BQuick On Oct. 17: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. EU, U.K. Reach Brexit Deal, But Parliament Approval Remains Uncertain
Negotiators from the U.K. reached an agreement with officials in Brussels that could pave the way for Britain to finally break 46 years of ties with the European Union. But the Democratic Unionist Party said it still can’t support the deal.
- That makes the parliamentary arithmetic a lot tighter for British Prime Minister Boris Johnson, who needs the backing of the House of Commons in a vote expected Saturday in order to deliver an orderly Brexit on Oct. 31.
- Three DUP officials said their party won’t support the deal, saying they were unhappy about customs checks in the Irish Sea, among other things.
- Johnson’s been defeated in a string of crucial votes since taking office in July and lost his majority in the chamber. Nevertheless, the U.K. prime minister announced the agreement with an upbeat statement.
Pull it off, and Johnson will draw a line on three years of political turmoil in the U.K.
Pound’s Brexit Rally Fades
U.S. stocks approached record highs, boosted by mostly positive quarterly results. Doubts over whether a Brexit deal can win approval weighed on the pound.
- With doubts swirling over the Brexit deal’s chances of success, investors are also grappling with a mixed bag earnings from major European companies.
- The S&P 500 Index advanced 0.5 percent to 3,005.27 as of 10:04 a.m. New York time, the highest in more than three weeks.
- The euro advanced 0.5 percent to $1.1124, the strongest in more than seven weeks on the biggest gain in almost four weeks.
- West Texas Intermediate crude declined 0.7 percent to $52.98 a barrel.
Get your fix of global markets update here.
2. Nifty Near One-Month High
Indian equity indices extended gains for the fifth straight trading session to end near a one-month high.
- The S&P BSE Sensex rose 1.1 percent or 453 points to close at 39,052.
- The NSE Nifty 50 gained 1.07 percent or 122.4 to end at 11,586.35.
- Both the benchmark indices ended at their highest levels since Sept. 24.
- The equities with exposure to Europe witnessed a sudden spike in the last 30 minutes after EU and U.K. reached a Brexit deal.
- Ten out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
What Foreign Investors Bought And Sold In September
Foreign investors have piled into miscellaneous stocks the most in September as, buoyed by the surprise corporate rate tax cuts, they turned buyers first time in three months.
- Insurance and banking sectors saw the second and third-highest net inflows, according to data available on National Securities Depository Ltd.'s website.
- That pushed Nifty 50 higher by 4.09 percent in September, snapping three months of losses.
After being net sellers for the first 15 days of the month, FPIs pumped in over $1.3 billion in the second half. Find out the money flow picture here.
3. Zee Misses Analyst Estimates
Zee Entertainment Enterprises Ltd.’s quarterly profit fell short of the lowest analyst estimate as it provided for loans extended to related parties.
- Net profit rose 6.9 percent year-on-year to Rs 413.20 crore.
- Revenue rose 7.4 percent over last year to Rs 2,122 crore.
- Advertising revenue rose 1.2 percent to Rs 1,224.70 crore while subscription revenue rose 19 percent to Rs 723.50 crore.
- The company missed the profit estimate because of exceptional items worth Rs 171 crore, including provisions after related parties delayed repayment.
- Total receivables stood at Rs 2,418 crore, of which, receivables from related parties accounted for Rs 700 crore.
Ad trends could remain muted for the broadcasters with a worsening market.
4. Value Investor Guy Spier’s Strategy
For value investor Guy Spier, there’s something common between a maker of bathroom fittings and a credit rating agency in India: longevity.
- Spier sees Cera Sanitaryware Ltd. and CARE Ratings Ltd. as businesses that will be around for a long time. Something that makes them lucrative bets.
- “I try to restrict myself to buying companies that I believe would be around pretty much forever. One example comes to my mind of many great companies in India is a company called CERA Sanitary,” the chief executive officer at Aquamarine Fund told BloombergQuint in an interview.
- “They make bathroom installations, the kind of business you know would be around for a very long time,” Spier said.
- And this strategy is at the core of his investing philosophy. Because apart from the risk, he considers for how long he can hold a stock before thinking about a change.
Watch the full interaction with Spiers where he explains why he retains his optimism on India.
