BQuick On Nov. 27: Top 10 Stories In Under 10 Minutes
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Jordan Sirek/Bloomberg)  

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

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

1. ‘There Can Be No Recession’

Finance Minister Nirmala Sitharaman said the Indian economy may have slowed down but there is no threat of a recession.

  • Replying to a discussion on the economic situation in the country in the Rajya Sabha, Sitharaman reeled out a numerical comparison between five years under Congress-led United Progressive Alliance-II regime and Bharatiya Janata Party's first term.
  • She said inflation was lower and growth was higher under the Modi government.
Economic growth may have slowed but there is no recession, there can be no recession.
Nirmala Sitharaman, Finance Minister

Sitharaman added that foreign direct investments and forex reserves have also swelled under BJP’s rule.

2. S Naren Wants You To Adjust Your Expectations

How do top investors recalibrate portfolios and investing strategies when a bull market pauses? Because that’s what happened for several months this year. And while markets may have more recently resumed their upward climb, portfolios now face the problem of stark polarisation.

  • S Naren thinks that people need to moderate their expectations because bull and bear markets will come and go.
  • The executive director and chief investment officer at ICICI Prudential AMC said that when the going gets tough, he likes to rely on his switching model. So he doesn't focus on selling stocks in his portfolio but switching them for another stock for the time being.
People don’t realise we are in a low-interest rate world. The returns from the market have switched to the risk-free rate currently. But somehow, Indian investors can’t understand lower returns.
S Naren, Chief Investment Officer, ICICI Prudential Asset Management Company 

Here’s the second episode in the Bulls Interrupted series.

3. Nifty Conquers 12,100, U.S. Stocks Mixed

Indian equity benchmarks closed at record highs helped by investors pumping in money in the final hour of trade.

  • The S&P BSE Sensex rose 0.49 percent or 199.31 points to 41,020.61.
  • The NSE Nifty 50 advanced 0.52 percent to 12,100.70.
  • The broader markets represented by the NSE Nifty 500 index rose 0.54 percent.
  • Once the Nifty index witnesses a decisive break above 12,150, one can expect a rally to the levels of 12,400 to 12,600 to happen in the next couple of weeks, according to Manav Chopra, head of research, Indiabulls Ventures.
  • Nine out of 11 sectoral gauges compiled by NSE traded higher.

Follow the day’s trading action here.

In a stock market where nerves have been rattled by a slowing economy and a crisis in the lending sector, Axis Asset Management Co. believes it is worth paying more for shares of high-quality companies.

The strategy has paid off for Axis. Its largest fund has delivered an annual return of over 12 percent over the past five years, beating 96 percent of its peers.

Here’s what its strategy is in a winner-takes-all market”.

U.S. equities opened mostly higher as the risk-on mood that’s driven American benchmarks to record highs showed few signs of abating.

  • The dollar gained and Treasury yields rose after data on economic growth and claims for unemployment beat analysts’ expectations.
  • Equities climbed across Asia except in China, where data showed the economy slowing further.

Get your daily fix of global markets here.

4. RBL Bank To Launch Share Sale

RBL Bank Ltd. is looking to raise about Rs 1,500 crore (around $200 million) within a week through a share sale that would be a mix of a preferential issue and a qualified institutional placement, according to two people privy to the development.

  • The private lender recently concluded roadshows and met with several investors, said one of the persons cited above.
  • The bank, the person said asking not to be identified as the details are private, would first launch the preferential share sale.

The QIP will be done in tranches. Find out how much equity will be diluted.

5. Zee Entertainment: Three Directors Resign

Days after promoters lost control, three directors of Zee Entertainment Enterprises Ltd. resigned, with two citing related-party loans and film advances, among other issues, as the reasons.

  • Independent directors Sunil Sharma and Neharika Vora, and non-independent director Subodh Kumar quit the board, according to the company’s exchange filing.
  • Sharma, in his resignation letter, cited sale of shares by the promoter group and subsequent reconstitution of the board as the reason behind his resignation.
  • Kumar and Vora, however, cited film advances worth Rs 2,200 crore, a bank appropriating deposits worth Rs 200 crore and laxity in spending corporate social responsibility funds among the reasons, according to the filing.
  • The company, however, said that appropriate disclosures were made and that it has taken remedial action wherever required.

