BQuick On Nov. 21: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Sony’s Interested In Ambani’s TV Network
Sony Corp. is in talks to acquire a stake in the television network controlled by Mukesh Ambani, as the Japanese giant seeks to tap booming demand for content in India, people familiar with the matter told Bloomberg News.
- The Tokyo-based company is currently conducting due diligence on Ambani’s Network18 Media & Investments Ltd. before any possible offer, the people said, asking not to be named as the information is not public.
- Sony is considering several potential deal structures, including a bid for the company or a merger of its own Indian business with Network18’s entertainment channels, one of the people said.
- Talks are at a preliminary stage and may not result in a transaction, the people said.
A successful deal may help Sony bolster its local offerings.
2. A Lifeline For Telecom Operators
Already struggling because of an unabated tariff war unleashed by Reliance Jio Infocomm Ltd., the Supreme Court order last month asking telecom operators to pay pending dues worth thousands of crore threatened to cripple operations of Bharti Airtel Ltd. and Vodafone Idea Ltd.
The two have now received a lifeline.
- Not only has Reliance Jio joined them in announcing an increase in tariffs, the government also deferred spectrum payments by two years.
- That would ease pricing pressure and provide critical cash flows.
- Vodafone Idea pays Rs 11,600-12,000 crore towards spectrum auction dues annually, while Bharti Airtel and Reliance Jio pay Rs 5,800-6,500 crore and Rs 3,000-3,500 crore, respectively.
Here’s a detailed look at the telecom operators' books and how the government's move may help them.
3. Essel Group Debt: MFs Get Closure
Domestic mutual funds managed to recover their entire money lent against shares of Zee Entertainment Enterprises Ltd. to the Essel Group after the second tranche of share sale by the group’s promoters on the National Stock Exchange today.
- The share sale also brings closure to mutual funds who had entered into a standstill agreement with the Subhash Chandra-promoted group in January this year after the shares witnessed sharp single-day correction.
- Mutual funds had a total exposure of around Rs 7,500 crore to Essel Group’s non-convertible debentures. The group had offered Zee Entertainment's shares as collateral.
- With the share sale on the NSE’s block deal platform, the fund houses will receive the outstanding amount against Zee shares of around Rs 1,300 crore held by Aditya Birla Sunlife Mutual Fund, HDFC Mutual Fund and ICICI Prudential Mutual Fund.
The promoters still owe lenders close to Rs 2,400-2,900 crore.
4. Sensex Dips, S&P 500 Edges Lower
Indian equity benchmarks ended lower on weekly F&O expiry day, halting their two-day gaining streak.
- The S&P BSE Sensex fell 0.19 percent to end at 40,575.17.
- The NSE Nifty 50 fell 0.26 percent to close at 11,968.40.
- The broader markets represented by the NSE Nifty 500 Index fell 0.33 percent.
- The market breadth was tilted in favour of sellers.
- Eight out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Foreign portfolio investors ploughed nearly $1.75 billion into Indian stock markets last month, as they continued to pour money after the government rolled back higher tax surcharge.
But one sector took home 60 percent of that money. Find out which.
U.S. equities edged lower after losses in Europe and Asia as investors tried to judge the outlook for a trade deal between America and China.
- Chipmakers led losses on the S&P 500 Index in early trading.
- The dollar held steady and Treasuries dipped as China’s chief trade negotiator reportedly said he was “cautiously optimistic” about reaching a phase-one trade accord with the U.S.
- Pessimists focused on speculation that President Donald Trump may sign legislation backing Hong Kong protesters, potentially setting up further conflict between the superpowers.
- West Texas Intermediate crude gained 1.3 percent to $57.77 a barrel.
Get your daily fix of global markets here.
5. The Biggest Upgrades And Downgrades
Upgrades outnumbered downgrades by three to two after the second-quarter earnings, which were aided by tax cuts and lower costs.
- A majority of the NSE Nifty 50 firms either met or surpassed estimates in the recently concluded earnings season following two straight quarters of muted performance.
- In the broader universe of 258 stocks tracked by at least 10 analysts, ‘Buy’ ratings were upgraded for 120 companies since the end of June quarter earnings, according to Bloomberg data.
