A worker uses a wire mesh to filter charcoal at a coal wholesale market in India. (Photographer: Dhiraj Singh/Bloomberg)

BQuick On March 7: Top 10 News Stories In Under 10 Minutes

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

1. ECB Unleashes Support Package

Mario Draghi revealed the biggest cut in the European Central Bank’s economic outlook since the advent of its quantitative-easing program as policy makers delivered a new round of stimulus to shore up growth.

  • The ECB President said the euro-zone economy will now expand only 1.1 percent this year, a drop of 0.6 percentage point from the forecast given out just three months ago.
  • A package of assistance from new loans for banks to a longer pledge on record-low rates is intended to expand the institution’s existing stimulus, he said.
  • “The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment,” Draghi told journalists in Frankfurt on Thursday.
The risks surrounding the euro area growth outlook are still tilted to the downside.
Mario Draghi, President, ECB

ECB becomes just the latest central bank to capitulate to slowing demand.

2. Dow Slumps, Euro Drops

U.S. and European stocks slumped as investors fretted that the ECB’s dovish turn didn’t go far enough in light of policy makers’ worsening concerns about the global economy.

  • The euro fell to a four-month low. The dollar rose for a seventh day.
  • The S&P 500 Index declined a fourth day, with financial shares among the worst performers in early trading.
  • After an initial spike for the Stoxx Europe 600 when the European Central Bank pushed back guidance on rate hikes and announced a new series of long-term loans to support lenders, the gauge headed lower as details of the plan disappointed some traders.
  • West Texas Intermediate crude climbed 0.3 percent to $56.39 a barrel.

Get your daily fix of global markets here.

Sensex Clocks Best Four-Day Rally In Over A Month

S&P BSE Sensex ended higher for the fourth consecutive trading session, its longest gaining streak since Feb. 6.

  • The benchmark closed 0.24 percent higher at 36,725.
  • NSE Nifty 50 ended a little changed at 11,058.
  • The market breadth, however, was tilted in favour of sellers. About 889 stocks fell and 853 shares advanced on the National Stock Exchange.
  • Six out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty Media Index’s 1.85 percent fall.
  • On the Flipside, the NSE Nifty PSU Bank Index was the top sectoral gainer, up 1.4 percent.

Follow the day’s trading action here.

BQuick On March 7: Top 10 News Stories In Under 10 Minutes

3. Rupee’s Rally Short-Lived?

The rupee gained 28 paise to close at 70 against the U.S. dollar on Thursday amid robust foreign inflows and strong buying in domestic equities.

  • This is the third straight session of gain for the domestic currency, during which it has strengthened by 92 paise.
  • The currency has rebounded about 2.5 percent since early February, and is no longer the worst performer this year among Asia’s emerging market currencies -- a tag it held as recent as last week when tensions between India and Pakistan briefly reached the highest point since a 1971 war.
  • But analysts aren’t sure if the gains will sustain with elections due by May.
Rupee may have a little further to run, but the leash is pretty stretched and rupee slip back remains a risk.
Vishnu Varathan, Head - Economics and Strategy, Mizuho Bank
Consolidation is likely, with USD/INR to be contained within a 70.4-71.5 range in the near-term.
Khoon Goh, Head - Asia Research, ANZ 

Here’s what the technical charts are saying.

4. How India Plans To Revive Struggling Power Plants

The government approved suggestions of a group of ministers including assured coal supply and sale of power to revive stressed power plants.

The Cabinet Committee on Economic Affairs decided to go ahead with the recommendations approved by the group, originally prepared by a high-level empowered committee, RK Singh, minister of state for power, said.

The approved measures include:

  • Grant of coal linkage for short-term power purchase agreements.
  • Increase in quantity of coal for special forward e-auction for power sector.
  • Allowing existing coal linkage to be used in case of termination of PPAs due to payment default by discoms.
  • Procurement of bulk power by a nodal agency against pre-declared linkages.

Here are the objectives and implications of the measures.

5. Airtel Gets A New Investor

Bharti Airtel Ltd. has found a new investor: the Government of Singapore.

  • India’s second largest telecom company said in an exchange filing that GIC Pvt. Ltd., acting in concert with Singapore’s government and monetary authority, will subscribe to shares worth Rs 5,000 crore in a proposed rights issue.
  • The promoters of the Sunil Mittal-controlled company said they have transferred their right of subscribing to the shares in favour of the Singapore government.
  • The state will own close to 4.4 percent in Bharti Airtel at a discount of nearly 29 percent, according to BloombergQuint’s calculations.
  • Earlier the promoter group—Bharti Airtel and SingTel—was supposed to fund nearly Rs 16,785 crore in the proposed rights issue.
  • However, with the transfer in rights the amount stands at Rs 11,785 crore.

