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

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

1. Prospect Of Modi’s Return Triggers Sharp Rally

Indian equity benchmarks clocked their best single-day gains in nearly six years to close at record highs after the exit polls predicted that the NDA will return to power.

• The S&P BSE Sensex closed 1,422 points or 3.75 percent higher at 39,352 and the NSE Nifty 50 ended 420 points or 3.69 percent higher at 11,828.
• The rupee rose the most since December and the yield on benchmark 2029 bonds slid eight basis points.
• Global funds bought a net Rs 1,730 crore of shares on Monday, according to provisional data from the exchanges. That would mark the first net inflow since May 7.

Follow the day’s trading action here.

• Vikas Khemani of Carnelian Capital Advisors said for the rally to continue, the new government has to "come out with a good economic revival plan".
• Morgan Stanley's Jonathan Garner said that Modi's return, coupled with earnings growth, will push Sensex towards the 42,000 mark.
• Jim Walker, chief economist at Aletheia Capital, said that global investors will also see this as a relief, with continuity and “strength in the heart of the government”.

Are Indian markets set for the next leg of the bull run?

2. Oil Rises Ahead Of OPEC Move

U.S. equities pared losses after an early stumble as the fallout from the White House’s moves against Chinese telecom giant Huawei battered technology shares.

• The S&P 500 Index slid at the open in New York on Monday, led by semiconductor companies, but those losses were partially offset by gains in energy shares fuelled by a rise in the price of oil.
• Financials also advanced, and 10-year Treasury yields rose before a slew of U.S. data this week as well as Federal Reserve policy-meeting minutes on Wednesday.

• Oil rose after Saudi Arabia and other OPEC+ members signaled their intention to keep supplies constrained, while U.S. President Donald Trump ratcheted up tensions with Iran.
• Saudi Energy Minister Khalid Al-Falih urged members of OPEC+ gathered in Jeddah to “stay the course” on output cuts.
• West Texas Intermediate crude gained 0.8 percent to $63.24 a barrel, the highest in almost three weeks.

Get your daily fix of global markets here.

3. Earnings: Tata Motors, BPCL

Tata Motors Ltd.’s profit in the quarter ended March nearly halved but beat analyst estimates as muted sales in India and difficulties with its Jaguar Land Rover unit continue.

• Profit fell 47 percent over last year to Rs 1,117.5 crore.
• Revenue fell 4 percent to Rs 86,422 crore.
• Operating income declined 6 percent to Rs 8,019.5 crore.
• Operating margin narrowed 20 basis points to 9.3 percent.
• Margin for Jaguar Land Rover fell 300 basis points to 9.8 percent.

In the short term, the pain will continue due to multiple uncertainties.

Bharat Petroleum Corporation Ltd.’s quarterly profit beat estimates as it jumped more than sixfold on higher inventory gains.

• Net profit rose 6.3 times on a sequential basis to Rs 3,125 crore in the January-March period, India’s second-largest state-run oil marketer said in its exchange filing.
• That’s the highest since at least June 2017. Analysts tracked by Bloomberg had projected the figure at Rs 2,736 crore.
• Revenue fell 6.6 percent over the previous quarter to Rs 73,990 crore, against the Rs 75,478-crore forecast.
• The company’s other expenses for the last financial year included Rs 700.38 crore toward losses on account of foreign currency transactions and translations.

Operating margin swelled 550 basis points to 6.5 percent.

4. Own An NBFC? Here’s How To Make The Most Of It

There’s been fishy business going on at Religare Finvest Ltd. for almost a decade, alleges a complaint filed by its own Chief Executive Officer Sanjay Palve and Milind Patel, CEO of Religare Enterprises Ltd., its parent company.

• In the past two years the headlines have indicated several investigations into its lending practices, at least one regulatory order by Securities and Exchange Board of India directing recovery of Rs 2,300 crore loans from erstwhile promoters — the Singh brothers, and even a bankruptcy filing.
• But all this pales when compared to the allegations Palve and Patel have made against brothers Malvinder Singh and Shivinder Singh, and Sunil Godhwani and Narender Ghoshal.

