BQuick On Oct. 9: Top 10 Stories In Under 10 Minutes
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BQuick On Oct. 9: Top 10 Stories In Under 10 Minutes

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

1. RBI Rejects Indiabulls Housing-Lakshmi Vilas Bank Merger

The proposed merger of private sector lender Lakshmi Vilas Bank Ltd. with home financier Indiabulls Housing Finance Ltd. failed to receive approval from the Reserve Bank of India, the bank said on Wednesday in a statement to stock exchanges.

  • In April, Indiabulls and LVB had approved a plan to merge the bank into Indiabulls Housing.
  • But in May, they reversed the plan and said they will merge Indiabulls Housing into LVB.
  • The proposed merger had received all necessary approvals, apart from the banking regulator.
  • RBI recently placed Lakshmi Vilas Bank under its ‘prompt corrective action’ regime due to high bad loans, weak capital level, negative return on assets and high leverage.

"The first reaction is relief. Because all this uncertainty, mudslinging and orchaestrated campaign that was going against our company is behind us now. We were looking at a merger from a holistic view. It was not going to benefit us instantly."
- Ajit Mittal, ED, Indiabulls Group

This is a developing story. Follow it here.

2. U.S. No Longer World’s Most Competitive Economy, India Drops Rank Too...

India has slipped 10 places to rank 68th on World Economic Forum’s competitiveness index, largely due to improvements witnessed by several other economies.

  • India is among the worst-performing BRICS nations in the WEF index, along with Brazil.
  • The major shortcomings in some of the basic enablers of competitiveness in case of India were limited ICT adoption, poor health conditions and low healthy life expectancy.
  • Separately, the new IMF chief Kristalina Georgieva warned that the effect of the “synchronised slowdown” in the global economy will be more pronounced in emerging markets like India.

The WEF said that while the 10-place drop looks dramatic, India’s score is little changed from last year.

The U.S. dropped from the top spot in the World Economic Forum’s annual competitiveness report, losing out to Singapore.

  • Hong Kong, the Netherlands and Switzerland made up the rest of the top five, according to the WEF survey published on Wednesday.
  • On the U.S., WEF noted growing uncertainty among business leaders and said trade openness has declined.

But U.S. still remains an “innovation powerhouse”, ahead of Japan, Germany and Sweden.

3. Early Diwali Gift For Government Employees

Bringing cheer to 50 lakh central government employees and 65 lakh pensioners ahead of Diwali festivities, the Cabinet on Wednesday announced an increase of 5 percentage points to 17 percent in dearness and relief allowances, envisaging an additional annual outgo of Rs 16,000 crore.

  • The Cabinet approved releasing an additional installment of Dearness Allowance to central government employees and Dearness Relief to pensioners with effect from July 1.
  • The increase of 5 percentage points over the existing rate of 12 percent of the basic pay/pension is to compensate for price rise, an official statement said.
  • This is the highest ever increase in dearness allowance in one go by the central government.
  • For the 8 months of this fiscal the additional payment will total just over Rs 10,000 crore.

Dearness Allowance/Dearness Relief is paid to central government employees and pensioners to adjust for the cost of living and to protect their basic pay/pension from erosion in the real value, the statement said. The allowances are revised twice a year from January 1st and July 1st.

Read the full story here.

4. SBI Cuts Lending And Deposit Rates

Less than a week after the Reserve Bank of India lowered the benchmark borrowing rate, State Bank of India cut lending and deposit rates across maturities citing adequate liquidity in the system.

  • SBI, India’s largest lender, reduced the marginal cost of funds-based lending rate by 10 basis points, according to its statement.
  • The one-year MCLR will be 8.05 percent from Thursday.
  • Ending a pause announced on Aug. 23 to protect interests of small borrowers, SBI also cut the savings account rate by 25 basis points to 3.25 percent for accounts with deposits up to Rs 1 lakh.
  • Ending a pause announced on Aug. 23 to protect interests of small borrowers, SBI also cut the savings account rate by 25 basis points to 3.25 percent for accounts with deposits up to Rs 1 lakh.

SBI also announced that it will cut interest rates on retail term deposits and bulk deposits.

5. Nifty Halts Six-Day Losing Streak; U.S. Stocks Jump

Indian equity benchmarks halted their six-day losing streak, their longest since July 25.

  • The S&P BSE Sensex surged 1.72 percent to close at 38,177.
  • The NSE Nifty 50 rose 1.68 percent to end at 11,313.
  • The broader markets represented by the NSE Nifty 500 Index advanced 1.52 percent.
  • The bulls staged a smart comeback led by short covering and stable global cues, Ajit Mishra vice president of research at Religare Broking said in a statement.
  • “Going forward, we believe the upcoming earnings season would dictate the trend for the Indian markets," Mishra said.
  • The market breadth was tilted in favour of buyers.
  • Ten of 11 sectoral indices compiled by NSE ended higher.

