BQuick On Oct. 15: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. IMF Cuts India's GDP Forecast Sharply
The International Monetary Fund cut India’s growth forecast sharply for the current year, joining a list of organisations forecasting a sharp slowdown in the Indian economy.
- The IMF expects the Indian economy to grow by 6.1 percent in the current financial year, compared to its earlier forecast of 7 percent, the organisation said in the latest update of its World Economic Outlook.
- Growth in the next financial year is forecast at 7 percent, down from a forecast of 7.2 percent earlier.
- Compared to the forecasts in the April World Economic Outlook, the IMF has cut India’s projected growth rate by 1.2 percentage points.
- The downward revision reflects a weaker than expected outlook for domestic demand.
There has been a negative impact on growth that’s come from vulnerabilities in the non-bank financial sector, and the impact that it has had on consumer and small and medium enterprises’ borrowings.Gita Gopinath, Chief Economist, IMF
The IMF joins a growing list of agencies that have cut India’s growth forecast.
2. Trade Deficit Narrows To Seven-Month Low
India’s trade deficit narrowed to the lowest in seven months in September as a deepening economic downturn sapped demand for imports.
- The gap between exports and imports was at $10.86 billion last month from $13.45 billion in August, data released by the Commerce Ministry showed.
- That was lower than the median estimate for a $12.9 billion deficit in a Bloomberg survey of 20 economists.
- Imports declined 13.9 percent from a year ago to $36.9 billion, compared with a 13.5 percent fall in August.
- Exports fell 6.6 percent to $26 billion, against a 6.1 percent drop in the previous month.
Here are the other highlights.
3. SBI Seeks IBC Changes
State Bank of India, the nation’s largest lender by assets, is seeking changes to the three-year-old bankruptcy law to take on the world’s worst bad debt pile.
- “There may be some more changes that may be required,” State Bank of India Chairman Rajnish Kumar said at Bloomberg Equality Summit in Mumbai, without providing details.
- “Once the Supreme Court decides on the Essar Steel case, I think many of the issues which are leading to litigation will get addressed,” Kumar said.
- Of the nation’s 12 largest delinquent borrowers including Essar Steel India Ltd. and Bhushan Power & Steel Ltd. which were pushed into bankruptcy process in 2017, only about half have been resolved so far, data compiled by Bloomberg shows.
- On Tuesday, the country’s top court deferred hearing Essar Steel insolvency case to the next week.
The delays in resolving soured debt undermine India’s efforts to revive economic growth.
4. A Small Shop That Does Big Business With Kotak, Piramal And Omkar
Shop No. 318 in A-Z Industrial Estate, in one of Mumbai's busiest commercial district, has no distinctive features. The entrance doesn’t even carry the nameplate of the company that claims to be housed in it – Karelides Traders Pvt. Ltd. Inside, there’s a board that lists several companies registered with that address but there’s no sign of them or any of their officials.
- Karelides Traders describes itself as a trader or wholeseller in its filings with the company registrar.
- Despite a share capital of Rs 1 lakh, no salary or rent costs, the company reported a revenue of Rs 183.2 crore.
- The firm had a debt of Rs 1,010 crore, as of March 2018. Debt rated AA by ICRA.
- Turns out, Karelides does business with some of the biggest names in corporate India including Piramal, Kotak and Omkar.
But how did this entity, housed in a small shop, become the kingpin in a real estate financing structure? BloombergQuint looks for answers.
5. Nifty Hits Two-Week High, U.S. Stocks Rise
Indian equity indices ended higher for the third straight session driven by a rally in automakers.
- The S&P BSE Sensex rose 0.76 percent to 38,506.09.
- The NSE Nifty 50 rose 0.77 percent to 11,428.30.
- The broader markets represented by the NSE Nifty 500 Index rose 0.67 percent.
- An investor is advised to bet on quality large-cap stocks or on Nifty-based exchange-traded funds in the current volatile market environment, according to Sameer Kalra, founder & head of research at Target Investing.
Follow the day’s trading action here.
