A crowd of people watches the sunset on the seaside near Beirut, Lebanon. (Photographer: Wael Ladki/Bloomberg)

BQuick On Oct. 16: Top 10 News Stories In Under 10 Minutes 

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

1. Infosys’ $2-Billion Milestone; Hero’s Margin Pain

Infosys Ltd.’s profit rose as expected in the July-September quarter and India’s second-largest software services provider maintained full-year guidance, backed by strong client addition for the second straight quarter.

  • Net profit rose 13.6 percent sequentially to Rs 4,110 crore.
  • Revenue in dollar terms rose 3.2 percent quarter-on-quarter to $2,921 million.
  • Operating profit rose 14.7 percent to Rs 4,894 crore.
  • Operating margin remained largely flat at 23.7 percent.

Get a detailed analysis of Infosys’ earnings here.

Hero MotoCorp Ltd.’s profit for the quarter ended September met estimates even as higher commodity costs hurt margins.

  • Net profit of the country’s largest two-wheeler maker fell 3.4 percent year-on-year to Rs 976.3 crore.
  • Revenue rose 8.6 percent to Rs 9,090.9 crore.
  • Margin contracted to 15.2 percent from 17.4 percent.

Here’s what impacted margins.

2. Piramal Weighs $1 Billion Sale

Billionaire Ajay Piramal is considering a sale of his contract pharmaceutical operations, which could fetch around $1 billion, people with knowledge of the matter told Bloomberg News.

  • Piramal Enterprises Ltd. is working with advisers to gauge interest in the business, known as Piramal Pharma Solutions, according to the people.
  • It has sent out preliminary marketing materials to potential buyers, the people said, asking not to be identified because the information is private.
  • Piramal Pharma Solutions is a contract development and manufacturing organisation, which provides services including drug discovery and commercial production to other health-care firms.
  • The sale has attracted interest from private equity firms and U.S. companies, the people said.

3. Indian Markets Continue Climb; U.S. Stocks Rally

Indian equity benchmarks rose for third day in a row led by Reliance Industries Ltd., ICICI Bank Ltd., HDFC Ltd. and State Bank of India.

  • The S&P BSE Sensex Index rose 0.85 percent or 297 points to 35,162.
  • The NSE Nifty 50 Index advanced 0.7 percent or 72 points to 10,585.
  • “The result season has been in-line so far but we need even better numbers because valuations are expensive,” AK Prabhakar, head of research at IDBI Capital Market Services told Bloomberg over the phone.

Follow the day’s trading action here.

U.S. stocks jumped as earnings from major banks and health-care firms bolstered confidence in the economy. The dollar fell as geopolitical tensions appeared to ease.

  • The S&P 500 Index rallied after the index couldn’t make a clean break of the key 200-day moving average on Monday. A rebounding tech sector led gains.
  • The dollar held near a two-week low, while the 10-year Treasury yield traded around 3.16 percent amid data showing U.S. factory production expanded in September.
  • Oil retreated amid the potential easing of tensions between the Saudi Arabia and the U.S. over the disappearance of a prominent journalist.

Get your fix of global markets update here.

4. Dealing With Volatility

Avendus Capital Public Markets, India’s largest hedge fund, had shrugged off a surge in crude and a weaker rupee. Then defaults by Infrastructure Leasing & Financial Services Ltd. rocked the market.

  • “We immediately saw what’s happening and did our course correction,” Vaibhav Sanghavi, co-chief executive officer at Avendus Capital Public Markets said. “We were already in significant cash and actively hedged to protect the portfolio.”
  • Avendus chose to hold 50 percent investments in cash. Its Absolute Return Fund returned 0.2 percent gains in September when the benchmark Nifty 50 fell 6.5 percent.
  • Avendus Capital Public Markets prefers to be on the sidelines when volatility spikes, said CEO Andrew Holland. “We sit in cash during binary events,” he said. “I would rather protect the capital.”
We sit in cash during binary events. I would rather protect the capital.
Andrew Holland, CEO, Avendus Capital Public Markets

5. Now Transfer Money From One Mobile Wallet To Another

The Reserve Bank of India on Tuesday issued final guidelines to enable interoperability for pre-paid instruments or mobile wallets.

