BQuick On March 4: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Spreading Coronavirus Risks Raise Prospects Of India Rate Cut
The number of coronavirus cases in India has risen to 28, including 16 Italians touring through Rajasthan, the government announced on Wednesday.
- All international passengers will henceforth be screened at airports.
- Seventeen Indians abroad have been infected, 16 from a cruise ship in Japan "being treated at onshore medical facilities" and one from the United Arab Emirates, the Ministry of External Affairs said.
- With Holi less than a week away on March 10, Prime Minister Narendra Modi, Home Minister Amit Shah, Bharatiya Janata Party President JP Nadda and Delhi Chief Minister Arvind Kejriwal said they would not hold any Holi Milan gathering.
- Globally, total cases topped 93,000 with as infections rose in Europe. China reported 38 more deaths and fatalities rose to nine in the U.S. Cases also surged in South Korea, Iran and Malaysia.
See all updates around the coronavirus in India.
The global spread of the coronavirus, along with the detection of at least two dozen local cases, have raised the prospects of an emergency monetary policy action in India.
- On Tuesday, Reserve Bank of India Governor Shaktikanta Das told Bloomberg that he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed.
- JPMorgan economists see the possibility of the MPC following the Federal Reserve and other central banks in a preemptive easing of monetary policy.
Other economists, too, remain open to the possibility of an emergency rate cut.
2. Rupee Falls Further, U.S. Stocks Rebound
Indian equities ended lower, resuming declines after a one-day breather. The indices, however, managed to pare early losses, led by the gains in Tata Consultancy Services Ltd. and Infosys Ltd.
The S&P BSE Sensex fell 0.55 percent to end at 38,409.48 after declining as much as 2.01 percent earlier.
The NSE Nifty 50 fell 0.45 percent to close at 11,252.20 after declining as much as 1.96 percent earlier.
The broader markets represented by the NSE Nifty 500 Index ended 0.7 percent lower after falling as much as 2.13 percent earlier.
Nine out of 11 sectoral gauges compiled by the NSE ended lower.
Follow the day’s trading action here.
Cracks are starting to appear in rupee’s defenses with new coronavirus cases being reported in India.
The rupee slid as much as 0.4 percent to 73.6 per dollar on Wednesday to become the worst-performing Asian currency.
The domestic unit then recovered slightly to close 0.1 percent lower at 73.22 against the dollar.
A broad dollar weakness triggered by an unexpected rate cut from the U.S. Federal Reserve on Tuesday did little to support the rupee, even as most other emerging Asian currencies rallied on the back of that move.
The rupee may fall to its lowest level ever in the near-term. Here’s why.
Stocks rebounded as investors digested a surprise in the U.S. presidential primary and weighed the potential for more of a concerted effort by the world’s largest economies to tackle the fallout from coronavirus.
The S&P 500 rallied from yesterday’s steep declines after Senator Joe Biden won a majority of state primaries on Super Tuesday, dulling some investors concerns about the possibility of a more liberal candidate challenging President Donald Trump in the fall.
At the same time, 10-year Treasury yields fell below 1 percent and the dollar rose as traders waited for other top economies to follow the Federal Reserve’s emergency rate cut.
Oil rose for a third day.
Get your daily fix of global markets here.
3. SBI Cards IPO Sees Robust Demand... Finally
India’s first billion-dollar initial public offering in more than two years saw demand return on the third day of bidding.
- The IPO of SBI Cards and Payment Services Ltd. was subscribed 15.49 times as of 5:00 p.m. on Wednesday, the third of the four-day share sale.
- Against an issue size of 10.02 crore shares, the SBI Cards IPO has received bids for 155.35 crore shares, with qualified institutional buyers making the bulk of the purchases.
- The IPO had failed to achieve full subscription till Tuesday.
Find out which class of investors subscribed most to the IPO.
4. Cryptocurrencies No Longer Banned In India
The Supreme Court has set aside the Reserve Bank of India’s 2018 circular that barred banks and other financial institutions from facilitating transactions involving cryptocurrencies.
The bench, headed by Justice Rohinton F Nariman, quashed the central bank’s circular on grounds of disproportionality.
The judgment, authored by Justice V Ramasubramanian, noted that the RBI has failed to show “at least some semblance of any damage suffered by its regulated entities’’ to back its decision to effectively bar crytocurrencies in India.
While the Supreme Court did not accept the petitioners’ argument that the RBI’s decision was ultra vires and in violation of fundamental rights, it ruled that the restrictions put in place by the RBI are disproportionate.
The central bank needs to provide proof that its regulated entities have been damaged by virtual currency exchanges.
5. Cabinet Decisions: PSU Bank Mergers, Revised Air India Sale Terms, Company Law Changes
The Union cabinet approved the merger of 10 public sector banks into four, paving the way for the largest consolidation among the state-owned lenders.