The broadcaster had last week appointed three new independent directors.

6. Cabinet Extends 15th Finance Commission’s Term, Raises FCI’s Authorised Capital

The Union Cabinet extended the term of 15th Finance Commission to submit its final report covering its suggestions for financial years 2021-22 to 2025-26 to Oct. 30, 2020.

  • The commission would submit an interim report soon covering its suggestions for 2020-21 so that these can be used for the next year’s budget.
  • Headed by NK Singh, the 15th Finance Commission had to submit its suggestions for the five-year period commencing April 2020.

This is not the first time when an interim report will be submitted to the government.

The Indian government has decided to increase the authorised equity capital of Food Corporation of India amid concerns about a build-up of debt at the country’s apex food procurement agency.

  • The cabinet decided to increase the authorised capital of FCI from the existing Rs 3,500 crore to Rs 10,000 crore, the government said in a press release.
  • Over the last few years, the debt taken on by FCI has ballooned with the agency expanding borrowings from sources like the National Small Savings Fund.
  • This increase in borrowing has been likely due to delayed subsidy payments from the government.

The increased capital, once infused, will increase FCI’s borrowing capacity.

7. Air India: It’s A Sale Or A Shutdown

India’s national carrier will have to shut down if a renewed attempt to sell the debt-laden airline fails to find a buyer, the country’s aviation minister said, a year and half after an attempt to sell the high-profile asset flopped.

  • “The airline will have to close down if it’s not privatised,” Hardeep Singh Puri told Parliament on Wednesday.
  • “Once we invite bids, then we’ll see how many bids will come in,” Puri said.
  • A successful sale of Air India is crucial for Prime Minister Narendra Modi to help bridge a widening fiscal deficit exacerbated by dismal tax collections and a $20 billion corporate tax cut.

Modi’s administration is considering a plan to exclude $7 billion of the airline’s debt in a bid to lure buyers.

8. Automatic Stay On Arbitral Awards Struck Down

The Supreme Court today struck down Section 87 of the Arbitration and Conciliation Act, 1996 which provided for an automatic stay on an arbitral award as soon as it was challenged in a court.

  • A bench headed by Justice Rohinton Fali Nariman ruled that the provision was “manifestly arbitrary”.
  • The judgment came on a plea by Hindustan Construction Company Ltd. and Gammon India Ltd. which had challenged the provisions of the Arbitration Act as well and the Insolvency and Bankruptcy Code.
  • HCC had argued that because of section it was being forced into insolvency despite being owed Rs 6,000 crore by the NHAI.

However, the court did not grant any relief in individual cases.

9. The Fallout Of Andhra’s U-Turns On Infrastructure Contracts

In the last few months, Andhra Pradesh has seen uncertainty on…

  • The Amaravati Capital City Startup Area project,
  • The Polavaram dam project,
  • Power purchase agreements with renewable energy producers.

“This series of events in Andhra Pradesh raises significant questions on the durability of contracts, especially in the context of insulating infrastructure projects from political risk.”

Hemant Sahai writes on the legal fallout.

10. Free PVR Tickets With New Streaming Entrant's Subscription

Mubi, a U.K. based curated movie streaming service, is breaking into India’s booming entertainment market through a partnership with the country’s largest operator of multi-screen theatre operator PVR Ltd.

  • Subscribers to Mubi will get access to films and free admission to one movie a month at any PVR cinema.
  • The introductory offer is for Rs 199 for 3 months, and then Rs 499 a month thereafter.
  • Mubi’s model is different from Netflix or Amazon.
  • It offers only 30 handpicked films at any given time, available to watch for 30 days.
  • That formula has attracted over 9 million subscribers across the globe.
  • PVR, on the hand, expects more people coming to theatres and spending on food and drinks.
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