BQuick On Nov. 15: Top 10 Stories In 10 Under Minutes
This is a roundup of the top stories of the day.
1. Tata-Jet Talks: The Modi Government Connection
Prime Minister Narendra Modi’s government has sought Tata Sons Ltd.’s help to rescue struggling Jet Airways India Ltd., people familiar with the matter told Bloomberg News.
- Tata Sons is in talks with the government about a potential haircut to state-run banks on Jet’s loans while Airports Authority of India may forego some of its dues, one of the people said, asking not to be identified as the discussions are private.
- The Tata Sons’ board is due to deliberate on the matter on Friday, the people said.
- Tata spokesman declined to comment while aviation ministry spokesman did not answer multiple calls and a text message sent to his mobile phone.
2. Infosys Appoints Interim CFO
Infosys Ltd. appointed Jayesh Sanghrajka as its interim chief financial officer as incumbent MD Ranganath’s term ends tomorrow.
- The board approved the appointment of Sanghrajka, currently the executive vice president and deputy CFO, with effect from Nov. 17, according to its press release.
- The board is also in the process of finding a new CFO, it said.
- Ranganath’s term ends tomorrow after an 18-year career at India’s second largest software services provider.
3. Trade Deficit Widens
India’s trade deficit in October widened from a five-month low in September after crude oil imports coupled with a depreciating rupee weighed on the nation’s trade books.
- The gap between exports and imports stood at $17.13 billion, compared with $14.61 billion in the same month last year.
- India’s imports rose 17.6 percent to $44.11 billion in October from $37.50 billion in the year-ago period.
- Exports rose 17.86 percent to $26.98 billion, with increased shipments of petroleum products, electronic goods and organic and inorganic chemicals.
4. Indian Markets Rise, Pound Knocked Amid Brexit Turmoil
Indian equity benchmarks rose to their highest levels in over a month led by gains in private sector lenders.
- The S&P BSE Sensex Index rose 0.34 percent or 119 points to 35,261.
- The NSE Nifty 50 Index climbed 0.4 percent or 40 points to 10,617.
- The Sensex and Nifty faced volatility in the first 90-minutes of trading. But gains in Kotak Mahindra Bank Ltd., HDFC twins, Axis Bank Ltd. and ICICI Bank Ltd. propelled the markets higher.
- S&P Consumer Durables Index was the top gainer while the S&P BSE Telecom Index was the top loser.
The pound plunged the most since June 2017 as the Brexit process again threw the U.K. government into chaos.
- U.S. stocks opened lower as California utilities continued to reel from the wildfires that have swept the state.
- Sterling tumbled after Brexit Secretary Dominic Raab announced his resignation on Twitter, the highest profile of several departures on Thursday morning. Influential Brexit-backer Jacob Rees-Mogg later joined calls for a vote of no confidence in Prime Minister May.
- The dollar stayed higher as the latest data showed U.S. retail sales rose in October by the most in five months. The yen rose with the Swiss franc.
- West Texas Intermediate crude climbed 0.6 percent to $56.58 a barrel.
5. Good Time To Buy Quality Mid Caps
The fear of losing money has a greater impact on investor minds than any gain, according to Samit Vartak of SageOne Investment Advisors LLP.
- Most investment decisions are about avoiding the pain of losses, Vartak told BloombergQuint.
- So investors, he said, try to hide in large caps that have done well rather than buying companies in the broader market where there is earnings visibility.
- Vartak, who believes in cycles, said the market-wide return on equity will revert to nominal-GDP growth levels sooner rather than later.
6. What FIIs Bought And Sold
Foreign investors turned net sellers in the quarter ended September despite two consecutive months of positive inflows, weighed down by a weaker rupee, rising prices of Brent crude and U.S.-China trade tensions.
- Investors trimmed their holding by over half a percentage point in 123 stocks—or nearly a quarter of the 501 stocks on the S&P BSE 500 Index.
- The biggest casualty was India’s largest telecom servicer provider Vodafone Idea Ltd., in which foreign portfolio investors reduced their holding by over 13.5 percent.
- However, they continued to invest in select Indian stocks as they increased their exposure by over half a percentage point in 93 of the 501 stocks on the S&P BSE 500.
7. More Good News Than Bad
Co-Founder Binny Bansal quitting as Flipkart Group Chief Executive Officer after an investigation into alleged sexual assault is expected to make the transition easier for Walmart Inc.
- The retail giant, which bought 77 percent stake in India’s largest online retailer for $16 billion in its biggest acquisition, can now speed up integration.
- Binny’s exit will have zero impact as far as the daily operations are concerned, said Sanchit Vir Gogia, founder and CEO at Greyhound Research.
It will work more in Walmart’s favour with all the founders out. They (Walmart) can strengthen their controlSanchit Vir Gogia, CEO, Greyhound Research
8. Dalmia Fights Back For Binani Cement
The Dalmia Group moved the Supreme Court challenging the National Company Law Appellate Tribunal’s approval for the sale of Binani Cement Ltd. to UltraTech Cement Ltd.
- A three-judge bench headed by Chief Justice Ranjan Gogoi agreed to Dalmia's plea for an early hearing, and listed the case for Nov. 19, Bloomberg reported.
- The group is confident of getting a favourable verdict from the apex court, Dalmia Bharat's Group Chief Executive Officer Mahendra Singhi told BloombergQuint in an interview.
- Singhi, however, refused to share details of the grounds on which the group challenged the NCLAT's order, saying that that matter was sub judice.
9. Banks Under PCA Continue To Bleed
The eleven government-owned banks which are under the Reserve Bank of India’s corrective action framework continue to report large losses, as they slow growth and top-up on provisions against their large pool of stressed assets. The slow pace of resolution under the insolvency process has meant recoveries remain low and losses remain high.
- The revised prompt corrective action, which imposes strictures ranging from curbs on branch expansion to lending, has become a flash point between the government and the RBI.
- Quarterly earnings data collated by BloombergQuint shows that the process of balance sheet repair remains painfully slow.
- Cumulatively, these eleven banks reported net loss of Rs 10,197 crore. Three banks reported small profits while other continued to be in the red.
- The losses have been a result of increased provisions, needed to cover for bad loans, and weak core income growth, which is a result of curtailed lending operations.
10. The Dilemma Of The Rational Voter
All political parties are like competing criminal gangs, fighting for the right to be the only legal mafia for five years, writes Amit Varma. Who do you pick? And along with this dilemma comes a broader paradox at the heart of democracy:
- One, why is it rational to not vote?
- Two, despite the answer to question one, why is it rational to vote?
- Three, if you feel, as I do, that all the options before us are terrible, why should you vote?
- Four, despite the answer to question three, why should you refrain from voting?