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BQuick On Nov. 27: Top 10 Stories In Under 10 Minutes

This is a roundup of the top stories of the day.

1. Salvaging Air India

India plans to transfer a “significant part” of Air India’s debt and its ground handling unit into a separate entity to reduce the struggling state-run carrier’s burden after a failed attempt to sell it.

  • A special purpose vehicle has been incorporated and the government’s 100 percent shareholding in Air India Air Transport Services Ltd. will be transferred to it, Aviation Secretary RN Choubey told reporters today.
  • The stake will be sold to a buyer and the proceeds will be used to retire Air India debt, he said.
  • Choubey refused to share the quantum of Air India’s debt that will be transferred to the new entity.

The panel has decided to seek expressions of interest for the ground handling unit.

2. Yes Bank Downgraded

Moody’s Investors Service has downgraded the ratings assigned to Yes Bank Ltd., citing corporate governance concerns and implications of the upcoming management transition on growth strategy of the bank.

  • The rating agency has pegged down both the foreign currency and local currency ratings for the lender.
  • Yes Bank’s foreign currency issuer rating has been cut to Ba1 from Baa3. Its baseline credit assessment has been cut to Ba2 from Ba1.
  • Moody’s has also maintained a negative outlook on that bank’s ratings, suggesting an elevated probability of another rating downgrade.

3. Indian Markets Rally; U.S. Stocks Mixed

Indian equity benchmarks ended higher for the second day, registering their best two-day rally since Nov. 2.

  • The S&P BSE Sensex Index closed 0.45 percent or 159 points higher at 35,513.
  • The NSE Nifty 50 Index ended at 10,685.60, up 0.54 percent or 57 points.
  • Seven out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty IT Index's 1.43 percent gain.
  • On the flipside, the NSE Nifty Pharma Index was the top sectoral loser, down 1.33 percent.
BQuick On Nov. 27: Top 10 Stories In Under 10 Minutes

U.S. stocks failed to add to the biggest gain in more than two weeks as trade tensions with China flared and investors assessed comments from a Federal Reserve official.

  • Technology shares led declines in the S&P 500 after President Donald Trump threatened China with more tariffs days before a sit-down with his counterpart Xi Jinping.
  • Apple fell deeper into a bear market as Trump suggested levies on mobile phones.
  • The 10-year Treasury yield rose as Fed Vice Chairman Richard Clarida backed gradual rate hikes. The dollar was flat.
  • The pound weakened as traders mulled prospects for parliamentary approval of the Brexit deal, which Trump said could jeopardize Britain’s ability to strike a trade pact with the U.S.

4. Why Your Fuel Bill Isn’t Going Down

It’s the state-run oil retailers, not consumers, who are gaining the most from the plunge in crude. At least for now.

  • Brent crude dropped below $60 a barrel after Saudi Arabia’s energy minister signalled that the kingdom’s output may have reached a record.
  • But retail prices, which had jumped to a record as oil surged earlier this year, are not directly linked to crude. Indian refiners consider the 15-day average crude price and factor in the impact of currency movement and freight costs to calculate how much they spend to convert every barrel of crude into auto fuel.
  • Since the last peak on Oct. 15, the conversion cost has fallen nearly 18 percent for diesel and 27 percent for petrol, according to data compiled by BloombergQuint.
  • Retail prices, however, declined 8 percent and 10 percent, respectively during the period.

Oil companies’ earnings on the sale of every litre of fuel is now at its all-time high.

5. What Oil At $50 A Barrel Means

Just a couple of months ago, major oil trading houses were predicting the return of $100 crude. Now, with oil prices at half that level, here’s a look at what the slump means for the world economy.

  • Energy importers like India and South Africa will benefit; oil producers such as Russia and Saudi Arabia will hurt.
  • Central banks under pressure to raise interest rates will get a reprieve; those looking to revive prices, such as the Bank of Japan, face another headwind.
BQuick On Nov. 27: Top 10 Stories In Under 10 Minutes

6. Urjit Patel's Written Answers

Reserve Bank of India Governor Urjit Patel on Tuesday committed to a parliamentary committee to give in writing his views on some of the controversial issues.

  • These may include the government citing the never-used powers to get the central bank on the discussion table, sources told PTI.
  • Patel, who appeared before the 31-member Parliamentary Standing Committee on Finance, said the economy would get a boost from oil prices cooling off from four-year highs and fundamentals were “robust”, according to sources.
  • The RBI governor also told the Members of Parliament that credit growth was 15 percent.
  • He, however, did not answer specific questions on the government invoking Section 7 of the RBI Act, non-performing assets, the autonomy of the central bank and other contentious issues, sources said.

Patel made a presentation about the state of the economy.

Also read: India Is Said to Push RBI to Lift Lending Curb on Some Banks

7. SMEs Need Lower Rates, Support

Among the nearly dozen issues being debated between the government and the Reserve Bank of India is the issue of support to small and medium enterprises.

  • Following a meeting last week, the RBI’s central board advised the regulator to consider providing relief to SME borrowers. But where is that demand stemming from?
  • The government’s Principal Economic Adviser Sanjeev Sanyal says that SMEs have faced the brunt of some of the structural changes in the economy and may now need some support. Apart from the near-term concerns, Sanyal said that the real rate of interest for SMEs remains too high.
  • Commenting on the discussions to put in place a new economic capital framework for the RBI’s balance sheet, Sanyal said that any transfers from the RBI’s reserves, if required, would be staggered over a period of time.

8. Amazon Just Beat Flipkart

Amazon India has overtaken Flipkart in gross sales for the first time, according to Barclays, even as the online retail war intensifies with Walmart acquiring the homegrown retailer.

  • Seattle-based Inc., largely helped by its marketplace, generated $7.5 billion in gross sales in the year ended March compared with $6.2 billion by Flipkart, Barclays said in a report reviewed by BloombergQuint.
  • That number excludes the gross merchandise value of Flipkart Group subsidiaries Myntra and Jabong.
  • The Indian e-commerce market is the next big battleground where online shoppers are expected to more than double from 80-90 million in 2017 to 180-200 million by 2020, Barclays said.

The size of the market is also expected to jump twofold by 2020.

9. Modi Sir, Aware Of ‘Egregious Officers Destroying Business’ – ‘EODB’?

Even as Prime Minister Modi got ‘India Shining’ bouquets from his Mumbai/Delhi echo chamber on ‘Ease of Doing Business’, his Gujarati kinsmen and India’s first generation founders, if he had cared to speak to them, would have given a very different ‘India Taxing’ brickbat.

  • Eye-popping facts on what 'Ease of Doing Business' does not consider.
  • How Gujarat Inc.’s SOS to PM Modi got drowned out in the ‘Ease of Doing Business’ din.
  • No problem says the PM, offers India Inc. another “Grand Challenge”.
  • Why government notices have reopened and sprinkled fresh salt on old wounds of venture capital investors and startup founders.

10. Spotify’s Gateway To India

The world’s largest music streaming service has secured deals with many of the major rights holders in India over the past few months, clearing one of its final hurdles to entering the country of 1.3 billion people, people familiar with the pacts told Bloomberg News.

  • Spotify Technology SA is preparing to introduce its service as soon as the first quarter of 2019, said the people, who asked not to be identified because the information isn’t yet public.
  • Variety previously reported on the agreements, saying Spotify will launch in India within six months.
  • The expansion provides a major test of Spotify’s ability to lure customers in what it calls the “rest of world” markets -- a group that spans from Australia and Japan to Israel and South Africa.
  • India is one of the fastest-growing music markets.

Yet, the music streaming giant has many hurdles to overcome in India.