Pedestrians walk along a street near the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: John Taggart/Bloomberg)  

BQuick On March 20: Top 10 Stories In Under 10 Minutes

Introducing Election Soundtrack, a daily podcast that’ll get you up to speed with everything that you need to know about Elections 2019.

This is a roundup of the day’s top stories in brief.

1. No Bail For Nirav Modi

Nirav Modi, who allegedly defrauded Punjab National Bank Ltd. of $2 billion, was denied bail by a London judge who said there were "substantial risks" that the celebrity jeweler could flee while India seeks his extradition.

  • U.K. police arrested Modi on Tuesday at the request of Indian authorities as he opened a bank account.
  • Judge Marie Mallon made the ruling in a London court on Wednesday, after Modi, wearing a white button down shirt and black trousers, said he would fight extradition.
  • The tycoon, who dressed stars including Kate Winslet, Dakota Johnson and Priyanka Chopra, faces charges of fraudulently acquiring guarantees from PNB that were later used to obtain loans from abroad, according to complaints filed by the lender.

One analyst thinks this could be a win for Narendra Modi ahead of elections.

2. Etihad Throws In The Towel

Etihad Airways PJSC has offered to sell its 24 percent stake in Jet Airways Ltd., allowing the Indian carrier’s lenders to decide on their future course of action, according to two people in the know.

  • After a meeting between Etihad CEO Tony Douglas and SBI Chairman Rajnish Kumar, the airline has stated that it will not participate in the resolution plan for Jet Airways.
  • In a late evening meeting yesterday between SBI and the rest of the lending consortium, bankers were made aware of Etihad Airways’ stance and its reluctance to participate in the resolution plan.
  • Lenders are now mulling an alternative plan for resolving Jet Airways.

Etihad had apprehensions with some parts of the resolution plan that lenders didn’t want to change.

Also read: Banks Working On Jet Airways’ Turnaround Through Change In Management

3. Mixed Day For Indian Markets

Indian equity benchmarks had a varied close to the day after rallying for seven consecutive trading sessions, their longest gaining streak since December 2018.

  • The S&P BSE Sensex ended 0.06 percent or 23.28 points higher at 38,386.75, while the NSE Nifty 50 ended at 11,521.05, down 0.1 percent.
  • This after the losses in ICICI Bank Ltd. and Maruti Suzuki India Ltd. pressured gains in HDFC Bank Ltd. and Infosys Ltd.
  • The broader market index, represented by the NSE Nifty 500 Index, also closed lower after declining 0.18 percent.
  • Six out of 11 sectoral gauges compiled by NSE advanced.

Follow the day’s trading action here.

4. Why Ramesh Damani Is Not A Billionaire

Ramesh Damani is among the most-successful Indian investors, but he too has a regret.

  • “Given that the index has surged 40 times and some of my peers have become billionaires, why am I not a billionaire?” Damani asked, referring to returns by India’s benchmark index in a little less than three decades.
  • “If one is in the equity markets, one has to compare himself with the best and the opportunity size,” Damani, a veteran investor, said.
The reason why some great investors became billionaires is because when an opportunity presented itself, they bought large chunks, and maybe I couldn’t do it as well.
Ramesh Damani, Veteran Investor
  • The richest people in the world are rich not because they built great business alone, but because they owned common stock, he said.

But investing has unintended consequences, Damani says.

5. Pressure Ahead For Private Banks?

As demand for credit rises, private banks are facing a shortfall in deposits.

  • The credit-deposit ratio—a measure of how much a bank is lending out of its deposits—of the top six private lenders is at about 96 percent as of December against the average of around 87 percent over financial years 2011-2018, according to the data available on the banks’ websites.
  • By comparison, for the top three public sector peers, credit-deposit ratio was about 71 percent as of December against the long-term average of around 75 percent.
  • For all Indian banks, the loan-to-deposit ratio stood at 77.92 percent as on March 1, the highest in three months, the Reserve Bank of India’s data showed.

A high credit-deposit ratio leaves banks strapped for liquidity. Here are the private banks under pressure.

Also read: Financialisation Of Savings: Pad-Up Before You Go In

6. Your Complete Guide To The L&T-Mindtree Saga

Is L&T wise to pay Rs 10,800 for Mindtree?

Mindtree Ltd.’s top brass asked if Larsen & Toubro Ltd.’s Rs 10,700-crore hostile takeover bid is driven by reckless pursuit of scale or ego. It appears to be all about money.