The banks’ boards will now have to finalise the share swap ratio, Finance Minister Nirmala Sitharaman said after the cabinet meeting.
The government or banks will not seek any exemption from regulators to fast-track the merger process, and due process will be followed, she said.
The merger would be effective from April 1, 2020.
The government has reworked terms of the Air India sale to allow non-resident Indians to own 100 percent of the disinvestment-bound airline.
"Today's decision on Air India is one milestone decision where NRIs...will get permission to invest 100 percent in the airline," Union Minister Prakash Javadekar told reporters.
NRI investments would be treated as domestic investments.
Here's how it compares to the earlier framework.
The Cabinet also approved a proposal to allow direct overseas listing of Indian companies. For this framework, an enabling provision would be made under The Companies Act, 2013.
Currently, quite a few Indian companies have American Depository Receipts that are traded in the U.S. Some other corporates have Global Depository Receipts.
A depository receipt is a foreign currency-denominated instrument, listed on an international exchange and issued by a foreign depository to a domestic custodian.
Apart from providing an additional fundraising avenue for Indian companies looking to expand and boost their business activities, overseas listing of shares would also help in bringing more capital into the country.
Find out what are the other main changes.
6. Schwarzman Calls Fed’s Emergency Rate Cut A ‘Bit Of A Failed Experiment’
The world’s largest alternative asset management firm termed the U.S. Federal Reserve’s decision to cut interest rate to contain the economic damage from coronavirus “a bit of a failed experiment” as people choosing to stay indoors is what’s hurting the global economy more.
“Coronavirus has induced what appears to be a panic in at least the developed world,” Stephen A Schwarzman, chief executive officer and chairman of Blackstone Group, that manages $571 billion worth of assets, told BloombergQuint in an interview.
“Experts expect a coronavirus vaccine in 1-1.25 years and if that is true then we have a period of dislocation of severity we don’t completely know,” he said.
Watch the full interview where Schwarzman explains why he thinks there's a lot more potential in the Indian economy.
7. India Tells Telcos To Pay Up As Per Court Order
India’s Department of Telecommunications has asked Bharti Airtel Ltd. and Vodafone Idea Ltd. to pay entire past dues as per Supreme Court’s verdict, and any partial payments made by the companies cannot be construed as compliance to the order, according to documents seen by Bloomberg News.
The government has asked the companies to pay the balance amount without any further delay.
The telecom companies should present documents supporting their calculations of adjusted gross revenue in case the payment is not made.
Vodafone CEO Nick Read will meet DoT officials on Friday.
8. India Services Activity Growth At 7-Year High
India's services sector activity rose at the fastest pace in seven years in February, helped by a recovery in demand and business confidence, a private survey showed on Wednesday.
- The IHS Markit India Services Business Activity Index rose to 57.5 in February compared with 55.5 in January, after dipping to a 19-month low in September.
- It was the highest reading since January 2013.
- Companies that reported higher business activity spoke about stronger demand, supportive economic conditions, and accommodative public policies, according to IHS Markit.
Service providers enjoyed a marked increase in new work intakes during February.
9. Oyo To Slash 5,000 More Jobs
Oyo Hotels is cutting its global workforce by about 5,000 to 25,000 people, with the deepest reductions in China after business there crumbled in the wake of the coronavirus outbreak.
- The Indian startup, one of the largest in SoftBank Group Corp.’s portfolio, is reducing staff in China, the U.S. and its home country as it seeks to boost profitability.
- Oyo expanded rapidly after its founding in 2013 and reached a valuation of $10 billion, but investors have soured on money-losing businesses after WeWork’s meltdown and SoftBank has pushed portfolio companies to prioritise profitability.
- The global headcount would fall by about 17 percent from 30,000 in January.
- The company said it is also prioritising improved relations with hotels and stronger corporate governance.
The move follows the dismissal of 12 percent of its 10,000 staff in India.
10. After Short Videos, TikTok Parent Is Ready To Shake Up Music
ByteDance Ltd. launched a social network for music in India at a time the nation’s crowded music streaming market is yet to get users into the habit of paying.
Resso allows users to stream, share lyrics, comments and engage with other listeners, generate music-accompanied GIFs and videos, something that’s also a hit on its sister app TikTok, the company said in a statement.
Barring Universal Music, the Beijing-based firm secured licence deals from Sony Music Entertainment, Warner Music Group, Merlin and Indian publishers like T-Series, Saregama, Zee Music, YRF Music, Times Music, Tips, Venus and Shemaroo, to name a few, the statement said.
Unlike TikTok, which has around 200 million users in India and follows a free-to-use model, Resso has a “freemium version” that provides an extensive catalogue of music on demand.
Find out what the paid version offers and how much will it cost.