They paint a picture of a lending business that obliged its promoters with money whenever they needed. A personal bank of sorts.

5. Paytm: All Presence, No Profit

On May 15, payments firm Paytm tied up with foreign lender Citibank to introduce a co-branded credit card. The new addition joined a plethora of products introduced by the Paytm ecosystem over the last few years, making it a mini financial conglomerate.

But there is one thing missing in all of this—profitability.

• The practice of heavy discounting through cashbacks, along with large operational expenses on items like advertising, marketing and network costs have meant that profitability remains a distant dream for a company that is now nearly nine years old.
• Earlier last week, Vijay Shekhar Sharma, founder of One97 Communications Ltd.—the parent company of Paytm—acknowledged that profitability is some time away.

Here’s what we found out when we reviewed Paytm’s finances over the last few years.

6. Adani’s (Australia) Election Boost

A surprise election victory for Australia’s pro-coal ruling coalition is ratcheting up pressure on the Queensland state government to approve development in one of the biggest untapped reserves of the fossil fuel.

• Adani Group’s Carmichael coal project is located in Australia’s huge Galilee Basin, which if fully developed, has the potential to more than double Australia’s thermal coal exports.
• But the project, first proposed in 2010, has been hampered by regulatory delays and difficulty in securing financing amid a passionate environmental protest movement.
• The tide may now be turning. The opposition Labor Party, which fought on a platform advocating tougher action to combat climate change, fared poorly in Queensland, especially in mining communities in the north of the state. Meanwhile, the Labor state government has been accused by the Indian company of putting roadblocks in the way of the project and will itself face voters in 2020.

Find out what experts had to say on the future of the Adani coal mine.

7. India Moves To Recover Tax Dues From IL&FS

The Central Board of Indirect Taxes and Customs has directed its officials to take “suitable action” to recover dues from India-based subsidiaries of debt-ridden Infrastructure Leasing & Financial Services Ltd., according to an internal note accessed by BloombergQuint.

• Tax officials have been asked to recover indirect tax from 169 India-based entities of IL&FS, according to the note.
• While the National Company Law Appellate Tribunal had earlier imposed a moratorium on subsidiaries of IL&FS, the tax department believes that it won’t affect the ascertainment of tax, and recovery once the case is resolved, an official said requesting anonymity.

But it is not just the 169 IL&FS group companies that are under the taxman’s scanner.

8. ArcelorMittal Confirms Rs 42,000 Crore For Essar Steel

Global steel major ArcelorMittal told the National Company Law Appellate Tribunal that it would pay Rs 42,000 crore, including a minimum of guarantee of Rs 2,500 crore as working capital, for acquiring Essar Steel Ltd. under the insolvency process.

• Senior advocate Harish Salve appearing for ArcelorMittal also accused Ruias—former Essar Steel promoters—of creating hurdles in the resolution process of the bankrupt steel maker.
• According to Salve, issues related to alleged non-performing assets of the companies of Lakshmi Mittal's brother have been already dealt with and rejected by the Supreme Court.

The NCLAT will continue to hear the Essar Steel insolvency case on May 21.

9. RBI Lifeline For NBFCs?

India’s non-bank lenders rose after a news paper reported that the Reserve Bank of India will offer them a credit line to help the shadow banks tide over a liquidity crisis.

• Indiabulls Real Estate Ltd., Dewan Housing Finance Corp. and Reliance Home Finance Ltd. traded more than 10 percent higher during the day.
• The non-bank lenders, which have been hit by high borrowing costs and largely shut out from the bond market after the crisis at shadow lender IL&FS Group broke out last year, are facing trouble raising funds.
• RBI is working on a liquidity line and and may seek comments on the draft guidelines after federal election results are declared on May 23, the Business Standard newspaper reported.

The expectation of a special credit line is driving up prices.