BQuick On Sept. 17: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Spooked Investors Wipe Out Nifty’s 2019 Gains
Indian equity indices declined for the second-straight session after geopolitical tensions surrounding Saudi Arabian oil supplies triggered a selloff.
- The S&P BSE Sensex ended 1.73 percent lower on Tuesday, at 36,481.09, and the NSE Nifty 50 fell 1.69 percent to 10,817.60—wiping out this year’s gains.
- The broader markets represented by the NSE Nifty 500 Index closed 1.72 percent lower.
- “There is also a possibility of a flare up due to retaliatory actions by U.S. or Saudi Arabia resulting in further instability and correction in the markets,” said Sudip Bandopadhyay, group chairman, Inditrade Capital, in an interview with BloombergQuint.
- On the technical front, Nifty may touch 10,300 “at least once” before the September monthly expiry, according to technical analyst Jai Bala.
- All 11 sectoral gauges compiled by NSE traded lower.
Follow the day’s trading action here.
U.S. stocks fluctuated as investors weighed the outlook for output from one of the world’s biggest oil facilities after the attack over the weekend that curtailed production and sent crude prices soaring.
- The S&P 500 Index swung from small gains to small losses, while bank shares led European stocks lower.
- The S&P 500 Index was little changed as of 9:43 a.m. New York time.
- The Stoxx Europe 600 Index slid 0.2 percent.
- The Bloomberg Dollar Spot Index increased 0.1 percent.
Get your fix of global markets update here.
2. Only Few Options To Fill Oil Gap That Has Rattled The World
The oil market is facing a prolonged disruption to Saudi Arabia’s oil production with few options for replacing such huge output losses.
- The weekend attacks on the kingdom eliminated about 5 percent of global oil supply -- and raised the risk of more conflict in the region -- propelling Brent crude to a record surge.
- The worst ever sudden disruption to global oil supplies continues to reverberate as geopolitical risk premiums soar on concern over instability in the Middle East and a potential retaliation against Iran, which the U.S. has blamed for the strikes.
- Still, it was a more subdued start to trading on Tuesday, with both Brent and West Texas Intermediate futures falling. The Brent had slipped below $66 a barrel by 7:20 p.m.
Options are few for Saudi which has domestic inventory to cover only 26 days of exports.
Surging oil prices will probably reinforce the Federal Reserve’s resolve to cut interest rates this week
But the FOMC is likely to view the inflationary impact of higher oil prices as a one-time bump rather than persistent when it meets this week.
Another question that arose is that how could Saudi Arabia, a country with the third-largest military budget and six battalions of missile defense systems, fail to defend the beating heart of its oil industry, on which the kingdom depends?
That question lies at the heart of responses to Saturday’s attack.
3. More Rupees Being Traded In London Than In Mumbai
India’s currency gained share of the global foreign exchange trade between 2016 and 2019, showed the latest edition of the Bank of International Settlements Triennial Central Bank Survey.
But a more interesting trend was the shift in trading of Indian currency contracts to offshore locations.
- The data showed that average daily volume of rupee trading in India was $34.49 billion.
- In contrast, the average daily trading volume in the U.K. was $46.82 billion, while it stood at $14.40 billion in the U.S. and $12.57 billion in Hong Kong.
- The data, the BIS, explained, includes spot transactions, outright forwards, foreign exchange swaps, currency swaps, options and other products.
- Taken together, trading of Indian rupee-linked products in these three large offshore centres was double the trading in onshore markets.
The shift to offshore trading of rupee is increasingly worrying Indian policymakers.
4. Bharti Airtel: The Challenger To Jio That Vodafone Idea Couldn’t Be
When Mukesh Ambani muscled into India’s telecom sector with free services and rock-bottom data pricing, incumbents dug in by cutting tariffs. That didn’t stop Asia’s richest man from storming past them to the No. 1 crown. Still, billionaire Sunil Mittal’s Bharti Airtel Ltd. is in the fight even as things have turned worse for Vodafone Idea Ltd.
- Reliance Jio’s cheaper plans lured away customers, causing Vodafone Idea’s revenue per user to drop.
- The carrier has been losing subscribers for 11 straight months.
- Bharti Airtel, however, managed to cushion itself.
- Its share of total revenue increased first time in five quarters in June because of focus on high-paying users.
So, what did Bharti Airtel get right?
5. Another Indian Firm Faces GST Profiteering Allegations
The indirect tax anti-profiteering unit has accused cosmetics maker L’Oréal India of making undue profit worth Rs 215 crore, according to a person aware of the development.