  • L&T plans to buy the software services provider as it looks to put its cash hoard to better use.
  • That’s because the market regulator rejected L&T’s bid to reward shareholders through a buyback and it's looking to boost its return on equity— measure of profitability which, according to Edelweiss Securities, has fallen from its 2003-11 highs.
  • L&T has enough firepower. The company, according to R Shankar Raman, group chief financial officer, has cash of Rs 15,000-16,000 crore today.

BloombergQuint looks at L&T’s numbers to see if the acquisition makes sense.

But is L&T a suitable owner for Mindtree?

The promoters of Mindtree Ltd. posed five questions to Larsen & Toubro Ltd., one being if the engineering and construction major can build a “great technology business without decimating another”, as they condemned its hostile takeover bid for the mid-sized IT firm.

  • The only way to judge is to look at how L&T built its own information technology company compared with Mindtree over the past few years.
  • L&T Infotech Ltd.’s earnings grew in line with Mindtree’s over at least five financial years, according to Bloomberg data.
  • The IT subsidiary of India’s largest infrastructure company also reported higher operating margin and return ratios, and offered greater returns to investors since listing compared with Mindtree.

Here’s a head-to-head comparison.

Larsen & Toubro’s acquisition strategy hinges on size and price. What about Mindtree’s defence, asks Menaka Doshi.

  • L&T has stated that it intends to acquire up to 66 percent of Mindtree. What’s so special about 66 percent?
  • Why this three-step deal structure, and how effective is Mindtree’s buyback defense?

The answers those questions and more, here.

7. Even If Modi Wins Lok Sabha, A Rajya Sabha Seesaw Awaits

Over the next two years the Bharatiya Janata Party will initially lose a bit of ground in the Rajya Sabha, then begin to recover and increase its seat total, writes Richard Rossow.

  • 85 Rajya Sabha seats will be up for election within the next two years.
  • Whoever wins the Lok Sabah election will have to deal with a hung chamber in the Rajya Sabha.
  • BJP will initially lose legislative strength in the upper house of Parliament.

Here’s why BJP’s fortunes in the Rajya Sabha will begin to strengthen only after summer 2020.

8. Google Fined In Europe...Again

Alphabet Inc.’s Google was fined 1.49 billion euros ($1.7 billion) by the European Union for thwarting advertising by rivals, a penalty that may be EU antitrust chief Margrethe Vestager’s third and final attack on the U.S. tech giant.

  • It brings the total Google has been ordered to pay to 8.2 billion euros in EU antitrust probes that have run for nearly a decade and taken aim at the company’s popular software for Android phones and searches related to shopping.
  • Wednesday’s case focuses on Google’s role as an ad broker for websites, targeting exclusivity agreements for online ads with its AdSense for Search product.
  • The problematic contracts were all dropped by 2016, when the EU escalated the investigation.
BQuick On March 20: Top 10 Stories In Under 10 Minutes

Google says it has already made a lot of changes to address concerns. And it could help avoid future fines.

9. Gates Joins Bezos In The $100-Billion Club

Bloomberg tracks the fortunes of some 2,800 billionaires. Of those, 145 are worth at least $10 billion, making them decabillionaires.

Now, the world contains two centibillionaires simultaneously—Jeff Bezos and Bill Gates.

  • Microsoft Corp. co-founder Gates, once the world’s richest person, has again eclipsed the $100 billion threshold, joining Amazon.com Inc.’s Bezos in the super exclusive club.
  • Gates’s fortune, now $100 billion on the nose, hasn’t reached such heights since the dot-com boom, when Bezos was only beginning his march up the world’s wealth rankings.

But, the Gates and Bezos mega-fortunes may not last long.

10. You Can Still Save Tax This Year

The financial year is drawing to a close and with it the window for making tax-saving investments. For many individuals who have been less than conscientious in planning their investments, a few minutes of effort over the next couple of weeks can dramatically curtail tax spending.

  • Most salaried individuals make use of Section 80C of the Income Tax Act to make basic tax-saving investments.
  • Another Rs 50,000 can be saved by investing in the National Pension Scheme under Section 80CCD of the Income Tax Act.
  • Under Section 80D, you can take a health insurance cover for yourself and a premium of up to Rs 25,000 is deductible from your taxable income.

Confused? Watch this special episode of BQPortfolio to understand the dos and dont’s of last-minute tax saving.