in the text of his remarks. “On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective.’’
Read more on what Powell said about trade tensions.
5. Goldman Sachs Will Have A New Boss From October
It’s official at long last: David Solomon will inherit the crown from Lloyd Blankfein at Goldman Sachs Group Inc.
The news, announced Tuesday -- after more than a year of jockeying, choreography and speculation -- fully and finally sets in motion one of the most significant succession plays on Wall Street. On Oct. 1, just 76 days from now, Solomon will start running Goldman Sachs, which sits at the center of more concentric circles of money and power than perhaps any other firm in the industry.
Read more about Goldman’s succession plan.
6. Vicious Farm Cycle: Can’t Repay Loans, Don’t Get Crop Insurance Cover
Suresh Dhoble, 55, a small farmer in Osmanabad, Maharashtra, borrowed Rs 1 lakh two years ago to sow soybeans and pulses in his three-hectare farm. But he stopped the bank repayments a year ago, when the state pardoned agricultural loans. “When the government has promised to pay off my entire loan, why should I?”
But Dhoble’s decision to default will cost him his crop insurance cover under Prime Minister Narendra Modi’s flagship insurance scheme, according to Sunil Kumar, assistant director at the central Department of Agriculture, Co-operation and Farmers Welfare. “The Pradhan Mantri Fasal Bima Yojana doesn’t insure substandard loan accounts,” he said. This, as a July 2016 circular issued by the government had mandated compulsory coverage for standard loans.
Nearly 70 lakh loan accounts, said Kumar, have turned bad for a year now, according to an audit conducted by the department. They are mostly from Uttar Pradesh and Maharashtra— the two states ruled by Prime Minister Narendra Modi’s Bharatiya Janata Party that has waived agricultural loans. Most of these accounts have defaulted on account of farmers’ default in anticipation of a loan waiver, said Kumar and another ministry official.
For more on this story read here.
7. HDFC AMC’s Rs 2,800-Crore IPO Opens Next Week
Housing Development Finance Corporation Ltd. will raise up to Rs 945.2 crore by selling 4.08 percent stake in its asset management arm through an initial public offering. The Rs 2,800-crore IPO will also see its joint-venture partner Standard Life offload stake.
The price band of the HDFC Asset Management Company Ltd.’s public offer has been fixed at Rs 1,095-1,100 apiece, parent HDFC said in an exchange filing today. The minimum bid lot has been fixed at 13 equity shares and applications may be made in its multiples, the filing said.
The IPO will open for anchor subscription on July 24 and for the public between July 25 and July 27.
Here are more details on the upcoming IPO.
8. Six Controversial Bills Up For Discussion In The Monsoon Session
After a washout Budget Session, the Narendra Modi government is keen on fast-tracking the passage of a number of controversial laws in the Monsoon Session beginning tomorrow.
Bills for criminalising triple talaq, prohibiting discrimination to transgenders and amendments to the Right to Information Act are among the ones to be considered, according to bulletins published by Lok Sabha and Rajya Sabha. The Monsoon session is scheduled to continue till Aug. 10.
Here are the issues which could be hotly contested in the Monsoon session:
- Triple Talaq
- Transgender Rights
- Revamping OBC Commission
- National Medical Commission
- RTI Act Amendments
- DNA Profiling
Here’s the status of each of these bills.
9. All You Need To Know About UPL’s Latest Buyout Plan
The board of UPL Ltd. will be meeting in the next few days to finalise the takeover of agri-pesticides maker Arysta LifeScience, a person aware of the matter told BloombergQuint requesting anonymity.
Bloomberg first reported in June citing unnamed people that UPL will acquire Arysta LifeScience from U.S.-listed Platform Specialty Products Corp that is backed by investor and hedge fund manager William Ackman. Mumbai-based UPL has teamed up with other investors, including Abu Dhabi Investment Authority, it said. The Mint and Economic Times subsequently reported on the deal.
Shares of the chemicals maker have fallen 15 percent in the last one month amid worries that the deal will increase UPL’s leverage. Bloomberg on July 16 reported that the company is looking for a $3-billion loan to fund the buyout, adding to investor concerns.
10. Supreme Court Recommends Parliament Act On Mob Lynchings
The Supreme Court has urged the country’s parliament to make a law banning mob lynching after numerous attacks on Muslims by Hindu nationalist cow vigilantes.
A panel of Supreme Court judges led by Chief Justice of India Dipak Misra today said India should create a "separate offence" for lynching and urged lower courts to hand down maximum sentences for crimes involving mob attacks.
"A special law in this field would instill a sense of fear for law amongst the people who involve themselves in such kinds of activities," Misra wrote in his judgment. "Horrendous acts of mobocracy cannot be permitted to inundate the law of the land. Earnest action and concrete steps have to be taken to protect the citizens from the recurrent pattern of violence which cannot be allowed to become the new normal."