BQuick On May 27: Top 10 Stories In Under 10 Minutes

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

1. Anil Ambani’s Rs 1,050-Crore Radio Deal

Anil Ambani will sell his FM radio broadcasting business to Music Broadcast Ltd. for at least Rs 1,050 crore ($151 million), both companies said in separate statements to stock exchanges.

• Ambani’s Reliance Capital Group plans to first sell a 24 percent stake in its entertainment company Reliance Broadcast Network Ltd. to Music Broadcast, a unit of Jagran Prakashan Ltd., for Rs 200 crore before a complete disposal at an enterprise value Rs 1,050 crore, subject to regulatory approvals, the statement said.
• The combined network will have 79 stations, making it the biggest in India.
• The deal is expected to close in the first quarter of the financial year starting April 2020.
• The radio business is a unit of Reliance Capital Ltd., the Anil Ambani group’s financial services arm.

The exit from the radio business is part of efforts by Ambani to cut wider group liabilities.

2. Earnings: GAIL, IndiGo, Zee

GAIL (India) Ltd.’s quarterly profit fell by a third due to a weaker performance in petrochemical and marketing verticals.

• Net profit of the state-run gas utility fell 33.2 percent sequentially to Rs 1,122.2 crore.
• Revenue fell 5 percent to Rs 18,763.4 crore.
• Operating profit fell 37 percent to Rs 1,684.1 crore.

GAIL’s petrochem business reported an operational loss.

InterGlobe Aviation Ltd.’s quarterly profit jumped fivefold as the operator of budget carrier IndiGo earned higher fare per passenger at a time fuel prices were relatively lower.

• Profit surged 401.2 percent over the last year to Rs 590 crore.
• Revenue rose 35.94 percent to Rs 7,883 crore.
• Yield rose 12 percent to Rs 3.7 per kilometre.

The airline expects profitable growth ahead and is expanding.

Zee Entertainment Enterprises Ltd.’s quarterly profit rose but missed estimates as the Subhash Chandra-led media company incurred an exceptional loss.

• Net profit rose 26.8 percent year-on-year to Rs 292 crore.
• Revenue rose 17 percent to Rs 2,019.3 crore.
• Operating profit fell 5.2 percent to Rs 577.7 crore, while operating margin. contracted 690 basis points to 28.6 percent.

Zee Entertainment shares have been under pressure in 2019 so far.

3. Sensex, Nifty Hit Fresh Records

Indian equity benchmarks extended gains for the second consecutive trading session and registered their best two-day rally in a week to close at record highs.

• The S&P BSE Sensex closed 248 points or 0.63 percent higher at 39,683.
• The NSE Nifty 50 closed at 11,924, up 0.68 percent.
• The broader market index represented by the NSE Nifty 500 Index closed 0.85 percent higher.
• Eight out of 11 sectoral gauges compiled by NSE ended higher.

Follow the day’s trading action here.

Stocks rose in Europe on Monday after markets traded mixed in Asia as investors mulled three weeks of global declines amid escalating U.S.-China trade tensions.

• Core sovereign bonds in the European Union advanced after mainstream parties held their ground against populists in elections.
• The Euro Stoxx index climbed, helped by Fiat Chrysler’s proposed merger with France’s Renault, which drove up both carmakers’ shares.
• U.S. stock futures drifted.
• Italian bond yields jumped as the country was said to face a $4 billion fine over failure to rein in debt.
• The yuan steadied after a senior Chinese economic official said speculators “shorting the yuan will inevitably suffer from a huge loss.”
• The yen fell as the U.S. and Japan discussed a trade deal.
• The euro held most of its gains from Friday, while the dollar rose against a basket of major currencies.

Get your daily fix of global markets here.

5. Modi’s Return Divides Rupee Analysts

Prime Minister Narendra Modi’s thumping election victory is dividing analysts on India’s rupee.

• Citigroup Inc. is positioning for a weaker rupee using options after the currency’s recent outperformance, while Nomura Holdings Inc. expects the sweep of Modi’s win to attract robust overseas flows to the nation’s assets, giving another leg to the rally.
• Investor sentiment turned positive last week -- the rupee gained one percent and stocks rose to records -- after Modi swept to a comfortable victory as predicted by nearly all exit polls.
• With election outcome settled, markets are now looking to see how the government tackles slowing economic growth.

So where would the rupee go next?

7. Why The Lookout Circular Against Naresh Goyal

A potential fraud detected by investigative agencies at crisis-hit Jet Airways (India) Ltd. led to the issuance of a lookout circular against Naresh Goyal and his wife, a senior government official said requesting anonymity.

• Promoters of companies in which serious financial irregularities are found, need to be made accountable, the official said.
• Naresh Goyal and his wife Anita Goyal were stopped from flying out of the country by immigration authorities based on a lookout circular issued on the request of Ministry of Corporate Affairs. A lookout circular is issued by the Ministry of Home Affairs.
• The Registrar of Companies, which comes under the Ministry of Corporate Affairs, had found instances of Companies Act violation and some unexplained fund trail, according to a Mint report.

The Ministry of Corporate Affairs is following a principle-based approach.

8. New U.S. Visa Rules A Blow To Indian IT

Profitability of Indian IT companies is likely to be impacted by changes in U.S. visa rules, specifically for H1-B visas, with margins estimated to narrow in 2019-20, a Crisil report said.

• Revenues are set to rise by 7-8 percent in dollar terms for the over $180 billion IT industry in 2019-20 on the back of faster growth in digital services, ratings agency Crisil's research wing said in a note.
• The IT industry’s operating margins will narrow by 0.30-0.80 percent, largely on account of an increase in mandatory local U.S. hiring, the report stated.
• Nearly 65 percent of the operating expenses for an IT firm are towards employees.

Indian IT has historically relied on labour arbitrage, but the gap is narrowing.

9. Google Pay’s Quiet Rise Up The UPI Charts

Google Pay recorded the highest value of transactions among Unified Payments Interface or UPI-based platforms in April 2019, with competitors PhonePe and Paytm hard on its heels, shows transaction data accessed by BloombergQuint.

• The payments platform of Google LLC reported approximately Rs 49,700 crore in transactions in April.
• PhonePe reported nearly Rs 42,610 crore worth of transactions and Paytm reported volumes of Rs 35,500 crore during the same period.
• The three companies put together accounted for nearly 90 percent of the Rs 1.42 lakh crore worth transactions reported on the UPI platform last month.

Google Pay has relied on cashbacks to improve customer engagement. But it’s performing better than peers.

10. Modi’s Rally And A Populist Warning

Narendra Modi credited grassroots workers for Bharatiya Janata Party’s thumping victory saying that chemistry trumped poll arithmetic in the Lok Sabha elections.

• Following a rally in Varanasi, Modi said it was the party workers who spread awareness about the government's policies and programmes.
• Modi will take oath on May 30, with the 17th Lok Sabha likely to have its first session from June 6-15.

It’s a terrible feeling to discover that your country is full of strangers, writes Mihir Sharma.

• For some in India, the election of Narendra Modi in 2014, with a majority that India hadn’t seen in three decades, was that moment.
• Everyone knew there was discontent with the status quo; everyone knew that Modi was doing well, better than anyone had expected before he became a candidate – but to win an unprecedented majority?
• It meant that far more Indians than imaginable were willing to trust a leader with so disquieting a record.

If you want to fight nationalist-populists like Modi, you can’t treat them like regular politicians.