BQuick On Oct. 29: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Power Tariff Revision: Eight-Week Deadline
The Supreme Court directed the Central Electricity Regulatory Commission to decide within eight weeks on approving revised tariffs for three power producers in Gujarat due to increased cost of imported coal.
- The Gujarat government sought the top court’s intervention to implement a state government panel’s report that recommended implementing a cost-reflective tariff, which would mirror any increase or decrease in input costs.
- The plea also includes a provision to extend the contract period for the plants run by Tata Power Co., Adani Power Ltd. and Essar Power.
- The two-judge bench led by Rohinton F. Nariman said the decision for tariff should not be bound by an earlier single-judge order, which had rejected the power producers demand for higher tariff last year.
2. Stocks Rally In India, U.S.
Indian equity benchmarks rose the most since Oct. 12 led by a rally in ICICI Bank Ltd. after it swung to profitability in September quarter.
- The S&P BSE Sensex Index surged 718 points or 2.15 percent to 34,067.
- The NSE Nifty 50 Index jumped 2.2 percent or 221 to 10,251.
- ICICI Bank shares surged 10.7 percent, the most in over a year.
- All sector gauges compiled by the National Stock Exchange ended higher led by the Nifty PSU Bank Index’s 8 percent surge.
Investors started the week optimistic, pouring into U.S. stocks on speculation the month-long rout has been overdone.
- The S&P 500 jumped more than 1.5 percent, with banks and tech shares leading the way. The measure looked for just its sixth advance in October and remains on track for its worst month since 2010.
- The Nasdaq indexes outperformed after IBM’s $33 billion purchase of Red Hat Inc.
- The euro swung between losses and gains as German Chancellor Angela Merkel confirmed reports she will quit as head of her Christian Democratic party after nearly two decades, though she intends to see out her term as head of state.
- The yield on 10-year Treasuries jumped two basis points to 3.09 percent, the largest surge in more than a week.
- West Texas Intermediate crude decreased 0.2 percent to $67.47 a barrel.
3. For Mobius, India Is Still A Favourite
India offers a “great” opportunity for foreign investors despite a recent selloff in equities, according to emerging market investment veteran Mark Mobius.
- “India is a collection of states that are competing with each other for investments,” 81-year-old Mobius, who left Franklin Templeton Investments in January to set up Mobius Capital Partners LLP, said.
- Also, the upcoming election will be a crucial event to watch out for, he told BloombergQuint in an interaction. “The market would react positively if Prime Minister Modi gets stronger support.”
- There could be a temporary downturn, according to Mobius, if the support for Modi weakens at a time India is on a reform track.
4. A Chinese Solution To The Rupee Problem?
India is considering allowing some imports from China to be settled in yuan, people familiar with the proposal told Bloomberg News, as the South Asian nation moves to limit its currency’s loss against the dollar.
- The plan would enable direct convertibility between the rupee and yuan and will help cut transaction and hedging costs, the people said, asking not to be identified citing rules.
- The proposal would allow Indian exports of pharmaceuticals, oilseeds and sugar to China to be settled in rupee, while keeping out trade in high volume products such as electronics, they said.
- By allowing Indian importers to pay for Chinese goods in yuan, the South Asian nation would be able to save on dollars to pay for escalating oil import costs in the face of higher crude prices and the rupee’s slump to a record low.
5. Piramal Seeks Foreign Cash
Ajay Piramal’s home finance firm is set to tap overseas markets for funds, as hurdles mount for such non-bank lenders to raise money at home after landmark defaults by IL&FS group.
- Piramal Capital & Housing Finance, which provides services including mortgages to individuals and real estate financing, is firming up plans to raise "sufficient capital" through external commercial borrowings and bond markets.
- "We will look at raising funds in the near future from ECBs, bonds and institutions," Piramal said in an interview in Mumbai without giving more details.
We will raise sufficient funds to meet our growth needs and bring down our exposure to short-term debt like mutual funds and commercial paper significantly.Chairman, Piramal Enterprises
6. Bharti Airtel’s Africa IPO Delayed?
Bharti Airtel Ltd., India’s second-biggest wireless carrier, is delaying a planned initial public offering of its Africa unit due to the turmoil in emerging-market stocks, people with knowledge of the matter told Bloomberg News.
- The company, which was originally aiming to list the unit in London by March, has pushed back the share sale by about half a year, according to the people.
- It plans to seek an enterprise value of about $8 billion for the Africa business, the people said, asking not to be identified because the information is private.
7. Burning Cash To Play Catch Up
Paytm Mall, the online retail platform of India’s biggest digital-payments brand expended nearly Rs 5 crore a day in the year ended March 2018 to gain market share as it competes with the likes of Amazon.com Inc. and the Walmart-backed Flipkart.
- Paytm’s e-commerce platform spent nearly Rs 2,581 crore in the 12 months through March 2018, according to filings with the Registrar of Companies that were reviewed by BloombergQuint.
- This comprised around Rs 944 crore on advertising and Rs 757 crore was miscellaneous expenses—including a royalty fee of Rs 405 crore and customer access expenses of Rs 307 crore.
- The company reported a net loss and revenue of Rs 1,787 crore and Rs 744 crore, respectively, for the fiscal.
8. Essar Steel: Ruia Offer Is Bigger, But Is It Better?
No doubt the Ruias’ promise to repay all creditors in full trumps ArcelorMittal’s resolution plan. But is value maximisation the only point to consider in this rather twisted insolvency saga, writes Menaka Doshi.
- If the Ruias were keen to retain the asset, and believed their legal case on eligibility was strong, why didn’t Numetal bid more aggressively?
- The Ruias have not offered any financial assurance to emphasise the seriousness of their offer.
- Most likely the Ruias will move the National Company Law Tribunal to be heard before the tribunal approves the ArcelorMittal plan.
9. Government Versus RBI: Dissent At The Podium
Have more amiable lines of communication between the government and the Reserve Bank of India gotten jammed, asks Ira Dugal.
- RBI Governor Urjit Patel and his team have now come out at least four times to defend their policies through public speeches.
- Patel began the trend in March by stepping out to speak on the imbalance of regulatory powers over public sector banks.
- In a speech in April, Deputy Governor NS Vishwanathan took his defence of the ‘February 12 Circular’ public.
- In October, Deputy Viral Acharya came out in public to defend the ‘Prompt Corrective Action’ framework.
- The most significant of the speeches of dissent came on Friday from Acharya.
10. Ayodhya Case: Hearing Dates To Be Set In January
The Supreme Court today fixed the Ram Janmabhoomi-Babri Masjid land dispute cases for the first week of January next year before an appropriate bench, which will decide the schedule of hearing.
- A three-judge bench, headed by Chief Justice Ranjan Gogoi, said the appropriate bench will decide the future course of hearing in January next year on the appeals filed against the Allahabad High Court verdict in the Ayodhya land dispute case.
- The other members of the bench are Justices SK Kaul and KM Joseph.
- Earlier, a three-judge bench, by a 2:1 majority, refused to refer to a five-judge constitution bench the issue of reconsideration of the observations in its 1994 judgment that a mosque was not integral to Islam.