- The Directorate General of Anti-Profiteering alleged that the company didn’t pass on the benefit of a reduced Goods and Services Tax rate on a range of products, the person said on the condition of anonymity as the information is not public yet.
- The company didn’t cut prices of shampoos and make-up products after the GST was lowered to 18 percent from 28 percent, the person said citing the agency’s findings.
- In December, the National Anti-Profiteering Authority had found a distributor of L’Oréal India guilty of profiteering by not passing the GST rate cut on hair colour to customers, and imposed a Rs 3.4-lakh penalty.
- It then widened the investigation to find out if the company had lowered prices.
This comes after Patanjali, P&G, ITC and HUL have all been accused of not passing on the benefit of GST rate cuts to consumers.
6. Hedging Risk Through Electric Vehicles
India’s Power Finance Corp. Ltd. is looking for new sectors to fund as it wants to hedge the risks associated with lending to the nation’s ailing utilities, Bloomberg reported citing people familiar with the matter.
- The country’s top lender to electricity projects is exploring new areas including railway electrification, electric vehicles and charging infrastructure, as well as gas import terminals or coal mines that serve a power plant, said the people, who asked not to be identified as the plan is still under discussion.
- The move is triggered by higher risks of default in India’s power sector amid mounting losses at distribution companies, fuel shortages and project delays.
- The business is also affected by weaker growth in generation capacity, especially at thermal and hydroelectric projects, the people said.
The company will engage experts to help it navigate the new sectors.
7. Pain For Stainless Steelmakers Ahead?
Margins of Indian stainless steel makers may come under pressure as prices of nickel, a key raw material, are rising amid lower demand for finished products.
- The price of nickel—the best-performing base metal so far this year—rose 46 percent in the last three months on the London Metal Exchange, according to Bloomberg data.
- “Higher nickel prices would mean inventory gains but only for near term,” said Yash Doshi, research analyst at SBI Securities.
- The impact of higher nickel prices might not be felt in the near term, but the pain is expected to be felt over long term, according to Doshi.
Here’s how margin of stainless steelmakers fared.
8. Reigniting India’s Export Potential
As part of a stimuli package to revive the sagging Indian economy, Finance Minister Nirmala Sitharaman announced a slew of measures for the real estate and the export sectors over the last week. For the last several quarters, these two drivers of the Indian economy have started to slow down. In fact, in a clear sign of just how steep this reversal has been, official data released for August 2019 indicated a 5.6 percent decline in the quantum of merchandise exports compared to the previous August.
At this juncture, it has become imperative to pull Indian exports out of the morass it has slid into, writes Ajay Dua.
- The revival of trade, especially exports, will undoubtedly be challenging with a looming global slowdown on the horizon, and continued U.S.-China trade war fears.
- However, the strategy for India has to be to find niche products and markets, and to act with speed and nimbleness to cash in on limited opportunities when they arise.
These are the next steps India should take to get exports back to the historic trajectory.
9. How Bill Gates Continues To Make A Fortune
Bill Gates is still in wealth-creation mode.
“We’re not, you know, in some defensive posture where we’re mostly in cash, or anything like that,” the Microsoft Corp. founder said in an interview with Bloomberg Television. “The strategy that’s been used on the investments is to be over 60 percent in equities.”
- That’s helped Gates add $16 billion to his net worth this year, taking his wealth to $106 billion, behind only Jeff Bezos.
- The Gates fortune had about $60 billion of equity assets as of Monday.
- By comparison, the average family office portfolio in North America held about 32 percent of its assets in equities in 2018, according to Campden Wealth’s 2018 global family office report.
That enabled Gates to build the world’s largest private foundation. But can he solve the rampant problem of inequality?
10. Your Chance To Live Like A Downton Abbey Aristocrat
Two Downton Abbey fans will soon get the chance to live like a Crawley for a night when Highclere Castle, the main filming location for the Emmy Award-winning drama, lists on Airbnb.
- As a promotion for the upcoming film Downton Abbey, which will premieres on Sept. 20 in the U.S., the estate in Hampshire, England, is opening its doors to two guests for a one-night stay on Nov. 26.
- George Herbert, the 8th Earl of Carnavon, and his wife, Countess Fiona, live at the castle when it is not open to the public.
- They will invite the guests for cocktails in the saloon, followed by dinner in the state dining room, where they will be served by the castle’s butler.
- Then they’ll receive coffee in the library before retiring to one of the principal bedrooms, with views of the rolling hills.
Find out when the booking opens and how much will a night of blue blooded living cost you.