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BQuick On March 5: Top 10 News Stories In Under 10 Minutes

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

1. GMR Auditor’s Red Flag

The auditor to GMR Infrastructure Ltd. said that its power sector loss would have been Rs 2,250 crore higher in the nine months ended December had it accounted for the reduced value of its investments.

  • SRBC & Associates LLP, the audit arm of EY, based its qualified opinion on a valuation report submitted by external experts, according to the auditor’s statutory limited review of the third-quarter earnings.
  • The company didn’t disclose who commissioned or prepared the valuation report.
  • The auditor had raised similar concern in the financial statement for the year ended March 2018 and the first and second quarter of the current financial year.
  • It's over and above the loss of Rs 545.56 crore in the power segment already reported by the company for the nine months ended December.

That suggests the power business’ impact on the GMR Infrastructure’s balance sheet is much bigger.

2. L&T May Finally Meet Its Guidance

India’s largest engineering company is set to defy the uncertainty ahead of the general election to meet its order guidance for the first time in at least six years.

  • Larsen & Toubro Ltd., the bellwether for infrastructure and private investments, is on track to close the financial year with at least Rs 1.68 lakh crore worth of fresh orders, meeting the target set at the start of the fiscal.
  • That was aided by the government’s infrastructure spending ahead of the election at home, and overseas and domestic orders to develop oil and gas fields and refineries as crude prices rose.
  • The company guided for a 10-12 percent growth in order inflow for the ongoing financial year 2018-19.
  • It needs orders worth Rs 47,900 crore to Rs 50,900 crore in the quarter ending March to achieve the target.

Around 70 percent of the orders are domestic, contrary to the concerns of a slowdown.

3. Trump Attacks India On Trade

The Donald Trump administration notified Congress on Monday that it wants to scrap trade concessions for India, the largest beneficiary of the so-called generalised system of preferences that impacts $5.7 billion worth of goods.

  • The notification starts a 60-day countdown before the president can take the action on his own authority.
  • A similar letter of intent was notified for Turkey as well with Trump wanting to counter what he calls unfair trade practices.
  • India has said that the duty benefit on exports under the preference was "relatively limited" at $190 million.
  • However, University of Kansas School of Law Professor Raj Bhala says the Trump administration’s decision to end the preferential trade benefits enjoyed by India will have larger ramifications.
For the first time, U.S. is using the Generalised System of Preferences as leverage to try and compel its reforms in the dairy sector, medical devices and e-commerce rules.
Raj Bhala, Professor, University of Kansas School of Law 

Trump’s move shouldn’t come as a surprise to Modi, says Bhala.

4. Sensex Rises, U.S. Stocks Slump

Indian equity benchmarks ended higher for the second consecutive trading session, closing their best two-day rally in over a month.

  • The S&P BSE Sensex ended 1.05 percent or 378 points higher at 36,442.
  • The NSE Nifty 50 Index ended at 10,987, up 1.14 percent.
  • Ten out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Auto Index’s 3.13 percent gain.

Follow the day’s trading action here.

BQuick On March 5: Top 10 News Stories In Under 10 Minutes

U.S. stocks fell to a one-week low as banks retreated and investors awaited news on the trade front.

  • The S&P 500 headed for its fifth drop in six days, as the torrid post-Christmas rally continued to falter near the 2,800 level that’s capped advances for several months.
  • Lenders led the declines. Industrial companies slumped with trade in focus after President Donald Trump turned his ire toward India as he looks to clinch a deal with China.
  • The dollar strengthened a fifth day.
  • The pound hit a fresh session low on news that the U.K. was said not to be expecting a Brexit breakthrough at a meeting with the EU’s chief negotiator.

Get your daily fix of global markets here.

Also read: The Most Volatile Stock in India Has Already Surged 116%

5. Prepare For Lower Returns From Liquid Funds

As the market regulator looks to protect mutual fund investors from IL&FS-like default risks, debt schemes widely used by companies to park short-term cash are expected to turn less lucrative.

