BQuick On Nov. 20: Top 10 Stories In Under 10 Minutes
This is a roundup of the top stories of the day.
1. Cement Makers See Signs Of Revival
India’s cement industry, weighed down by excessive supply and low demand for at least three years, is witnessing signs of revival on demand from the government’s infrastructure push, and low-cost and rural housing.
- Capacity utilisation rose in January-March and April-June quarters for most cement makers.
- Even in the seasonally weak September-ended quarter when construction stops during the monsoon, the utilisation level averaged 70 percent compared with 65 percent a year earlier, according to data compiled by BloombergQuint.
2. Unsold Vehicles Piling Up
Auto makers stare at their worst festive sales in five years as higher upfront insurance costs and rising fuel prices hurt demand..
- The Indian auto industry has seen a 20 percent year-on-year drop in overall demand during the October-November festive season, according to Saharsh Damani, chief executive officer of Federation of Automobile Dealers Association.
- Two-wheelers and passenger cars were the worst-hit segments as customer enquiries didn’t convert into sales, he said.
- Sales growth slowed down as auto fuel prices jumped to a record last month with the Brent crude trading near its four-year high.
- Car and two-wheeler makers also increased prices as a weaker rupee increased the prices of imported components.
3. Shapoorji Pallonji Group Plans $1 Billion Share Sale
Shapoorji Pallonji Group plans to seek about $1 billion by bringing outside investors into its solar unit, as it embarks on a series of asset sales across the 153-year-old conglomerate to reduce debt.
- The group, owned by reclusive billionaire Pallonji Mistry, will sell as much as 30 percent in the solar engineering arm of Sterling & Wilson Pvt., said Jai Mavani, executive director at the conglomerate’s flagship company.
- The funds would be raised through a pre-listing stake sale followed by a public offering.
- A separate listing of Eureka Forbes Ltd., the water purification unit of publicly traded Forbes & Co., and sales of commercial real estate will also be considered, Mavani said.
4. NTPC Eyes Stressed Assets
NTPC Ltd., India’s largest electricity producer, is considering buying power plants run by indebted RattanIndia Power Ltd. and Jaiprakash Power Ventures Ltd., people familiar with the matter told Bloomberg News.
- NTPC is doing an internal assessment of RattanIndia’s plants at Nasik and Amravati in the western state of Maharashtra and Jaiprakash’s Nigrie plant in neighboring Madhya Pradesh state, the people said, asking not to be identified as the talks are private.
- The state-run generator will consider bidding if the creditors to the two companies decide to take these assets to bankruptcy court after failing to resolve debt issues.
5. Bharti’s $2 Billion Quest
Bharti Airtel Ltd. is raising more than $2 billion in loans from banks, as India’s second-biggest wireless carrier faces increased competition at home and the threat of a ratings downgrade to junk.
- The company, controlled by billionaire Sunil Bharti Mittal, has agreed to two- and three-year bilateral loans with 10 to 12 lenders, according to people with knowledge of the matter, who are not authorized to speak publicly and asked not to be identified.
- Moody’s Investors Service on Nov. 8 put Bharti’s Baa3 rating, its lowest investment-grade evaluation, on review for downgrade citing low levels of profitability and higher debt levels to fund capital spending.
6. Markets Fall, Rupee Climbs
Indian equity benchmarks halted a three-day rally, their longest winning streak in over a month.
- The S&P BSE Sensex Index fell 0.84 percent or 300 points to 35,474.
- The NSE Nifty 50 Index declined 1 percent or 107 points to 10,656.
- The fall in the 50-stock index was the most in over a month.
The Indian rupee on the other hand rallied for a sixth day, after the central bank signaled a compromise with the government in their dispute over reserves.
- The rupee advanced as much as 0.5 percent to 71.2825 per dollar as of 10.12 a.m. in Mumbai, the strongest level since Sept. 4.
- The Indian currency finally closed at 71.4613 to the dollar.
The sell-off in U.S. stocks picked up steam, with investors dumping the tech darlings that carried the bull market for much of its record run.
- The S&P 500 Index slid to the verge of a correction, the Nasdaq Composite erased its gain for the year, and the Dow Jones Industrial Average shed more than 400 points as angst spread across global equity markets.
- In bond markets, the Treasuries 10-year note yield fell to its lowest level since September.
- West Texas Intermediate crude fell 1.9 percent to $56.14 a barrel, the lowest in a week on the largest fall in a week.
- Gold advanced 0.3 percent to $1,228.09 an ounce, reaching the highest in more than two weeks on its sixth consecutive advance.
7. The Biggest Earnings Downgrades And Upgrades
Analysts lowered the average full-year earnings estimate for Nifty 50 companies as the number of index constituents that either beat or met forecasts fell to its lowest in at least five quarters.
- Earnings of 34 of the Nifty 50 companies either surpassed or were in line with consensus estimates of analysts tracked by Bloomberg in three months ended September, while 16 missed forecasts.
- The Nifty earnings missed the average analyst estimate at the beginning of the earnings season by nearly 6 percent, largely because Sun Pharmaceuticals Industries Ltd., Grasim Ltd., Tata Motors Ltd. and state-run oil marketing companies missed profit estimates.
8. RBI Escapes With A Few Burns And Bruises
RBI has stood its ground on most key issues but the central board has emerged more empowered, writes Ira Dugal.
- On the RBI’s reserves, both sides will live to fight another day.
- On banking regulations, there’s been some give and take.
- But, there is a subtle change in the dynamics between the central board and the RBI executive.
9. Capital Relief To Government Banks
The Reserve Bank of India’s decision to defer the full implementation of the "capital conservation buffer" prescribed for banks under Basel-III rules is expected to bring some relief to only a handful of state-owned banks, say analysts.
- While government officials suggested that capital worth Rs 37,000 crore would be freed up, allowing for an additional Rs 3.7 lakh crore in potential lending, analysts are more circumspect on the costs and benefits of the decision.
- “With many banks struggling to meet the basic capital ratios, i.e. CRAR of 9 percent, the decision to extend the transition period for implementing the last tranche of Capital Conservation Buffer, by one year is likely to benefit only a few banks as most of the public-sector banks are not maintaining the existing CCB requirement of 1.875 percent,” said Karthik Srinivasan, group head of financial sector ratings at ICRA.
10. Debt Not A Concern For Glenmark
Glenmark Pharmaceuticals Ltd. said it has a plan to lower its debt and the market shouldn’t be “overly concerned”.
- “The street’s concern of debt on Glenmark’s books isn’t valid,” Chairman and Managing Director Glenn Saldanha told BloombergQuint in an interaction.
It’s underestimating the kind of products in the pipeline which will aid growth in the coming quarters.Glenn Saldanha, CMD, Glenmark
- To reduce debt, the company is banking on a combination of factors, including product launches, drug approvals from key geographies and a minority stake sale in the active pharmaceutical ingredient business.