BQuick On May 30: Top 10 Stories In Under 10 Minutes

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

Earnings: Coal India

Coal India Ltd.’s profit for the January-March period jumped more than four-fold to beat analyst estimates due to higher margin and lower employee benefit costs.

• Net profit rose over 300 percent to Rs 6024.16 crore.
• Revenue rose 7.5 percent to Rs 28,546.2 crore.
• Margin expanded to 28.7 percent from 0.7 percent a year ago.

Its operating profit jumped over 40 times.

Sensex, Nifty Resume Rally

Indian equity benchmarks resumed their record closing spree on derivatives expiry day after a one-day blip.

• The S&P BSE Sensex closed 0.84 percent or 330 points higher at 39,831.97.
• The NSE Nifty 50 ended at 11,945.90, up 0.71 percent.
• The broader market index represented by the NSE Nifty 500 Index ended 0.6 percent higher.
• In the May series, the 50-share gauge ended 2.6 percent higher.
• Six out of 11 sectoral gauges compiled by NSE ended higher.

Follow the day’s trading action here.

What Falling Global Bond Yields Mean For India

Indian government bond yields, which remained stubbornly high despite interest rate cuts announced by the monetary policy committee, have finally seen a decline in the last three weeks because of a confluence of global and domestic factors.

• The 10-year benchmark bond yield has fallen 28 basis points since May 10, when it traded at 7.41 percent.
• On Thursday, yields were trading at 7.13 percent, a basis point higher than its previous close of 7.12 percent.
• Hopes of easier liquidity conditions and another rate cut from India’s monetary policy committee are the local factors that have brought down yields.
• Bond yields are coming down globally and this is putting downward pressure on India bond yields too.

Lower oil, fewer pressure on currency and inflation have added to positive sentiment.

Will RCom Go The Aircel Way?

Earlier this month, lenders to insolvent telecom firm Aircel Ltd. agreed to take a 99 percent haircut on the Rs 19,800 crore in loans owed by the firm to banks.

• Aircel’s fate, which symbolises the troubles that India’s telecom industry has gone through over a turbulent decade, led to concerns that banks would need to take steep haircuts in the resolution process of other stressed telecom firms.
• Most notably— Reliance Communications Ltd., which is also being resolved under the Insolvency and Bankruptcy Code.
• Lenders, however, say that the extent of losses seen in Aircel are a one-off and will not be repeated with RCom.

Here’s what lenders had to say.

What Adlabs Imagica’s Accounting Move Reveals

A recent accounting move by Adlabs Entertainment Ltd. revealed some dismaying news about the company’s financial future.

• The owner of theme park Adlabs Imagica wrote-off a deferred tax asset worth Rs 165.41 crore in the fourth quarter of 2018-19.
• That suggests it doesn’t expect to turn a profit any time soon.
• To be clear, the write-off is as per accounting standards, but the message it sends should be worrying for investors.

Here’s a detailed look at what Adlabs did and how it came to that.

GDP Growth: Worst Yet To Come?

Growth in the Indian economy may weaken in the January-March quarter as a confluence of factors turned adverse. Slower financing from non-bank lenders, weaker demand for consumer products like automobiles, and lower output in the farm sector are expected to pull down the fourth quarter’s GDP growth to near 6 percent.

• India’s Q4 GDP growth is expected at 6.3 percent, according to a Bloomberg poll of 30 economists. The range of growth estimates is wide and stretches from a low of 5.7 percent to a high of 7 percent.
• GDP growth stood at 6.6 percent in the third quarter and is expected to grow at 7 percent in financial year 2018-19, according to CSO estimates.
• “Both investment demand and consumption demand are showing signs of moderation as revealed by various leading indicators,” Soumyakanti Ghosh, chief economist at State Bank of India, said in a report earlier this week.

So how far did the economy slip in the fourth quarter?

Why Telangana Has Spooked Solar Power Producers

At least 10 private solar power producers have urged the Telangana government to clear dues worth around Rs 1,000 crore pending for nearly eight months.

• Members of the Solar Power Developers Association—who have commissioned over 2,500 MW in capacity in the state since 2014-15 by investing around Rs 13,000 crore—discussed the situation with its chief secretary in February this year, an official of the body told BloombergQuint on condition of anonymity.
• The chief secretary, the official said, assured that the issue will be reviewed and sought a formal representation.
• Telangana—with installed solar capacity of 3,600 MW as of March—is hardly the outlier. The discoms, or distribution companies, of Telangana, Karnataka, Tamil Nadu and Andhra Pradesh collectively owe as many as 12 private producers, including thermal power generators, over Rs 20,496.4 crore as of December 2018, according to data on Ministry of Power’s PRAAPTI portal.

Delayed payments run the risk of turning projects unviable, which risk turning

Liquidity Gloom? Not For These Large Builders

Even as India’s developers were hoping for revival from a prolonged slowdown, a cash crunch aggravated the slump last year. But for bigger builders, that’s not a worry.

• Most large publicly listed developers reported a revenue growth in the quarter ended March.
• While that was driven by new accounting provisions, the number of units sold and sales value also jumped to its highest in at least five quarters, suggesting a revival in demand.
• That comes when developers are finding it tough to raise money, leading to a consolidation in the industry.
• “Stress in levels of demand still continues and a revival has happened in the affordable segment,” Shishir Baijal, chairman and managing director at property consultant Knight Frank, said.

Find out how big developers are driving the realty revival.

10. The New Cold War Is Getting Colder

As the U.S. and China clash over everything from trade to technology, some of the biggest names in investing are bracing for a protracted superpower conflict and adjusting their portfolios accordingly.

• Ray Dalio calls it a “long ideological war.”
• Stephen Jen says we’re witnessing the start of a 15-round fight.
• Mark Mobius sees little hope for a quick resolution and is avoiding shares of Chinese exporters and buying companies that sell to domestic consumers.

Global equities lost $4 trillion of value this month.