BQuick On May 31: Top 10 Stories In Under 10 Minutes

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

1. The Modi 2.0 Cabinet

Amit Shah will be the home minister in Prime Minister Narendra Modi’s new cabinet, while Nirmala Sitharaman has been named the finance minister. Subrahmanyam Jaishankar, former foreign secretary, is the new external affairs minister.

• Sitharaman will be the second woman to hold the finance portfolio. She will also be the minister for corporate affairs.
• Rajnath Singh, who was the home minister in Modi’s first term, has been given the charge of the defence ministry.
• Piyush Goyal will head the railways and commerce ministries.

Who got what? See the full list of portfolio allocations in Modi's new cabinet.

2. Key Cabinet Decisions

PM Modi’s newly elected Cabinet held it’s first meeting today. Among several decisions, it was decided to extend PM Kisan scheme to all farmers. Nearly 2 crore farmers, who were earlier excluded from the scheme, will now benefit from the scheme. Total number of beneficiaries will rise to 14.5 farmers and the cost of the scheme will rise to Rs Rs 87,000 crore from Rs 75,000 crore earlier.

Other key highlights from the Cabinet briefing:

• Parliament session to be held from June 17-July 26
• Union Budget will be presented on July 5.
• Voluntary and contributory pension scheme for small and marginal farmers approved.
• Rs 3,000/month pension scheme for retail traders, shopkeepers approved.

Catch more details here.

3. GDP Growth At 20-Quarter Low

The Indian economy slowed further in the January-March 2019 quarter, as consumption and investment in the economy weakened. Key employment generating sectors such as agriculture and manufacturing saw lower growth in the final quarter of year, showed data released on Friday.

• GDP rose by 5.8 percent in the fourth quarter of 2018-19, pulling down growth for the full financial year to 6.8 percent.
• In gross value added terms, the economy grew at 5.7 percent in Q4, with full year growth settling at 6.6 percent.
• The growth slowdown in the fourth quarter was partly due to temporary factors, said Economic Affairs Secretary Subhash Chandra Garg.

Find out which sectors the economic slowdown hit the most.

4. Fiscal Deficit: Last-Minute Rush

The Indian government managed to come close to its once-revised fiscal deficit target for financial year 2018-19, showed data released by the Controller General of Accounts.

• Fiscal deficit for FY19 settled at close to 3.4 percent of GDP, in line with the revised target and marginally higher than the initial budget target of 3.3 percent of GDP.
• At the end of March, the fiscal deficit stood at Rs 6.45 lakh crore or 101.7 percent of the revised estimate.
• The interim budget presented in February had pegged the FY20 fiscal deficit at 3.4 percent.

Here’s how the government accounts changed between February and March.

5. A Glimpse Into The Job Crisis

Unemployment rate in India, across urban and rural areas, stood at 6.1 percent between July 2017 and June 2018, according to the Periodic Labour Force Survey of the National Sample Survey Office.

According to the annual report, the first of its kind:

• Unemployment rate for females, rural and urban, stood at 5.7 percent.
• For males, rural and urban, the unemployment rate stood at 6.2 percent.
• Given the lack of frequent and standardised data on the size of the labour force, participation and unemployment, this survey data is tough to contextualise.

So it’s official, unemployment in India is at highest since 70s.

6. Sensex Posts Weekly Gain, U.S. Stocks Sink

Indian equity benchmarks extended gains for the third consecutive week, their longest weekly gaining streak since the first week of April.

• The S&P BSE Sensex closed 0.71 percent higher this week to end at 39,714.
• The NSE Nifty 50 ended at 11,922, up 0.66 percent this week.
• The broader market index represented by the NSE Nifty 500 Index closed 0.85 percent higher during the period.
• On Friday, the Nifty drifted 0.19 percent lower while Sensex shed 0.3 percent or 118 points.

Follow the day’s trading action here.

U.S. stocks sank to fresh 12-week lows and Treasuries rallied a fourth day as the Trump administration’s trade spats intensified, rattling financial markets already on edge over the strength of global growth.

• The S&P 500’s May decline topped 6 percent and the Dow Jones Industrial Average sank deeper into its longest streak of weekly losses since 2011 after President Donald Trump threatened to place escalating tariffs on Mexico and China prepared a blacklist of foreign companies it accuses of damaging its interests.
• The Mexican peso tumbled more than 2 percent, while the yen jumped. Bund yields sank to a record as investors sought havens.
• The 10-year Treasury rate slid below 2.2 percent for the first time in 20 months, and a key portion of the yield curve inverted further, adding to investor angst over the threat of a recession.
• West Texas Intermediate crude fell 2.1 percent to $55.41 a barrel, the lowest in more than 15 weeks.

Get your daily fix of global markets here.

7. What Fund Managers Think Of Modi 2.0

A stable government will aid Indian equity markets but a global slowdown and liquidity shortage remain the biggest concerns. That’s what emerged from discussions with three market veterans Nilesh Shah, Vikram Kotak and Basant Maheshwari at the Mumbai edition of BQ Edge, an on-ground initiative of BloombergQuint.

• The spectre of a coalition government had cast its shadow in the run-up to the elections, and now that it has been put to rest, the political risk is out of the way, said Shah, founder of investment management firm Envision Capital.
• Vikram Kotak, co-founder and managing partner at Ace Lansdowne Investments Services LLP, expects the next five years to be the best for the Indian equity market.
• Basant Maheshwari, author of The Thoughtful Investor, is cautious. It’s back to the old grind, similar to 2009-2014, and the change in the international markets will weigh in, he said.

All three market veterans agree that the first budget and the 100-day plan of the government will be critical.

8. Auto Revival In May? Maybe Not

Auto sales declined again in May, according to BloombergQuint's survey of dealers and analysts, suggesting consumption and discretionary spending is yet to pick up.

• While inventory levels have come down, that’s largely because of production cuts by automakers, the survey of seven dealerships across India revealed.
• Retail demand is yet to pick up, they said.
• Sales have been falling since the Diwali festival season due to higher upfront insurance costs and an increase in vehicle prices.
• Discounts didn’t help and inventory piled up at dealerships, prompting production cuts.
• The slump coincides with a decline in consumer goods volumes and a liquidity crunch, causing fears of an economic slowdown.

Three brokerages polled by BloombergQuint also expect the sales volumes to fall.

9. Airtel's ARPU Boost

Bharti Airtel Ltd.’s average revenue per user for the quarter rose the most since its 2002 listing as India’s second-largest largest telecom operator weeded out low-paying subscribers and added more 4G users.

• The Sunil Mittal-led company’s ARPU jumped over 18 percent to Rs 123 in the fourth quarter of financial year 2018-19.
• The telecom operator had reported its quarterly earnings on May 6, but didn't disclose the other details due to rights issue.
• Despite the fall in its overall subscriber base, Bharti Airtel added 4G users, aiding growth in its India business.

Here’s what all boosted Bharti Airtel’s 4G user base.

10. HAL’s Cash Crunch

India’s largest aeronautics company continues to battle a crippling cash crunch as pending dues from the government—its biggest client—nearly doubled since March last year, forcing the state-owned entity to raise debt to run its daily operations.

• Cash balance of Hindustan Aeronautics Ltd. was nearly wiped out over the last one year at Rs 140.49 crore as of March 2019.
• Its receivables—or payments from clients—jumped two-fold to Rs 13,938 crore.
• The receivables now account for 70 percent of the company’s annual consolidated revenue from operations, 98 percent of which comes from the Ministry of Defence.

The company’s liquidity crisis worsened further in the fourth quarter.