The bulk of that will come from Sunil Mittal.

6. Ajanta Pharma’s Revival Plan

Ajanta Pharma Ltd. was a mega wealth creator with its shares rising nearly 20,000 percent—or 200 times—in the decade through October 2016. But the stock has since lost nearly half its value and has declined 16 percent so far this year partly due to a slowdown in its Africa business.

  • The company expects growth in India, Asia and U.S. to make up for the loss in business in its key market of Africa, which contributes a quarter of its revenue.
  • The institutional, or tender, business in Africa—under which it makes drugs on contract for governments and other institutions—is expected to either remain flat or decline by about 10 percent in the next financial year, a spokesperson for the specialty pharmaceutical maker told BloombergQuint through email.

Here’s Ajanta Pharma’s strategy for its India business and fledgling U.S. operations.

7. Wipro Promoter To Cut Stake?

Billionaire Azim Premji is expected to sell up to 0.44 percent stake in Wipro Ltd. owned through his philanthropic trust, according to two people familiar with the development.

  • The Azim Premji Trust, part of the promoter group that owns 74.3 percent in the software services provider, plans to sell a minimum of 0.29 percent, or 1.78 crore shares through block deals, the people said on the condition of anonymity as the information is not public yet.
  • The term sheet has a greenshoe option allowing a total sale of 0.44 percent or up to 2.67 crore shares—BloombergQuint has reviewed the term sheet.

Shares are likely to be sold at a discount to Thursday’s closing price.

8. The Fiscal Deficit Math That You Don't See

There a big gap in the government’s budget math that’s nearly 1 percent of India’s GDP, writes Ananth Narayan.

  • We need an incredible 73 percent year-on-year growth in tax revenues in the last two months of FY19 to meet the revised estimate of 19.1 percent full-year growth in central tax receipts.
  • Instead, if the current trend of 4.7 percent growth in tax receipts continues, we will end the year Rs 1.8 lakh crore short of revised estimates.
  • We saw a similar trend of optimistic revised estimates of revenues last year as well. We might well be in for déjà vu later this year.
  • Then how has the government been ‘meeting’ its fiscal deficit target?

Here’s how that gap is being covered for the last two years.

9. India’s Breakfast Wars

Samyuktha R, 24, mostly has upma or poha for breakfast. Not freshly made at home but the packaged instant-mix bought off-the-shelf from the local supermarket. It tastes decent, said the MBA undergraduate from Bengaluru, and is convenient as she just has to pour hot water and wait to have it on-the-go. But she prefers it to corn flakes or muesli or even instant noodles.

  • “I have been living in a hostel for two years and have my classes early in the day,” she said. “I need something quick.”
  • Samyuktha underscores the challenge makers of packaged breakfast food face in India.
  • More than two decades after Kellogg Company entered India, the cereal market is worth Rs 2,579.5 crore, according to data by Euromontior International.

It’s still tiny compared with India’s Rs 5.1-lakh-crore packaged food industry.

10. Sealed Covers Vs Judicial Transparency: How To Strike A Balance?

Transparency in judicial proceedings and open hearings have been a topic of public debate dating back centuries. The English jurist Jeremy Bentham once said, “Secrecy being an instrument of conspiracy, ought never to be the system of a regular government.

  • But much like any other aspect in philosophy, some real-life situations call for a deviation from open hearings.
  • In courts, these deviations are: in-camera trials and sealed-cover submissions.
  • The courts in India opt for in-camera trials (behind closed doors which can’t be reported by the media) primarily in cases where personal details are involved which might not be appropriate for public consumption in marital disputes or rape trials involving minors.
  • But sealed-cover submissions are different. While in an in-camera trial the accused gets a chance to access the information and arguments being made against him, in case of sealed covers, one or at times both the parties don’t get access to those submissions. It’s strictly between the court and the party asked to submit the information.
  • Recently, the Supreme Court sought submissions on details such as pricing and the negotiation process for India’s purchase Rafale fighter jets from France’s Dassault Aviation in a sealed cover.

Here’s what retired retired justices J Chelameswar and AP Shah have to say on the debate.