  • In its guidelines, the RBI said that interoperability will be enabled through both the card networks and the Unified Payment Interface.
  • In 2017, the RBI had said that such interoperability, which allows transfer of funds seamlessly between mobile wallets, would be permitted but operational guidelines were awaited.
  • The rules have now been released, giving a boost to mobile wallet companies, while also reducing the advantage that payments banks enjoyed.
  • Contrary to expectations, the RBI didn’t impose any minimum net worth requirement on mobile wallets before permitting them to become interoperable.

Here's how this benefits mobile wallet firms.

6. U.S. Firms Seek Another 12 Months

Multinational firms, including the large card companies like Mastercard and Visa, which have failed to meet the Reserve Bank of India’s data localisation norms, are seeking another year to become compliant.

  • The companies are willing to comply with the RBI’s rules but have sought 12 months to complete the process, said Mukesh Aghi, chief executive officer of the U.S.-India Strategic Partnership Forum, an industry body acting on behalf of U.S. businesses.
  • In April, the RBI had asked all payment services providers to start storing all data only locally. The regulator gave firms until Oct. 15 to comply.
  • The RBI has given no indication of an extension of the deadline.
We have requested a 12-month period from the RBI so that we can provide you world-class data... We need to have a consultative process so that we can set milestones for three months, six months and 12 months.
Mukesh Aghi, CEO, U.S.-India Strategic Partnership Forum

7. E-Commerce Deals Are Falling Between The Cracks

A nine-member team has been tasked with reviewing the competition law in view of the changing business environment and suggest amendments to it. Sudhir Mittal, chairman of the Competition Commission of India, spoke to BloombergQuint on some of the areas that the committee should focus on, the regulator’s decision to not narrow down the filing exemption under its merger control regulations, the outcome in the Hyundai case before the National Company Law Appellate Tribunal and the procedural clarity that the Delhi High Court ruling in Cadila Healthcare Ltd. case has brought in.

Here are the highlights of what Mittal had to say:

  • Competition Law Review Committee should review thresholds that determine regulatory filing.
  • Deals in e-commerce space usually don't meet asset/turnover threshold and need to be examined.
  • The idea of introducing settlement provisions under competition law has merit.

Watch the full interview here.

8. Trade Deficit Fall = Weaker Domestic Demand?

A surprise fall in India’s trade deficit in September has led economists to question whether domestic demand is weakening.

  • The gap between exports and imports stood at $13.98 billion, sharply lower than a five-year high of $17.4 billion in August.
  • Economists noted that slower import growth despite higher oil prices could reflect a weakening of domestic demand conditions.
  • The slowdown in this “core category” of imports ahead of the generally buoyant festive season could suggest that demand is adjusting to higher prices driven by a weaker currency, said Nomura Global Markets Research in a report.
  • Tushar Arora, senior economist at HDFC Bank Ltd., pointed out that the month-on-month momentum of core imports was also contrary to seasonal trends.

Will this be a one-off?

9. Jhunjhunwala’s Contrarian Calls

Veteran investor Rakesh Jhunjhunwala was buying more shares of Dewan Housing Finance Corporation Ltd. while the stock was crashing during the July-September quarter. The investor now also holds a significant position in SpiceJet Ltd. and has cut his stake in Lupin Ltd., according to exchange filings.

  • Jhunjhunwala now owns 3.19 percent stake in the battered housing financier, compared with 2.76 percent stake in the June-ended quarter.
  • His stake in the SpiceJet has now gone up to 1.25 percent, or 75 lakh shares.
  • Jhunjhunwala also upped his stake in Fortis Healthcare Ltd. to 2.76 percent.
  • The billionnaire investor cut stake in Lupin to 1.79 percent.

Here’s more on Jhunjhunwala’s contrarian calls.

10. Mumbai Home Sales Jump

Home sales rose 9 percent across India’s seven biggest cities in the third quarter, boosted by low-budget apartments, according to Anarock Property Consultants Pvt.

  • The highest sales were recorded in Mumbai and neighboring Pune, which accounted for about 27 percent of purchases across the seven cities, the real estate broker said in a report.
  • The National Capital Region, which covers Delhi and surrounding areas, and Hyderabad both posted the lowest growth, with a 2 percent increase from the previous quarter, the data showed.
  • The third quarter of the year is usually a slow period for the housing market because of the 15-day “shraddh” period, when people honor their dead ancestors and which is considered inauspicious for buying property.

Housing supply has been dominated by low-budget homes.