BQuick On May 24: Top 10 Stories In Under 10 Minutes

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

1. RBI Mulls New Liquidity Norms For NBFCs

The Reserve Bank of India on Friday released draft rules proposing to tighten the liquidity framework for the country’s non-banking financial companies.

• The new rules, if finalised, will bring in a more robust governance and reporting structure for monitoring liquidity risks and introduce a ‘liquidity coverage ratio’ in order to ensure that non-bank lenders have some buffer available in times of stress.
• The rules come against the backdrop of an NBFC crisis, which was sparked off by the collapse of Infrastructure Leasing and Financial Services.
• The default by the once-AAA rated firm led to tightness in the credit market and exposed liquidity risks on the balance sheets of NBFCs.

The RBI is now trying to correct some of the concerns that emerged.

2. Hinduja’s Demanding Offer To Jet Airways

The Hinduja Group, which recently threw its hat in the ring for a potential investment in Jet Airways (India) Ltd., has laid down tough conditions for any investment in the airline.

• The conditions, unlikely to be acceptable to Jet Airways’ bankers, mean that the future of the airline remains uncertain.
• The Hinduja Group is seeking an 80 percent haircut on the outstanding debt of the airline, said two people familiar with the discussions, who spoke on condition of anonymity.
• Jet Airways owes its lenders close to Rs 10,000 crore.

That’s not all. Here’s the rest of their conditions.

3. Sensex, Nifty Rejoice Modi’s Big Win

Indian equity indices closed at record highs as investors were buoyed with optimism after the Narendra Modi-led government was reelected for a second term.

• The S&P BSE Sensex ended 1.6 percent higher at 39,434.70.
• The NSE Nifty 50 ended at 11,844.10, up 1.61 percent.
• The broader market index represented by the NSE Nifty 500 Index ended 1.77 percent higher.
• All sectoral gauges compiled by NSE ended higher, led by the NSE Nifty PSU Index’s 5.59 percent gain.
• JSW Steel Ltd. quarterly profit fell by half as the steelmaker’s operating margin dropped.

Follow the day’s trading action here.

U.S. equities climbed at the end of a bruising week in which escalating trade tensions dominated markets. The pound fluctuated after U.K. Prime Minister Theresa May laid out a timetable to quit. Ten-year Treasury yields gained and the dollar slipped.

• The S&P 500 Index rose 0.3 percent as of 10:35 a.m. New York time.
• The Stoxx Europe 600 Index rose 0.6 percent, the biggest advance in a week.
• Oil rose, paring its biggest weekly loss of the year, as signs that global crude markets are tightening jostled with fears that the U.S.-China trade feud will hurt fuel demand.

Get your fix of global markets update here.

5. Kovind Accepts Modi’s Resignation Paving Way For New Government

President Ram Nath Kovind on Friday accepted the resignation of Prime Minister Narendra Modi and asked him to continue till a new government assumes office, a communique from the Rashtrapati Bhavan said. The 17th Lok Sabha has to assume office by June 3.

Meanwhile, BJP lawmaker Subramanian Swamy has said the time is ripe to introduce labour reforms in the country by the new government in place.

• “If you want more labour-intensive technology to be used, you should enable companies to have a modified hire-and-fire system,” Swamy said in an interview with BloombergQuint.
• “And the modification is that if you find that somebody is not working, you can fire him and send him back home. But you must continue to send his paycheck for three years or two years—this could be negotiated—till he finds another job,” he said.
• This move will nudge companies to hire much more than they are currently doing, he said.

Watch the full interview with the BJP leader here.

7. Cement Prices Continue Rising

Cement prices rose for the fifth straight month in May even as price corrections in the drought-affected south India kept overall gains in check.

• All-India cement prices jumped 3 percent to Rs 372 per 50 kg bag on a monthly basis after the price hikes in north and west, according to a BloombergQuint survey of 17 dealers across five regions.
• “Prices are expected to correct going forward, especially in the southern region with the onset of monsoon,” Cement Expert Sanjay Ladiwala said, adding that cement prices are now at their peak and have already started facing pressure due to slowing construction activity.

Here are the regions that lead the price hike.

8. Procurement Of Pulses, Oilseeds At Record High

The government procured record amounts of oilseeds and pulses in 2018-19 to support farmers, who have seen incomes plummet in the face of rising supply and falling prices of key agricultural commodities.

• Nearly 5.8 million tonnes of oilseeds and pulses were procured in FY19, more than twice the 2.8 million tonnes procured in FY18.
• NAFED is the largest nodal agency for procurement of pulses and oilseeds under the government’s price support scheme.
• Under the scheme, procurement is undertaken if the market price of stocks remains at or below the declared minimum support price.

The increased procurement came against the backdrop of continued strong production of these commodities and low prices.

9. The Adani Coal Mine Numbers Don’t Add Up

Is the world’s most bitterly contested coal mine finally getting the go-ahead? After the opposition Labor party suffered heavy losses in coal-mining regions in Saturday’s Australian federal elections, Adani's Carmichael project looks to be getting closer than ever to approval. There's a rarely discussed problem with this, though: The numbers on Carmichael don’t stack up – and haven't for most of the past decade, writes David Fickling.

• Going by the energy content of coal and its price, Carmichael should get you something like $660 million of annual revenue.
• Subtract the costs of blasting, shoveling, washing, blending and loading the coal. Then adjust that for the cost of transporting the coal to port on third-party networks. Then consider the cost of building the mine and a separate 200 kilometer railway line.
• Over that you have bonds to fund with debt: let's assume you depreciate over 30 years and amortise over 10 and the result is $250 million.

But add all costs and Adani is losing $220 million a year. So why is everyone so adamant about the mine?

10. Theresa May Breaks Down As She Decides To Quit

An emotional Theresa May announced she will quit as Britain’s prime minister after admitting she had failed to deliver the one task that defined her time in office -- taking the country out of the European Union.

• “I have done my best,” May said in a statement to cameras in the sunshine outside her Downing Street offices. “It is, and will always remain, a matter of deep regret to me that I have not been able to deliver Brexit.”
• May said Britain now needs a new prime minister to take over and try to complete the task that has defeated her.
• She will stand down as Conservative Party leader on June 7, with a leadership contest formally beginning the following week.

May’s decision heralds the end of a turbulent, three-year premiership marked by bitter divisions.