BQuick On July 3: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Kharif MSP Hike And Other Cabinet Decisions
The Narendra Modi cabinet on Wednesday increased the minimum support prices for all kharif crops for 2019-20 amid a slow start to the sowing season due to the delayed onset of monsoon.
- The MSP for paddy was increased by Rs 65 per quintal.
- MSP for jowar was increased by Rs 120 per quintal, while for ragi it was raised by Rs 253 per quintal.
- Wednesday’s MSP hike is, however, lower than the increase the government had announced in 2018-19.
The delay in monsoon has hit sowing of pulses, coarse cereals and cotton the most.
The Union Cabinet gave its approval on Wednesday to the proposals for leasing out three major airports — Ahmedabad, Lucknow and Mangaluru — of the Airports Authority of India through public-private partnership, an official spokesperson said.
- Earlier this year, the Adani group had won the bids to operate the three airports for a period of 50 years.
- Adani group had also won the bids to operate the Jaipur, Guwahati and Thiruvananthapuram airports, owned by the AAI.
The winner bidder was chosen on the basis of the “per-passenger fee” offered.
The Union Cabinet on Wednesday approved the Code on Wages Bill which seeks to subsume existing laws related to workers remuneration and enable the Centre to fix minimum wages for the entire country.
- The Code on Wages is one of the four codes that would subsume 44 labour laws with certain amendments to improve the ease of doing business and attract investment for spurring growth.
- The four codes will deal with wages, social security, industrial safety and welfare, and industrial relations.
The government looks to push the bill for passage in the ongoing session of Parliament.
2. Services Activity Falls First Time In A Year
India’s main services index signaled a contraction in the industry for the first time in more than a year, a worrying sign for an economy that’s already slowing sharply.
- The Markit India Services PMI declined to 49.6 last month, dropping below 50 for the first time since May 2018, according to data from IHS Markit.
- A reading under 50 indicates a contraction in an industry that accounts for more than half of the nation’s gross domestic product.
That adds to worries after India lost its status as the fastest-growing major economy.
3. Indian, U.S. Stocks Edge Higher
Indian equity benchmarks extended gains for the third consecutive trading session. The benchmarks indices closed marginally higher after a topsy-turvy trade as gains in IndusInd Bank Ltd. and ITC Ltd. were offset by losses in Infosys Ltd. and Tata Consultancy Services Ltd.
- The S&P BSE Sensex closed 0.06 percent or 23 points higher at 39,839.
- The NSE Nifty 50 ended largely unchanged at 11,916.
- The broader market, represented by the NSE Nifty 500 Index, closed 0.13 percent higher.
- Seven out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
Bonds extended gains globally as investors weighed the prospect of more dovish appointees to two of the world’s major central banks.
- American equities edged higher in thin trading ahead of a holiday.
- The S&P 500 rose for a fifth straight day and the Dow Jones Industrial Average flirted with a closing record.
- Volumes were 11 percent below the 30-day average, with markets set to close at 1 p.m.
- Ten-year Treasury yields dipped to the lowest since November 2016, German rates turned more negative.
- The dollar fell after jobless claims came in broadly as forecast and private hiring numbers missed expectations.
- West Texas Intermediate crude gained 0.9 percent to $56.73 a barrel.
Get your daily fix of global markets here.
4. Nifty Could Drop 10%: Gautam Shah
The stock market was expected to rise after the general election. But technical indicators suggest a correction.
- That’s according to Gautam Shah, associate director and technical analyst at JM Financial Ltd. “The market is losing momentum,” he said at the Bengaluru edition of BQ Edge, BloombergQuint’s on-ground initiative.
- The benchmark NSE Nifty 50 index, Shah said, possibly could drop 10 percent in the short-term.
Shah doesn’t expect Nifty to sustain at elevated levels of 12,000 and beyond. Here’s why.
5. CLP India Enters Power Transmission
Kalpataru Power Transmission Ltd. has entered into binding agreements with Canada pension fund CDPQ’s CLP India Pvt. Ltd. to sell its stake in three power transmission assets at an enterprise valuation of Rs 3,275 crore.
