BQuick On Oct. 3: Top 10 Stories In Under 10 Minutes
Oil and gas tankers sitting parked on the side of a road near a refinery are illuminated by vehicle headlights at night in India. (Photographer: Dhiraj Singh/Bloomberg) 

BQuick On Oct. 3: Top 10 Stories In Under 10 Minutes

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

1. HDIL Directors Arrested

The Economic Offences Wing of the Mumbai Police has arrested realty firm Housing Development & Infrastructure Ltd. directors Rakesh and Sarang Wadhawan in the PMC Bank case.

  • “They were called for questioning today at the EOW office. The response from them was not sufficient and not satisfactory. Sufficient ground was found for the arrest for their role in this case,” Pranay Ashok, deputy commissioner of Mumbai Police, said in a media briefing, adding the two will be interrogated and produced before court in 24 hours.
  • “The SIT (special investigating team) that has been formed is looking into all aspects and the investigation is on.”
  • The EOW also attached Rs 3,500 crore worth of properties belonging to the Wadhawans and the company, a senior official at the EOW told BloombergQuint.
  • Sarang Wadhawan is the managing director, while his father Rakesh Wadhawan is the chairman at the Mumbai-based slum redeveloper.

Roughly Rs 2,000 crore, according to EOW, were diverted to the Wadhawans’ personal accounts.

2. RBI Hikes Withdrawal Limit For PMC Bank Customers

In a partial relief to depositors, the Reserve Bank of India has raised the withdrawal limit for customers of Punjab and Maharashtra Cooperative Bank Ltd.

  • Depositors are now allowed to withdraw Rs 25,000 from their accounts compared with the Rs 10,000 limit earlier, RBI said in a press release.
  • The decision was taken after reviewing the bank's liquidity position and with a "view to reducing the hardship of depositors", the central bank said.
With the above relaxation, more than 70 percent of the depositors of the bank will be able to withdraw their entire account balance. The Reserve Bank is monitoring the position of the bank and will continue to take necessary steps in the interest of depositors.
RBI Statement

RBI has also decided to appoint a committee of three members to assist PMC Bank's administrator.

3. Yes Bank Hopes To Raise $1.2 Billion ‘Sooner Than Market Expects’

Yes Bank Ltd. Chief Executive Officer Ravneet Gill said he expects to complete raising as much as $1.2 billion “much sooner than the market expects,” after sales of pledged shares this week eliminated an overhang on the lender’s stock.

  • Gill reiterated in an interview on Thursday his target of selling $1 billion to $1.2 billion of new shares to private equity investors, technology companies and family offices.
  • He declined to be more specific on the timing for completing a deal. The stock surged 33 percent.
Ideally we would like to do this in one shot. I think every stakeholder of the bank is of the same view that we should get as much capital as we need.
Ravneet Gill, CEO, Yes Bank
  • Meanwhile, Rajat Monga, group president and former chief financial officer of Yes Bank resigned amid continued restructuring at the lender under a new management that took charge earlier this year.

Even after a stock recovery, what Gill is seeking to raise is almost 86 percent of the bank's market cap.

Also read: The End Of The Rana Kapoor Era At Yes Bank

4. Nifty, S&P 500 Drop

Indian equity benchmarks extended declines for the fourth consecutive trading session ahead of the country’s central bank’s bi-monthly policy decision on Friday.

  • The S&P BSE Sensex fell 0.52 percent to end at 38,106.87.
  • The NSE Nifty 50 declined 0.4 percent to close at 11,314.
  • Seven out of 11 sectoral gauges compiled by the NSE ended lower.

Follow the day’s trading action here.

BQuick On Oct. 3: Top 10 Stories In Under 10 Minutes

Fresh signs the American economy is on wobbly ground rattled U.S. equity markets and drove investors into haven assets.

  • The S&P 500 plunged as much as 1 percent after a reading on the services sector fell to a three-year low, adding to recession concern after a similar manufacturing gauge hit its lowest in a decade earlier in the week.
  • Banks suffered the steepest losses as the 10-year Treasury yield sank below 1.52 percent for the first time in a month.
  • Gold rose 0.8 percent to $1,519.00 an ounce.
  • West Texas Intermediate crude fell 1.9 percent to $51.60 a barrel.

Get your daily fix of global markets here.

