BQuick On Sept. 12: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Rupee Relief
The Indian rupee rallied the most in 18 months after an official said the government may announce measures to support the currency after a planned review of the economy by Prime Minister Narendra Modi this weekend.
- The government is not ruling out an increase in interest rates, the official told reporters in New Delhi, asking not to be identified citing rules.
- The rupee strengthened as much as 1.1 percent to 71.92 per dollar after hitting a new low of 72.9138 in early trading. It closed up 0.7 percent at 72.1825.
- “The market is seeing a temporary relief and moving on hope,” said Sajal Gupta, head of foreign-exchange and rates at Edelweiss Securities. “If the government’s moves are credible, we will see the rally continuing. If the moves aren’t credible, the pain will return very swiftly.”
Here’s more on the rupee’s rebound.
2. Indian Markets Rally; U.S. Stocks Mixed
Indian equity benchmarks rebounded from one-month lows after an offical said that the government is considering measures to curb the rupee fall.
- S&P BSE Sensex Index rose 0.81 percent or 305 points to 37,718.
- Nifty 50 Index climbed 0.73 percent or 82 points to 11,370.
- S&P BSE FMCG Index was the top gainer, while the S&P BSE Telecom Index was top loser.
- The mid- and small-cap shares were mixed in trade.
Follow the day's trading action here.
A slide in technology shares sent most U.S. equities lower, while Europe’s benchmark rose and Asian shares extended a losing streak as traders turned their focus to the outlook for monetary policy amid lingering worries for global trade.
- The information technology and financial sectors were the biggest losers in the S&P 500 Index.
- Treasury yields eased and the dollar turned down after a softer-than-expected core producer-price inflation number crimped expectations for Federal Reserve tightening.
- West Texas Intermediate crude rose 1.2 percent to $70.06 a barrel.
Get your fix of global markets update here.
3. Modi Government’s Balm For Farmers
The Union Cabinet today approved an umbrella scheme to ensure remunerative prices to farmers for their produce.
- Named ‘Pradhan Mantri Annadata Aay SanraksHan Abhiyan’, or PM-AASHA, the scheme’s launch follows the government’s announcement in this year’s budget to increase the support prices of kharif crops to 1.5 times that of the crop’s cost, it said in a release.
- The cabinet, chaired by Prime Minister Narendra Narendra Modi, also approved an additional government guarantee of Rs 16,550 crore for the scheme, taking the total of such guarantees to Rs 45,550 crore.
- The cabinet also sanctioned three sub-schemes for procurement: price support scheme, price deficiency payment scheme and a pilot of the private procurement and stockist scheme.
Here are the highlights of the PM-AASHA scheme.
4. CPI Falls, But So Does IIP
India’s consumer price inflation fell below 4 percent for the first time in 2018, as prices of vegetables and pulses remained in check even as fuel prices rose. However, factory output declined slightly in July even as it continued to benefit from a low-base effect from last year when the industry was adjusting to the newly introduced goods and services tax regime.
- Retail inflation was at 3.69 percent in August compared to 4.17 percent in July.
- The lower than expected inflation reading complicates the task for India’s Monetary Policy Committee, which may see the need to hike rates in response to a weaker rupee when it meets next in October.
5. Stronger Capital Goods Imports Adding To India’s Woes
Growth in the Indian economy has strengthened. A modest pick-up in the investment cycle is underway. That’s the good news. The bad news is that a continued pick-up in investments could widen India’s current account deficit further.
- While oil remains the biggest pressure on India’s import bill, a surge in imports of consumer items like smartphones has also weighed on the export-import balance.
- Capital goods imports are also contributing to the imbalance and this could continue.
- There exists a near perfect correlation coefficient between investments and capital goods imports, shows analysis by BloombergQuint.
- This implies that if investments rise over the coming quarters, capital goods imports will also rise.
