BQuick On Nov. 26: Top 10 Stories In Under 10 Minutes
The sun rises beyond the Singapore Flyer in Singapore (Photographer: SeongJoon Cho/Bloomberg)  

BQuick On Nov. 26: Top 10 Stories In Under 10 Minutes

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

1. Fadnavis Resigns, Stage Set For Uddhav To Become Chief Minister

With Bharatiya Janata Party's Devendra Fadnavis tendering his resignation as the chief minister citing lack of numbers, Shiv Sena Chief Uddhav Thackeray became the frontrunner to take his place.

It was another day of twists in Maharashtra.

  • First, the Supreme Court ordered a floor test to determine who has the majority at 5 p.m. on Wednesday.
  • However, soon after that, Deputy Chief Minister Ajit Pawar resigned, returning to the Sena-NCP-Congress alliance.
  • This meant Fadnavis' government, formed early Saturday morning, no longer had the majority.
  • Fadnavis subsequently resigned and said that the BJP will play the role of a formidable opposition.
  • The Sena-NCP-Congress alliance then met at the Trident Hotel in Mumbai and christened itself the Maha Vikas Aghadi.
  • A resolution was passed by all MLAs to nominate Uddhav Thackeray as the alliance's leader and chief ministerial candidate.

Follow the day's complete developments around the Maharashtra government formation here.

2. You Thought Court Cases Were Slow? Meet Tax Disputes

India is notorious for its slow pace of judicial process but this beats it—a tiny tax claim involving the nation’s largest consumer goods maker is pending for about five decades.

  • Hindustan Unilever Ltd.’s matter relates to income earned in financial year 1963-64. The amount demanded is Rs 6 lakh.
  • That’s a paltry sum by current corporate standards as in 2018-19, HUL paid Rs 2,610 crore in income tax.
  • It’s not an isolated instance. Nearly half the Nifty 50 companies are fighting tax cases that are three decades old or more, BloombergQuint’s analysis of disclosures in their annual reports revealed.
  • Such litigation is rampant in India. According to the Economic Survey of 2018—direct and indirect tax claims worth 4.7 percent of India’s $2.5 trillion gross domestic product are under litigation as of March 2017.

Read this BQ Blue Exclusive to find out some of India Inc.’s most notable tax disputes

3. Sensex, S&P 500 Fluctuate Near Record Highs

Indian equity benchmarks ended lower, halting their two-day gaining streak after hitting record highs in the opening trade.

  • The S&P BSE Sensex fell 0.17 percent to end at 40,821.30.
  • The NSE Nifty 50 fell 0.3 percent to end at 12,037.70.
  • The broader markets represented by the NSE Nifty 500 Index fell 0.4 percent.
  • Eight out of 11 sectoral gauges compiled by NSE ended lower.

Follow the day’s trading action here.

  • The current rally is a “familiar territory” as the markets have gained 27 percent annually on an average in the two years after a general election compared to the long-term average of 14 percent, according to Saurabh Mukherjea, founder of Marcellus Investment Managers.
  • The Nifty 50 may be trading at a record highs but that may not be a cause for comfort, according to Basant Maheshwari, co-founder of Basant Maheshwari Wealth Advisers LLP.
  • Financial year 2020-21 will be “phenomenal” for stock markets even if the economy may still be treading a painful but a steady recovery path, said Hiren Ved, director and chief investment officer, Alchemy Capital.

Read more on what these market experts had to say.

U.S. equities fluctuated near record highs as investors searched for signs of progress in China’s comments about prospects for a “phase-one” trade deal.

  • The S&P 500 swung between gains and losses, while European and Asian stocks were mixed after China said that Sino-American trade negotiators “reached consensus” on certain issues in a phone call and agreed to stay in contact on the remaining points.
  • The dollar held on to five sessions of gains versus its major peers including the pound, which slipped after a poll signaled a narrowing lead for the ruling Conservative Party ahead of the Dec. 12 U.K. election.

Get your daily fix of global markets here.

4. CSB Bank IPO: Blockbuster Demand

The initial public offering of CSB Bank Ltd. was subscribed a whopping 86.89 times on the final day of bidding on Tuesday.