  • Liquid funds with a maturity of more than 30 days will have to mark-to-market the value of the assets they manage, according to a SEBI statement.
  • Earlier, schemes with a maturity of up to 60 days were exempted.
  • “Fund managers don’t want volatility. So instead of running mark-to-market risk, they will reduce maturity profile,” R Sivakumar, head, fixed income at Axis Mutual Fund, tweeted.
  • The turnover will rise and the implication for corporate sector is large, he said.

Assuming all new purchases are of 30-day maturity, Sivakumar expects an impact of 12 basis points on the yield.

6. Large-Cap Mutual Funds: Big Inflows, Small Returns

Large-cap funds have attracted a substantial amount of capital from a diverse range of domestic and foreign investors. But they have struggled to outperform benchmark indices, write Rohan Chinchwadkar and Shwetabh Sameer.

  • Three-year rolling alpha (return over and above that of an S&P BSE 100 exchange-traded fund) has been consistently falling for the last two years and is now negative.
  • While large-cap alpha peaked at 6 percent in late 2016, by December 2018 it stood at –1.86 percent.
  • A tough 2018 has brought the average one-year alpha of large-cap funds down to (-)7 percent.

Here’s why MFs are struggling.

7. India Keeps 'All Options' Open

India will have “all options” available in case there is another terror strike, government officials told PTI on condition of anonymity, while maintaining that the government will insist on concrete steps taken by Pakistan in dismantling terror infrastructure.

  • The people also said that India has shared with the U.S. the evidence of use of F-16 jet by Pakistan during retaliatory aerial combat and was confident that the U.S. is investigating the matter.
  • Since the strike on Balakot, India is trying to build maximum pressure on Pakistan on the issue of terrorism, the people said.

The Indian Air Force has kept all its bases in Western sector on maximum alert.

8. India Has The World’s Dirtiest Air

Seven of the top 10 most polluted cities in the world are in India, according to a new study showing South Asia’s battle with deteriorating air quality and the economic toll it’s expected to take worldwide.

  • Gurugram, located southwest of India’s capital New Delhi, led all cities in pollution levels in 2018, even as its score improved from the previous year, according to data released by IQAir AirVisual and Greenpeace.
  • Three other Indian cities joined Faisalabad, Pakistan, in the top five.
  • The index measures the presence of fine particulate matter known as PM2.5, a pollutant that can fester deep in the lungs and bloodstream of human beings.
BQuick On March 5: Top 10 News Stories In Under 10 Minutes

Pollution costs almost 8.5 percent of India’s GDP.

9. Prashant Bhushan Gets Support In Contempt Case

More than 10 civil society members and journalists including writer Arundhati Roy, former Chief Information Commissioner Wajahat Habibullah and veteran journalist N Ram have approached the Supreme Court for being allowed to argue in the contempt case filed against senior advocate Prashant Bhushan by the Attorney General for India.

  • The members argued that the top court has made it clear that it will discuss the issue of public discussion of pending cases by lawyers.
  • “The notice issued in this case by the court to Prashant Bhushan indicates that the court wants to deal with the larger issue of lawyers and litigants commenting publicly about pending court proceedings and whether any restraint should be put on lawyers and litigants comments on pending court proceedings,” said the intervention application filed in the Supreme Court.
  • The case will come up for hearing on March 7.

Here’s what the Supreme Court had said while issuing a contempt notice to Bhushan.

10. Average Salary Hikes

Employees in India are expected to get an average salary hike of 9.7 percent this year, a marginal increase from last year, while top performers will get 15.6 percent hike as companies are focusing on performance and productivity.

  • Human Resources consultancy firm Aon Hewitt's annual salary increase survey predicts an average salary hike of 9.7 percent across industries as companies expect a positive economic outlook backed by high economic growth expectation, high domestic demand and low inflation.
  • Last year, the survey had projected an average salary increase of 9.5 percent.
  • India continues to lead the Asia-Pacific region.

The sectors which may dole out the highest hikes are...