5. IRCTC IPO Subscribed Over 110 Times

Indian Railway Catering and Tourism Corporation Ltd.’s initial public offering became the most successful maiden issue in more than 20 months, driven by demand from institutions and rich investors.

  • The Rs 644-crore IPO received demand for more than 110 times the shares on offer—or for Rs 70,000 crore—till 4 p.m. on the closing day, according to data disclosed by the National Stock Exchange and the company.
  • That makes it the best IPO by subscription since Apollo Micro Systems Ltd. and Amber Enterprises India Ltd. went public with a demand for more than 150 times in January 2018.
  • The IRCTC IPO was fully subscribed on the second day itself. High-net-worth and institutional investors drove oversubscription.

IRCTC’s offer is the biggest and the most successful among the four railway companies that have gone public.

6. Altico Capital Gets A Suitor

U.S.-based alternative investment fund, Apollo Global Management has shown initial interest to buy stake in Altico Capital India Pvt. Ltd., according to two people in the know.

  • The people, who requested anonymity as the discussions are confidential, said that the fund has made presentations to lenders last week, however, the discussions are still in preliminary stages.
  • Real estate financier Altico Capital fell into financial stress after it defaulted on repayments to Mashreqbank, on external commercial borrowings.
  • The company’s board had appointed Alvarez & Marsal to help them come up with a resolution plan and turn the company around.
  • Lenders led by State Bank of India have an exposure of over Rs 4,300 crore to Altico Capital.
  • Mutual funds are also part of the lending consortium and have a sizable exposure.

The lending consortium is also open to talking with other funds to seek better offers.

7. India’s Top Mall Owners Are Smiling

As the Japanese fast-fashion retailer Uniqlo opens its first India store in a tony neighbourhood of New Delhi, one more big name will jostle for premium retail space that is short in supply. The nation’s top mall owners will be smiling.

  • Developers have been lowering lease tenures and increasing rents at a faster pace, causing a brand churn, BloombergQuint’s conversations with developers and retailers revealed.
  • According to a June report by Anarock, the retail industry has moved from long-term tenures to shorter contracts of three to five years to constantly update the brand mix. That compares with an average tenure of more than five years in other countries, it said.
  • That comes when India’s real estate market is struggling to shake off a string of setbacks, starting with demonetisation to a stricter housing law and a now liquidity crunch that has spiralled a year after defaults by IL&FS group.

But commercial real estate has been an outlier.

8. How Low Can Rates Go?

DBS Bank’s Radhika Rao uses the Taylor Rule to estimate the approximate room for further cuts, factoring the prevailing and one-year forward growth and inflation levels.

  • Of the 40 basis points in cuts expected this quarter, half is likely this week.
  • A similar-sized cut in December would take the repo rate to 5 percent by end-2019.
  • One year forward from December, there is still room for more cuts of up to 60 basis points in 2020.

However, a clear shift towards a consumption stimulus might put the RBI on the defensive.

9. U.S. Open To Trade Deal With India

U.S. Commerce Secretary Wilbur Ross said there was no structural reason a U.S.-India trade deal could not be done soon.

  • “Neither government said there would be a trade deal in five minutes. That was just speculation,” Ross said at the World Economic Forum's India Economic Summit, adding “we do think that there’s no structural reason why there can’t be one pretty quickly.”
  • “There will always be certain political imperatives which every country will have to respect and protect,” Commerce Minister Piyush Goyal said.
Everything cannot be sorted out in one or two or four meetings.
Piyush Goyal, Commerce Minister

There were hopes a trade deal countries would Modi visited U.S., but no agreement materialised.

10. Tata Steel Weighs E-Commerce Venture Stake Sale

Tata Steel Ltd. is weighing a sale of its stake in an e-commerce joint venture as India’s largest steel manufacturer looks to offload non-core assets to pare debt, people with knowledge of the matter told Bloomberg News.

  • The company is working with advisers on a potential sale of its 50 percent stake in mjunction Services Ltd., an online marketplace for commodities from steel, diamonds to grains and tea, said one of the people, who asked not to be named as the discussions are private.
  • The steel maker is seeking a valuation of about Rs 1,400 crore ($197 million) for its stake, the person said.
  • A sale will help Tata Steel raise cash at a time the company is struggling with a fall in demand for the alloy as cooling economic growth dents consumption.

State-owned Steel Authority of India Ltd. holds the rest of mjunction.

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