BQuick On Nov. 30: Top 10 Stories In Under 10 Minutes
This is a roundup of the top stories of the day.
1. India’s World-Beating Growth Cools
After peaking in the first quarter of the current year, growth in the Indian economy moderated in the July-September period, as agriculture and industry slowed.
- Gross domestic product grew by 7.1 percent in the second quarter of the financial year compared to 6.3 percent in the same quarter last year, showed data released by the Central Statistics Office on Friday.
- GDP grew at a stronger clip of 8.2 percent in the first quarter of the year, helped partly by a strong base effect.
- In gross value added terms, the economy grew at 6.9 percent in the July-September period. This, too, was a moderation compared to the 8 percent GVA growth reported in the first quarter.
- A Bloomberg poll of 46 economists had estimated GDP growth at 7.5 percent for the second quarter. GVA was estimated to grow at 7.3 percent.
2. Fiscal Deficit Breach, Core Sector Improvement
India’s fiscal deficit breached the budgeted target for financial year 2018-19 in October.
- Fiscal deficit—the gap between the government’s revenue and expenditure—stood at Rs 6.48 lakh crore at the end of October, according to the data released by the Controller General of Accounts.
- That’s 103.9 percent of the budgeted estimate of Rs 6.24 lakh crore for 2018-19.
- The gap had stood at 96.1 percent in October last year.
Infrastructure sector growth slowed to 4.8 percent in October due to contraction in the production of crude oil, natural gas and fertiliser.
- Eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity had together grown by 5 percent in October 2017.
3. The Biggest Upgrades And Downgrades
Axis Bank Ltd. and Marico Ltd. saw the biggest upgrade in analyst expectations in November on improving financials.
- Axis Bank and Marico received six more ‘Buy’ ratings each in November, the most among the 278 stocks tracked by at least 10 analysts, according to data compiled from Bloomberg.
- This is the highest number of upgrades for Axis Bank in a month since July 2014; and the most since February 2017 for Marico.
- The improved analyst optimism comes as the NSE Nifty 50 index gained 4.5 percent in November after two straight months of decline.
4. Nifty Clocks Best Month Since July
Indian equity benchmarks closed November with their best monthly gain since July.
- The S&P BSE Sensex Index gained over 5 percent this month to end at 36,194.
- The NSE Nifty 50 Index ended at 10,876, after rallying 4.7 percent.
- Seven out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Realty Index's 2.2 percent gain.
- On the flipside, the NSE Nifty PSU Bank Index was the top sectoral loser, down 0.55 percent.
- The rupee strengthened further by 27 paise to close at a four-month high of 69.58 against the U.S. currency on Friday.
- The Indian currency rose for the fourth day in a row aided by easing crude oil prices and steady stock markets.
U.S. Stocks Mixed With Trade Talks Due
U.S. stocks were mixed at the open, with anxiety over trade dominating sentiment ahead of a meeting between the American and Chinese presidents.
- The Bloomberg Dollar Spot Index advanced 0.2 percent.
- The yield on 10-year Treasuries dipped one basis point to 3.02 percent, the lowest in more than 10 weeks.
- West Texas Intermediate crude decreased 1.3 percent to $50.76 a barrel.
5. Prashant Jain Loves A Good Crisis
Uncertainty may have gripped the markets over the years due to reasons such as the liquidation of Lehman Brothers in the U.S. or “adverse” election results, but Prashant Jain urged investors to look forward to such events.
- “The best investments are made in the worst of times,” the executive director and chief investment officer of HDFC Asset Management Company said.
- “Markets do get corrected but over a period… you realise that the actual impact on corporates and markets is low,” Jain told BloombergQuint in an interaction.
- He said that the linkage between election outcomes and corporate profits is weak, adding that the markets position themselves appropriately—often conservatively—ahead of elections.
These events create an opportunity to buy the same assets for cheaper (valuations).Prashant Jain, CIO, HDFC AMC
6. Decks Cleared For RCom-Jio Spectrum Deal
The Supreme Court ordered Reliance Communications Ltd. to furnish corporate guarantees of Rs 1,400 crore within two days, paving the way for the sale of its spectrum to Reliance Jio Infocomm Ltd.
- A bench headed by Justice Rohinton Nariman asked the government to issue a no-objection certificate for the spectrum sale within seven days after the guarantee is submitted.
- The court said a corporate guarantee, backed by properties as assurance already submitted following an order of Telecom Dispute Settlement Appellate Tribunal, is sufficient for the government approval.
- In an earlier hearing before a different bench, RCom said that it cannot submit the Rs 2,940-crore bank guarantees demanded by the Department of Telecommunications due to the insolvency proceedings against the company. It was willing to deposit land parcels instead of the bank guarantee.
7. Modi Seeks To Ease Biggest Hurdle For Factories
Prime Minister Narendra Modi plans to unveil a long-awaited industrial policy soon to boost domestic manufacturing and accelerate economic growth before general elections next year.
Under the new plan, a company need not purchase land or equipment but could lease them on long-contract basis helping lower costs and cut down time on setting up operations, Department of Industrial Policy and Promotion Secretary Ramesh Abhishek said in an interview.
Units located in industrial clusters may be able to share infrastructure.
We have to be competitive. For this we need to upgrade our technology, lower costs, improve logistics, skill our labor. The industrial policy will bring all things together and will come out with recommendations on what needs to be done.Ramesh Abhishek, Secretary, DIPP
8. MFIs And The Liquidity Storm
India’s microlenders, who returned to strong growth after a period of uncertainty following demonetisation, are facing their second challenge in two years. This time it is the liquidity crunch facing non bank lenders, which could force microfinance institutions to slow growth.
- Harsh Shrivastava, CEO of MicroFinance Institutions Network, a self regulatory organisation for MFIs, said that the scenario for MFIs is similar to that being faced by the broader NBFC sector.
- While large MFIs have weathered the liquidity crunch well, smaller MFIs have seen some disruption.
- “The top 10 to 12 MFIs have continued to raise funds through securitisation, direct assignments and continued funding from banks,” said Supreeta Nijjar, vice president for financial sector ratings at ICRA.
9. UrbanClap’s Valuation Doubles
UrbanClap raised $50 million in a fresh round of funding led by Steadview Capital and existing investor Vy Capital as the home services startup plans to expand business.
- Angel investors and employees will also sell shares and ESOPs worth $4 million in the latest round, the company said in a statement on Friday.
- The investment values the company at about $480 million, more than double the valuation when it raised $21 million last year, a person privy to the development told BloombergQuint requesting anonymity.
- UrbanClap said it will use the funds to accelerate addition of customers and service partners, build product and technology teams, improve training capabilities and enhance its supply-chain.
10. What’s Behind The Farmer’s Distress
Cutting across political lines, leaders joined the protest to extend their support to the farmers rally in Delhi warning the Modi government about the consequences of not addressing the country's agrarian crisis.
- Hundreds of farmers reach Jantar Mantar on the Parliament Street on the second day of the Kisan Mukti March.
- Farmers are demanding the implementation of the MS Swaminathan Committee report, increased minimum support price and a special Parliament session to discuss two bills.