BQuick On Oct. 30: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Mukesh Ambani Vs Telecom Industry...Again
India’s telecom industry is split again—this time on the Supreme Court order asking the already bruised sector to pay dues and penalties worth over Rs 92,000 crore.
- Reliance Jio Infocomm Ltd. criticised industry lobby Cellular Operators Association of India’s letter urging a government panel to prioritise the adjusted gross revenue issue and suggest relief measures within two months.
- “Reliance Jio completely disagrees with the intent, tone, contents and connotations of the COAI letter. The letter does not represent the industry view by any stretch of imagination,” the Mukesh Ambani-led operator said in a media statement.
We take strong umbrage at COAI exploiting the legitimate pay-out obligations to create an alarmist propaganda for the doom of telecom sector in the country.Reliance Jio Statement
This is not the first time that Jio is at loggerheads with COAI.
2. A Flurry Of New Airports
India is planning to open 100 additional airports by 2024, as part of a plan to revive economic growth in Asia’s third-largest economy, people with knowledge of the matter told Bloomberg News.
- The proposal, which includes starting 1,000 new routes connecting smaller towns and villages, was discussed at a meeting last week to review infrastructure needed by 2025, the people said.
- Steps to start a plane-lease financing business in the country was also discussed, they said.
India’s plans to expedite airport development still trails that of China’s.
3. 'Export Growth Target Of 10% A Year Achievable'
Indian exports can grow at close to 10 percent annually, allowing for a doubling of the quantum of outbound shipments every seven years, said a government-appointed committee looking into the country’s export competitiveness.
- Achieving that level of growth consistently, though, will require a range of steps which help improve the elasticity of India’s exports relative to global export growth.
- The steps range from introducing long-suggested labour reforms, reducing the corporate tax rate and bringing down the cost of capital, the committee said.
- The committee acknowledged that not only has India’s export performance stagnated, it has deteriorated relative to the rest of the world.
Exchange rates are not to blame.
4. Sensex Rises, U.S. Stocks Struggle Despite GDP Cheer
Indian equity benchmark S&P BSE Sensex extended gains for the fourth consecutive trading session to end near a five-month high.
- The 31-share index rose 0.55 percent to close above 40,000 for the first time since June 4.
- The NSE Nifty 50 rose 0.54 percent to end at 11,850.25.
- Six out of 11 sectoral gauges compiled by NSE ended higher.
- Shares of IndiGo’s operator InterGlobe Aviation Ltd. surged more than 8 percent, their best daily advance since early 2016, after placing a 300-aircraft order with Airbus worth over $30 billion.
Follow the day’s trading action here.
U.S. stocks were little changed amid a mixed batch of earnings and data showing the American economy avoided a pervasive slowdown.
- The S&P 500 briefly fell to a session low when Chile canceled next month’s APEC meeting where the U.S. and China intended to sign a partial trade pact.
- The U.S. economy rose 1.9 percent in the third quarter and a report on private hiring showed solid gains, with both data sets topping estimates.
- The 10-year Treasury yield slipped to 1.8 percent before the Fed’s expected rate cut.
- West Texas Intermediate crude declined 0.7 percent to $55.16 a barrel.
Get your daily fix of global markets here.
5. The Opportunity In Fear
There is a fear psychosis in the markets and that’s providing opportunities to investors, according to veteran stock picker and fund manager Madhusudan Kela.
- The market value of companies can erode substantially by something as simple as a WhatsApp forward containing rumours, said Kela, who founded investment firm MK Ventures after leaving Reliance Group.
In the past, corrections were moderate and up to 30-40 percent; corrections these days can easily be 80-90 percent and swift.Madhusudan Kela, Founder, MK Ventures
- Investors should examine certain factors while looking out for “mis-priced opportunities”, Kela said.
- Kela’s enthusiasm also stems from the government’s reforms over the past few years—such as goods and service tax and the recent cuts in corporate taxes.
Here’s what will boost investor appetite for midcap stocks, according to Kela.
6. Real Estate Consolidation: Limited Relief
As India’s developers find it tough to raise funds, well-funded larger peers have either taken over or are helping complete stressed projects.
- But that’s helped only a small number of under-construction apartment blocks with no substantial boost to real estate sales.
- A year ago, the sector was still limping out of the setbacks of Prime Minister Narendra Modi’s overnight cash ban in November 2016 and the goods and services tax rollout when a non-bank crisis broke.
- As AAA-rated IL&FS group defaulted on repayments, credit dried up for non-banking financiers and builders, aggravating stress.
- Residential towers worth Rs 4.62 lakh crore with 4.54 lakh homes have been stalled in the top seven cities, according to a JLL India report.
Here’s how consolidation has worked so far within the real estate sector.
7. Will Discounts Prop Up Demand?
As consumption slows in India, consumer goods makers could be looking at cutting prices to drive volumes. But that will depend on how much room commodity costs provide.
- Indians have cut back spending on biscuits and shampoos to cars amid stagnant wage growth and falling rural incomes, dragging GDP growth to six-year low.
- Second-quarter earnings so far have shown that either volume growth has stagnated or fallen.
- Commodity costs fell for makers of soaps and paints, giving them cushion to cut prices. But input costs have risen for biscuit and coconut oil companies.
Here’s how raw material prices have played out.
8. Where There Is A Spend, There Is An EMI
It is now harder to think of goods and services which can’t be purchased on EMI, or equated monthly installements, than those which can.
- At one end are consumers purchasing food, taking a cab and watching movies on credit. At the other end are those buying their first luxury tote bag or getting a lip job on EMI.
- Loans pitched as “no-cost EMI” schemes with instant approvals, flexible tenors and multiple tie-ups are helping customers fulfill needs they probably didn’t know they had.
- The target segment is anyone with a regular income stream, particularly across India’s digitally savvy consumer base.
NBFCs from Bajaj Finance to Aditya Birla Finance have joined the bandwagon.
9. Tamil Nadu Nuclear Plant Cyber Attack Confirmed
The Nuclear Power Corporation of India Ltd. has confirmed that there was a malware attack in NPCIL's system, just a day after its denial that any attack on a nuclear power plant control system is not possible.
- The Quint had reported on Tuesday of the strong evidence of a malware attack on the IT systems of the Kudankulam Nuclear Power Plant in September.
- According to the NPCIL statement, the infected computer belonged to a user who was connected to the internet.
- This internet network was “isolated from the critical internal network”, the press release said.
- Former NTRO official and cybersecurity expert Pukhraj Singh had pointed out that the IT network of the power plant had been compromised, which is very different from its control systems.
Find out the full story here.
10. Brexit Means Partition For Indian Businesses
Indian producer-exporters face a choice between two Partitions with Brexit, writes Raj Bhala.
- Option #1: set up manufacturing operations in one of the remaining 27 EU members.
- Option #2: Retain investments in, and supply chains to, the U.K.
- Only one of those two options is optimal.
Find out which one that is, and why.