5. Strategic Sale Of Eight PSUs: Crucial Meeting Tomorrow
A group of secretaries will meet on Oct. 18 to consider cutting the government’s holding below 51 percent in at least eight public-sector companies, a person familiar with the matter said, as the Modi administration looks to bridge the budget gap.
- Among the state-owned firms to be considered for the strategic sale are the nation’s largest fuel refiner-retailer Indian Oil Corporation Ltd. and the biggest power producer NTPC Ltd., the person told BloombergQuint, asking not to be identified as he is not authorised to reveal details.
- If approved by the Core Group of Secretaries on Divestment, the proposals will then be tabled before the Cabinet Committee on Economic Affairs, he said.
The share sales are aimed at raising funds when corporate tax rate cuts and lower collections threaten to widen the fiscal deficit.
6. Vodafone-Idea Bond Sold At Steep Discount
A Vodafone Idea Ltd. corporate bond maturing in January 2022 was offloaded on Wednesday at a sharp discount to its face value.
- The bond, bearing a coupon rate of 8.03 percent and a face value of Rs 100, was sold at Rs 54.28 a unit, according to NSE data.
- The bond, issued in January 2017, has an outstanding amount worth Rs 500 crore, Bloomberg data showed.
- The seller and buyer of the security wasn’t immediately available.
- According to data available on the NSE, the Vodafone Idea bond worth Rs 40 crore with a residual maturity of about three years was sold at a 41 percent discount to its last traded price, which brings the effective yield to maturity at 42.9 percent.
- The bond, however, wasn’t actively traded. Its last trade was Oct. 17, 2018, at Rs 92.61 a unit.
Was it a panic sale? Possible.
7. Blackstone, Raheja Move Closer To REIT IPO
Blackstone Group and Indian developer K Raheja Group have selected more banks for an initial public offering of their joint commercial property portfolio, people familiar with the matter told Bloomberg News.
- Citigroup Inc., Kotak Mahindra Capital Co. and Axis Capital Ltd. were picked to join Morgan Stanley to arrange the listing of the assets as real estate investment trust in Mumbai, said the people, who asked not to be identified as the discussions are private.
- While the private equity firm and K Raheja are still working on the property composition for the REIT, they aim to finish the share sale by as soon as March, the people said.
A successful debut would mark India’s second REIT after the listing of Embassy Office Parks REIT in April.
8. Rs 1 Lakh Insurance In 1993 Should Be Rs 1 Crore Today
Did nobody think through the PMC Bank withdrawal restrictions? Or did nobody give a damn? Now, three people are dead. Whoever conjured up this policy gem at RBI deserves to be retired, writes Raghav Bahl.
- The three PMC-related deaths in Mumbai this week could have been prevented without causing even a penny’s loss to the exchequer.
- The easiest thing for any government to do is ban, freeze, stop, and choke … one fatal flourish of the pen and the job is done.
- It’s not the audacity of the scam, but the pusillanimity of the government’s response these last three weeks, that’s shocking.
9. ‘You Had Five Years Too’: Manmohan Singh Hits Back
Former Prime Minister Manmohan Singh said that the Narendra Modi administration should stop blaming the United Progressive Alliance for every economic crisis as five years is sufficient time to come up with solutions.
- “You cannot claim year after year that the fault lies with the UPA, you have been in office for five and half years and that is long enough period for a government committed to public welfare to do some credible things. Merely passing the buck to UPA regime is no solution to India’s problems,” Singh said.
- He was replying to a question on Finance Minister Nirmala Sitharman's comments in the U.S. where she said that the banking sector had its worst phase during Singh and RBI Governor Raghuram Rajan’s tenure.
Singh also admitted that there were “some weaknesses” in his government too but the Modi government should’ve resolved them instead of looking for brownie points.
10. Narendra + Devendra = Saffron Maharashtra
Maharashtra, which has been a Congress citadel since the state’s formation in 1960, is now clearly becoming a saffron fortress, writes Amitabh Tiwari.
- Like in other states, Bharatiya Janata Party successfully followed a strategy of not focusing on the dominant caste, consolidating all the other caste groups.
- That forces the dominant caste to make amends. In the 2019 Lok Sabha elections, 56 percent of Marathas voted for the National Democratic Alliance.
- Across all the six regions of Maharashtra, NDA now enjoys a handsome lead versus UPA.