  • The offering from the Kerala-based company received bids for over 100 crore shares against the total issue size of 1.15 crore shares, as per NSE data till 18:45 p.m.
  • The category reserved for qualified institutional buyers was subscribed 62.18 times, non-institutional investors 164.68 times and retail individual investors 44.25 times, according to merchant banking sources.
  • The IPO comprises a fresh issue of Rs 24 crore and an offer-for-sale of 1,97,78,298 equity shares, including an anchor portion of 94,54,080 equity shares.

The price band for the Rs 410-crore IPO has been set at Rs 193-195 per share.

5. Will Midcaps Make A Comeback?

India’s smaller companies have earned another look after suffering through some two years of underperformance relative to their larger peers.

  • The divergence between the two groups is “significant” compared with longer-term historical correlations, according to Citigroup Inc.
  • The MSCI India Mid-Cap Index has lost 17 percent in the past two years, while the benchmark S&P BSE Sensex Index has gained more than 20 percent.
  • “With better risk-reward post underperformance, we would selectively look to add mid-caps,” Citi analyst Surendra Goyal wrote in a note this week.
  • The valuation discount for midcaps highlights the improved risk-reward amid low expectations, he wrote.

Here’s why Citi thinks the odds are better for midcaps.

6. Aditya Birla Side Pockets Essel Group Exposure

Aditya Birla Mutual Fund has segregated its exposure to an Essel Group company after the firm defaulted on a debt payment.

  • That came after Adilink Infra & Multitrading Pvt. Ltd., an infrastructure company of the Subhash Chandra-led business house, failed to repay a minority investor on Nov. 25, leading to a default.
  • The minority investor—whose identity isn’t immediately known—had exercised the put option available to them.
  • The segregation has been done at the price at which the security was valued as on Nov. 22.
  • The schemes had valued their exposure at 65 percent of the total investment.

Find out how much exposure Aditya Birla has to Adilink Infra.

7. Clean Up Or Clear Out Dodgy Brokers

Any attempt at sweeping out a corner of India’s financial system means bringing investors face to face with creepy-crawlies. Disagreeable as the task is, it’s also necessary, writes Andy Mukherjee.

  • More than $200 billion in bad loans tumbled out when banks were made to open their attics to the regulatory broom four years ago. T
  • That cleanup isn’t over, and already it’s the stockbrokers’ turn.
  • Who knows what will emerge?

Find out how SEBI’s ban on Karvy Stock Broking could open yet another pandora's box for the market regulator and investors.

BQuick On Nov. 26: Top 10 Stories In Under 10 Minutes

8. Bringing The Rupee Back Home Is No Easy Task

As London does more rupee trading than Mumbai, authorities in India are taking steps to get foreigners to transact onshore. Analysts say that will be no easy task.

  • There’s no good reason for market participants to switch from excellent global trading hubs such as Singapore and London, said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte., who’s extensively traded currencies in offshore markets over a three-decade career.
  • For Schroder Investment Management Ltd., the need to add more counterparties would just increase investors’ trading costs.
  • India’s authorities are concerned a surge in rupee trading overseas threatens the stability of the currency, especially in times of stress.
  • That worry has intensified after London overtook Mumbai as the top trading center.
  • In response, India has been moving to make its onshore market more attractive and preparing to replicate offshore centers in specially designated financial zones within the country.

But India may just be fighting the waves in trying to reduce offshore trading.

9. Decoding The Supreme Court’s Verdict On Tribunalisation

Can judicially-functioning courts be replaced by quasi-judicial tribunals, which do not follow defined court procedures?

  • Does it tantamount to the encroachment of judicial independence?
  • What should be the minimum standards of qualification of members manning such tribunals given expected degree of impartiality and fairness?
  • Can there be common conditions for tribunal members ranging across diverse subjects, such as intellectual property, environment, tax, or by their very nature must they be different?

BMR Legal’s Mukesh Butani and Tarun Jain make sense of the Supreme Court’s complex judgment in the Rojer Mathew case.

10. We May Fail To Beat Climate Change

The world has refused to slash its collective greenhouse gas emissions, narrowing the planet’s pathway back to a safe climate.

  • Authors of an annual United Nations Environment Program report published Tuesday were uncharacteristically direct in their 2019 assessment of the gap between actual and desirable emissions levels.
  • “The summary findings are bleak,” they write. “Countries collectively failed to stop the growth in global GHG emissions, meaning that deeper and faster cuts are now required.”
  • The new report is part of a larger trend among high-profile scientific assessments published in the last 18 months, each featuring increasingly blunt language from a community not known for it.

How deep and how fast are the emission cuts required? The answer is...

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