- Growth will start rising and private investments will rebound after elections, pushing up capital goods imports further, said Pranjul Bhandari, the chief India economist at HSBC.
Are capital goods imports a lesser devil?
6. ICICI Bank AGM: Kochhar Absent But Controversy Stays
ICICI Bank Ltd. held its 24th annual general meeting in Vadodara on Wednesday. Missing from the podium was Chanda Kochhar, who remains on extended leave but holds on to her post as managing director chief executive officer at the bank. She may have stayed away but the allegations of impropriety against her clouded the mood at the AGM.
- Corruption at the bank is not acceptable, shouted out one of the shareholders in the course of the AGM. A few others clapped.
- The AGM was by no means unruly but a number of shareholders did choose to raise questions around Kochhar, governance at the bank, and whether the management needs to take tough decisions.
- In response, Sandeep Bakshi, the chief operating officer and acting CEO, assured that the bank had been ring-fenced from the controversy.
Here’s what went down at the lender’s annual general meeting.
7. Weaker Rupee = No Festive Bargains
A weaker rupee has eaten into the benefit of lower taxes for consumers looking to buy appliances and electronic goods this festival season.
- Makers of refrigerators to televisions increased prices as they now pay more for imported electronic components with the Indian currency falling to new lows every day.
- Godrej Appliances Ltd., Dixon Technologies Ltd., a contract manufacturer, and Blue Star Ltd. hiked prices by 2-7 percent at the start of the month.
- Goods and services tax rate on consumer durables was cut from 28 percent to 18 percent in July. Manufacturers followed that by reducing prices by up to 10 percent.
Rupee woes continue to add cost pressures.
8. Will The Real (Beneficial) Owner Please Stand Up?
India’s over 1.7 million companies will soon need to disclose their beneficial owners. But after stakeholders pointed out the various challenges in reporting the beneficial owners of companies the deadline, of Sept. 12, was extended by the Ministry of Corporate Affairs.
- This beneficial ownership disclosure is a result of an amendment to the Companies Act, 2013 that was introduced to prevent misuse of corporate vehicles for tax evasion and money laundering.
- Experts told BloombergQuint that its these thresholds that are giving rise to several unintended consequences and causing considerable confusion among companies.
- The trigger for significant beneficial ownership is a 10 percent threshold but when applied across structures, the test doesn’t always produce simple outcomes.
Here are couple of illustrations.
9. ‘Pink Dollar’ To Boost India’s Economy
India’s private sector is set to enter a new era of inclusiveness, after a landmark Supreme Court ruling decriminalized homosexuality in a move that’s expected to provide a significant boost to the South Asian nation’s $2.6 trillion economy.
- Many multinational businesses in India and elsewhere already recognize the links between inclusion of gay employees and better business outcomes and have taken steps to end discrimination in staff benefits in order to maintain a competitive workforce
- The court’s decision to overthrow the country’s notorious anti-gay law is expected to encourage others to do the same.
- India has been losing as much as 1.4 percent of its national output because of the discriminatory law, according to calculations by University of Massachusetts Amherst economics professor Lee Badgett, who has studied the issue for the World Bank.
It will have a massive economic impact.Keshav Suri, Executive Director, Lalit Suri Hospitality Group
Read more about India’s pink economy.
10. What To Expect From Apple
On Aug. 2, Apple Inc. became America’s first publicly traded company to reach a market valuation of $1 trillion. But today, Sept. 12, is actually Apple’s most important day of the year.
- Tim Cook will take the stage at the Steve Jobs Theater in Cupertino, California, to unveil the company’s iPhone and Apple Watch strategy for the next year.
- Individually, each new phone isn’t a significant upgrade. They’ll all look and act like the iPhone X, except there will be two bigger versions: a premium model selling for about $1,000 and another that costs less.
- But in totality, they’re significant: The three new phones will work together to help drive up Apple’s revenue as iPhones contribute about two-thirds of the company’s sales
Here's what else you can expect from Apple tonight.