Follow the day’s trading action here.

Also read: These Stocks Are The Most Expensive Bets In India

BQuick On Oct. 9: Top 10 Stories In Under 10 Minutes

Stocks rose in the U.S. and Europe as China revived hopes of progress in trade talks with the Trump administration this week despite potential headwinds. Treasuries slipped.

  • The S&P 500 Index rose 0.7 percent as of 9:50 a.m. in New York.
  • The Stoxx Europe 600 Index gained 0.5 percent.
  • The yield on 10-year U.S. Treasuries added three basis points to 1.56 percent.
  • West Texas Intermediate crude climbed 1.4 percent to $53.36 a barrel.

Get your fix of global markets update here.

Also read: Oil Rises on Trade Optimism as China May Be Open to Partial Deal

6. Equity Mutual Fund Inflows Get Hit

Inflows into equity mutual funds snapped the four-month rising streak even as the benchmark indices reported their best September in six years after India cut corporate tax rates.

  • Net inflow into equity and equity-linked schemes fell 28 percent over the previous month to Rs 6,609 crore in September, according to data released by the Association of Mutual Funds in India.
  • Investors used the spike in stock prices after the corporate tax cut to book profits through redemptions, according to Sunil Subramaniam, managing director and chief executive officer at Sundaram Asset Management Company Ltd.
  • Subramaniam expects the equity inflows to pick up in October.
  • Contribution through systematic investment plans remained steady in September.

Overall, the mutual fund industry witnessed an outflow of Rs 1.51 lakh crore. Find out more here.

Also read: How This Portfolio Manager Gave Four Times The Sensex Returns In 2019

7. No More Fully Free Calls From Reliance Jio

Forced by regulatory uncertainty over review of sunset clause for call termination charges, Mukesh Ambani’s Reliance Jio Infocomm Ltd. on Wednesday announced it will charge customers 6 paise per minute for voice calls made to rival phone networks, but will compensate them by giving free data of equal value.

  • In a statement, Jio said the 6 paise charge will remain in place till the time telecom operators are required to pay rivals for mobile phone calls made by their users to other operators' network.
  • These charges are not applicable on calls made by Jio users to other Jio phones and to landline phones and calls made using WhatsApp, FaceTime and other such platforms.
  • Incoming calls from all networks will continue to be free.
  • Currently, Jio charges only for data, and voice calls to anywhere in the country and to any network are free.

This will be the first time that Jio users will pay for voice calls. Here’s why it is doing so.

8. Where Are The Jobs? On The Farms.

India’s unemployment fell from a three-year high in August as rural India employed more labourers in the agricultural sector.

  • The unemployment rate fell to 7.2 percent in September from 8.2 percent in August, according to data released by the Centre for Monitoring Indian Economy Pvt. Ltd.
  • At the same time, the labour force increased to 44.1 crore in September from 43.9 crore in August.
  • A year ago, the labour force stood at 43.1 crore.
  • The employment rate increased from 39.5 percent to 40.1 percent during the one-month period.
  • Most of this increase in employment—60 lakh of the total 70 lakh—was from the rural agricultural sector as India’s farms require more people during the sowing season of kharif crops.

But that too is a concern, since with the retreat of monsoon such jobs may go away.

9. A Double Whammy For States?

State government finances have been stretched for the last two years as a spate of expenses ranging from farm loan waivers to costs incurred on account of a power sector restructuring scheme have reduced the headroom available for spending.

  • A recent report by the Reserve Bank of India cautioned that while states have been trying to keep fiscal deficit in check, the prudence has come at the cost of capital expenditure, which in turn, is hurting growth in the broader economy.
  • Yet state finances may actually worsen in the near term hit by a recent cut in corporate tax rates announced by the central government and continued losses at power distribution companies, cautioned M Govinda Rao, economist and member of the Fourteenth Finance Commission.
  • Against this backdrop, the recommendations of the Fifteenth Finance Commission, due over the next few months, will be crucial in determining the future trajectory of state finances, Rao said.

Watch the full interview here where Rao lists out near-term concerns for state finances and equates UDAY scheme to a disease without cure.

10. The Battery That Changed Everything

The Nobel Prize in Chemistry was awarded to the pioneers of the modern lithium-ion battery, which is revolutionizing everything from the mobile phones to the future of the global car industry.

  • The prize went to M. Stanley Whittingham, a professor at the State University of New York at Binghamton; Japan’s Akira Yoshino, of Asahi Kasei Corp. and Meijo University; and German-born John Goodenough, a professor at the University of Texas.
  • Such batteries have “revolutionized our lives” since they first entered the market in 1991, the Royal Swedish Academy of Sciences said in a statement on Wednesday.
  • “They have laid the foundation of a wireless, fossil fuel-free society, and are of the greatest benefit to humankind,” the statement said.

Find out how the lithium ion batter was first discovered.

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