- KPTL is selling stake in Kalpataru Satpura Transco Pvt. Ltd., Alipurduar Transmission Ltd. and Kohima Mariani Transmission Ltd., Kalpataru Power Transmission said in a BSE filing.
- “As a part of this deal, the transaction for ATL and KMTL will be effective post commercial operation date and fulfillment of certain conditions,” the company added.
- Construction engineering company Techno Electric & Engineering Co. Ltd. owns 26 percent stake in Kohima Mariani Transmission Ltd.
The deal will enable CLP India to expand its reach and grow investments.
6. Consumer Demand Troubles
Marico Ltd. and Godrej Consumer Products Ltd. informed the exchanges on Wednesday that demand for their products has remained sluggish in the quarter ended June.
- That’s an extension of a trend from last month when volumes of India’s four largest consumer goods makers grew at the slowest pace in seven quarters.
- Marico said a moderation in demand was evident in consumer sentiment indicators with the persistence of sluggishness in wholesale channels.
- Godrej Consumer Products said in its statement that demand across geographies has been “soft” for the quarter ended June.
India is in the grip of a consumption slowdown. Here's what the companies think will signal a revival.
7. Allied Financial Services Options Dispute Sent Back To SEBI
The dispute over the settlement of options contracts issued by stockbroker Allied Financial Services Pvt. Ltd. based on illegally used collateral is back with the market regulator.
- All parties should approach the Securities and Exchange Board of India with relevant details, the Securities Appellate Tribunal said in an oral order.
- The contracts can’t be settled till July 22 in accordance with the Supreme Court order, it said.
- SAT also rejected SEBI’s objections to IL&FS Securities Services Ltd.’s demand seeking the contracts to be annulled.
- IL&FS Securities Services is a counterparty to the call options.
The tribunal directed SEBI to hear the parties on July 10 and pass orders before July 17.
8. State-Run Banks To DHFL’s Rescue
India’s public sector lenders have bought out nearly Rs 12,000 crore in loans from stressed non-bank lender Dewan Housing Finance Ltd. since September 2018, said three people familiar with the transactions, speaking on condition of anonymity.
- The loan purchases, done through the bilateral ‘direct assignment’ route, helped DHFL generate much needed liquidity to repay dues as it struggled to raise fresh financing from the debt markets following the collapse of Infrastructure Leasing and Financial Services Ltd. in September.
- The largest purchases have been by State Bank of India, which has bought approximately Rs 4,000 crore in housing loans since September, and Bank of Baroda, which concluded a Rs 3,000-crore loan purchase in June, said the people quoted earlier.
- The two banks are also among the largest lenders to DHFL.
Total loans bought by PSU banks from DHFL is close to Rs 12,000 crore.
9. Budget 2019 And Tax Reforms
With improved compliance and increased tax base, the tax-to-GDP ratio has reached 12 percent—highest in the recent past, up from 10.1 percent in 2013-14, the Bharatiya Janata Party proudly claimed so in its election manifesto before the general election.
- The increased revenue, the party had promised, will give it room to lower tax rates, thereby rewarding honest taxpayers.
- As for startups and the ease of doing business, the government’s target will be that the time spent on tax compliance is limited to one hour per month, the party had promised.
- The BJP returned to power with a landmark majority and its first union budget will be presented on July 5. Time for Finance Minister Nirmala Sitharaman to deliver on the party’s promises?
BloombergQuint spoke with tax experts on their expectations from this year’s budget.
10. Rahul Gandhi Resigns
Rahul Gandhi on Wednesday said he is no longer Congress president and the party's working committee should meet immediately to decide on his successor.
- Gandhi told reporters he has already resigned and the Congress Working Committee should make the appointment soon.
- "Accountability is critical for the future growth of our party. It is for the reason I have resigned as Congress President," he said in a letter posted on Twitter.
- The Gandhi scion also said he will not nominate the next Congress President but will give full support to the CWC for selecting a new head.
Congress leaders at various levels have been appealing to Gandhi to take back his resignation.