- The number of ‘Buy’ ratings was cut—implying a ‘Hold’ or a ‘Sell’ recommendation—for 80 stocks.
- Analysts kept their calls unchanged for 58.
Find out which stocks were the centre of attraction for analysts.
6. Government To Sell Up To 15% Stake In RITES
The Indian government will raise up to Rs 1,100 crore through an offer-for-sale by engineering consultancy firm Rites Ltd.
- The government will sell up to 3.75 crore shares, or about 15 percent stake, including a green-shoe option.
- It currently holds 87.4 percent in Rites.
- Following the sale, its stake may fall to 72.4 percent.
- The floor price is set at Rs 293.5 per share, a 4 percent discount to today's closing price.
The offer for sale will open tomorrow and close on Nov. 25.
7. SBI's Mea Culpa
India’s largest lender State Bank of India does not "mind" its lower stock valuation compared to a leaner private sector players due to state ownership and social sector focus, but admitted that it needs to improve on commercial decisions.
- Arijit Basu, managing director at SBI, also conceded that the bank has erred on some business decisions and cannot attribute those to social compulsions.
- Basu said there are also some benefits of the societal outlook of SBI, saying it helps it access low cost deposits, and that the market rewards the bank when it does good commercially.
On the commercial part, as a bank we feel that there is scope to improve. While there have been ecosystem problems, we would be foolish to state that in the last 10 years, we have not made mistakes in our business itself as those were taken with no social compulsion at all.Arijit Basu, MD, SBI
Basu, however, said its lower stock valuation was partly due to government ownership.
8. A 'Satyam Mindset' To Solve India's Corporate Issues?
India needs to resolve all corporate problems with a ‘Satyam mindset’, said Nilesh Shah, referring to the government’s takeover of struggling companies, a day after the Reserve Bank of India seized control of Dewan Housing Finance Corp.
- “I’m happy that we have seen that kind of recovery and resolution in many companies,” Shah, managing director at Kotak Mahindra Asset Management Company said.
- The approach separates the “good Satyam” and “bad Satyam” and offers a viable template for creditors to follow while resolving debt in the current scenario, Shah said.
- Kotak Mutual Fund also had exposure to debt-ridden Essel Group, the promoters of broadcaster Zee Entertainment Enterprises Ltd.
- “As a mutual fund industry, which had lent to some of these problem cases, we have now entered the era of recovery of money rather than writing it off,” Shah said.
Today, after six months of agnipariksha, I feel happy and vindicated and we have honoured our commitment and we did what we did for promoters, what is good for our unit holders, our country and the overall market.Nilesh Shah, MD, Kotak Mahindra AMC
Here's what Shah thinks is complicating the recovery and resolution attempts by lenders.
9. Bigger Problem Than Recession
The global economy is stuck in a rut that it won’t exit unless governments revolutionise policies and how they invest, rather than just hoping for a cyclical upswing, the OECD said.
- The latest outlook and policy prescriptions from the Paris-based group mark a step beyond its repeated warnings about threats to growth from U.S.-China tensions, weak investment and trade flows.
- Those remain, but it also flags more systemic challenges from climate change, technology and the fact that the trade war is just part of a bigger shift in the global order.
- For OECD Chief Economist Laurence Boone, the worry is that the world could continue to suffer in the decades to come if authorities offer short-term fiscal and monetary fixes as the only response.
Beyond how climate events harm the economy, how governments regulate and respond is also having an impact.
10. Cherry Goes Strawberry
The Indian cricket team will take on Bangladesh at Eden Gardens, Kolkata in the second match of a test series. And it will be the nation’s first five-day match using a pink ball under lights.
- It’s also the first time that India’s largest cricket gear maker Sanspareils Greenlands, popularly called SG, will supply the fluorescent ball for an international match.
- The 12 day-and-night Tests played so far have used British Dukes and Australian Kookaburra balls.
- The pink ball has had its share of controversy with players complaining about its seam not holding for the minimum 80 overs it’s stipulated to last in a Test.
- The colour often faded in the past, making it difficult to spot under lights, particularly for colour-blind players.
BloombergQuint visited the facility where the pink ball is made.