Health care and technology shares led U.S. stocks higher as earnings season begins in earnest.
- The three main U.S. equity indexes all opened higher, rising alongside stocks in Europe, defying concern Beijing and Washington remain far apart in their quest for a trade deal.
- The pound strengthened as the U.K. and European Union moved closer to a Brexit deal.
- West Texas Intermediate crude declined 0.6 percent to $53.48 a barrel.
Get your daily fix of global markets here.
6. Nearly A Quarter Of Bajaj Consumer Sold...In One Trade
Shares of Bajaj Consumer Care Ltd. slumped the most in nearly three years after 22 percent stake changed hands in a single large trade.
- More than 3.24 crore shares of the maker of Almond Drops hair oil were exchanged for Rs 629 crore at Rs 194.05 apiece on the BSE, according to Bloomberg data.
- Trading volumes jumped over 370 times its three-month daily average.
- Promoter Bajaj Resources Ltd. sold part of its stake to release pledged shares and repay all loans, according to a separate exchange filing.
- After its second-quarter earnings, Macquarie had put the company’s rating under review citing pressure from promoter’s debt and issues with its other businesses.
Bajaj Resources will now hold 38 percent stake in Bajaj Consumer, compared to 59.9 percent it held earlier.
7. Other Businesses Keep Wipro’s Margin Afloat
Wipro Ltd.’s consolidated operating margin and profit beat estimates in a quarter where the company absorbed the impact of wage hikes and its core IT services business witnessed subdued growth.
- Net profit rose 6.6 percent sequentially to Rs 2,561 crore.
- Operating margin widened 60 basis points to 17.3 percent.
- Wipro’s IT services business, that contributes majority of its revenue, rebounded but remained weak, growing at 0.5 percent in dollar terms.
- Margin of Wipro’s IT services contracted for the fourth straight quarter.
Find out how other the IT products and India State Run Enterprises segments came to Wipro’s rescue.
8. Why The HDFC Bank-Altico Tussle Has The Industry Watching
It’s an incident that got two of the country’s leading bankers taking digs at a each other publicly. And now it has the whole industry watching.
- In September, HDFC Bank Ltd. decided to use proceeds of external commercial borrowings raised by Altico Capital Ltd., held by the bank in the form of term deposits, to settle its loan dues.
- The amount was close to Rs 220 crore, BloombergQuint reported.
- The decision prompted State Bank of India chief Rajnish Kumar to slam the private lender, whom he did not name, as having acted selfishly.
- Peer Aditya Puri, the long time chief of HDFC Bank, while speaking at a press conference on September 30, countered that by saying “it is my security and I will exercise it.”
Beyond the exchange of words between the two bankers, the incident has raised a broader question.
9. What Explains The Steady Rally In Life Insurance Stocks?
One pocket of the financial sector has escaped the banking gloom, and is rallying despite valuation concerns. Niraj Shah finds out why.
- The three large listed life insurers have outperformed the banking index over the past 12 months.
- Market participants seem willing to ascribe premium valuations to those non-lending financials which are still able to show long-term growth potential.
- Despite most analysts on the street believing that these stocks are expensive, they have continued to rally and are trading near their life-highs.
Like some of the other blue-chip stocks, the insurance companies are marching on while skeptics continue to rub their eyes in disbelief.
10. India Plans To Train Women to Combat Water Challenge
Prime Minister Narendra Modi’s government plans to employ women across villages to test water quality to combat rising challenges, amid scarcity of the resource across India.
- Women in villages across 256 water-scarce districts will receive training to ensure clean water supplies, Smriti Irani, the minister for women and child development, said in Mumbai.
- The programme will be expanded to cover all of India’s 7,50,000 villages, Irani said.
- Inadequate water supply, sanitation and hygiene cost India around 0.8 percent of its gross domestic product, according to the World Bank.
- The efforts to train women are part of the government’s conservation plans at a time when water availability per person is expected to drop to 1,341 cubic meters by 2020 and about 70 percent surface water is unfit for consumption.
Here’s what Smriti Irani said on India's efforts to ensure women’s safety.