BQuick On Sept. 30: Top 10 Stories In Under 10 Minutes

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

1. India Announces 'Unlock 5' Guidelines

The Union Ministry of Home Affairs has announced guidelines for the fifth phase of reopening of the economy, amid the coronavirus pandemic.

According to the latest guidelines:

• Cinemas, theatres and multiplexes can open with maximum 50% seating capacity. Ministry of Information & Broadcasting will issue standard operating procedures.
• States and union territories can decide on reopening of schools, colleges and other educational institutions. Students can attend only with the written consent of their parents and attendance won't be mandatory.
• States and union territories also have the flexibility to permit social, academic, sports, entertainment, cultural, religious, political functions and other congregations beyond the limit of 100 people outside containment zones.
• Entertainment parks and similar places will be permitted to open. The Health Ministry will issue standard operating procedure.

Meanwhile, the Maharashtra government has extended the state-wide lockdown till Oct. 31, 2020, with certain key exemptions.

2. India Sticks To Borrowing Plan Even As Fiscal Deficit Continues To Widen

India has retained its market borrowing target of Rs 12 lakh crore for the ongoing fiscal despite expectations that the government may need to raise more funds to support the economy.

• The government’s market borrowing for October-March would be Rs 4.34 lakh crore, or 36.16% of the total borrowing slated for the year.
• This would be done through 16 weekly auctions of Rs 27,000-28,000 crore per week, Economic Affairs Secretary Tarun Bajaj told reporters on Sept. 30.
• The government has already borrowed Rs 7.66 lakh crore, or 63.83% of its total market borrowings. That was expected to raise its market borrowing as more resources would be needed for announcing a fiscal stimulus package.

But the government insists that it has already factored in the need for a stimulus.

India’s fiscal deficit reached 109% of the full-year target in the first five months of the ongoing financial year as the coronavirus pandemic continued to be a drag on the government’s finances.

• The fiscal deficit stood at 79% of the budgeted target in the year-ago period.
• The nation’s revenue receipts stood at 18% of target set for the current fiscal against 31% achieved a year ago.
• Gross tax revenue dropped 24% year-on-year to Rs 5.04 lakh crore.

Find out more about government spending during this period.

3. Record High Current Account Surplus, Another Decline In Core Output

India saw a record-high current account surplus — a rarity for the economy — in the April-June quarter as a precipitous drop in local demand resulted in a sharper fall in imports compared to exports.

• The quarter also saw net portfolio and foreign direct investment flows slow to a trickle, while remittances from Indians working abroad fell.
• India’s current account balance recorded a surplus of $19.8 billion in the April-June 2020 quarter, compared to a surplus of $0.6 billion in the preceding quarter.
• As a percentage of the GDP, current account balance rose 3.9% in the April-June 2020 quarter, compared to 0.1% in the preceding quarter.

The implications of a temporary shift from a current account deficit economy to one with a current account surplus could be two-fold.

India’s core sector output fell 8.5% in August, primarily due to decline in production of steel, refinery products and cement.

• The production of eight core sectors had contracted 0.2% in August 2019, showed data released by the Commerce and Industry Ministry on Wednesday.
• Barring coal and fertilisers, all sectors—crude oil, natural gas, refinery products, steel, cement and electricity—recorded negative growth in August.

August marked the sixth straight month of contraction for core sector output.

4. Nifty Ends Little Changed For Second Day

Consolidation continued in the Indian equity markets on Wednesday, with benchmark indices ending little changed for the second straight day.

• The S&P BSE Sensex ended 0.25%, or 90 points, higher at 38,067 while the NSE Nifty 50 index rose 0.2% to 11,247 points.
• Bharat Petroleum Corp. Ltd. was the top laggard on Nifty 50 index. The government has extended for the fifth time the bidding deadline for selling its stake in the state-run oil marketer. Shares ended 9% lower.
• FMCG stocks outperformed, with gains led by Hindustan Unilever Ltd., Britannia Industries Ltd. and Nestle India Ltd.. The index ended with gains of 1.3%.
• Broader markets too ended flat. The mid-cap index closed unchanged while the small-cap index saw modest declines of 0.3%.

Follow the day’s trading action here.

IPO Updates

The initial public offers of Mazagon Dock Shipbuilders Ltd. and UTI Asset Management Co. saw increased investor interest on the second day of bidding, albeit not in equal measure.

• Mazgaon Dock Shipbuilders: The public offer was subscriped 7.52 times with high demand from retail and non-institutional investors.
• UTI Asset Management: The maiden issue was subscribed 0.79 times with institutional investors finally putting in bids.
• Likhitha Infrastructure: The IPO of the oil and gas pipeline infrastructure service provider was subscribed 3.11 times on the second day.

Get complete details here.

5. Dhanlaxmi Bank Shareholders Vote Against Board’s CEO Pick

A day after the Reserve Bank of India appointed an additional director on Dhanlaxmi Bank Ltd.’s board, the lender’s shareholders have voted against the appointment of Sunil Gurbaxani as managing director and chief executive officer. This is the second such ouster of a bank chief in less than a week.

• The shareholders voted on 10 resolutions, including ratifying Sunil Gurbaxani’s appointment, at an annual general meeting held on Wednesday.
• More than 90% of the shareholders, who voted on the resolution, did so against the appointment, according to an exchange filing.
• The new CEO for the Thrissur-based bank was appointed in February for a three-year term, after he received the regulator’s nod.

Read more about the issues at Dhanlaxmi Bank.

6. The Unravelling Of A 93-Year-Old Lender

It’s not everyday that shareholders vote out directors from a board. Certainly not seven in one go. It’s even rarer to see this happen at a banking entity closely monitored by the Reserve Bank of India.

• Yet, that’s what happened on Sept. 25. Shareholders voted out seven directors of Lakshmi Vilas Bank up for nomination, including Chief Executive Officer S Sundar.
• At least two large institutional investors were among the 99.7% that voted against their reappointment.
• An official at one of these firms, speaking on the condition of anonymity, said they had been unhappy with the bank’s performance for at least the last two years.

The voting of directors took the 93-year-old lender closer to a crisis that has been building for years. But it wasn’t always seen as a weak bank.

7. General Atlantic Joins Reliance Retail’s Funding Blitz

General Atlantic will buy a stake worth Rs 3,675 crore in Reliance Industries Ltd.’s retail business as Asia’s richest man continues to raise funds to bolster the dominance of his consumer operations.

• The global growth equity firm will pick up a 0.84% stake in Reliance Retail Ventures Ltd., the holding arm for Mukesh Ambani’s retail business.
• The deal pegs the pre-investment equity valuation of Reliance Retail at Rs 4.28 lakh crore.
• The transaction is priced at Rs 682.25 apiece, the same at which Reliance Retail Ventures issued shares to parent Reliance Industries through a private placement in September, raising Rs 11,650 crore.

Ambani is now replicating the funding blitz for his retail unit after selling stakes in Jio Platforms to global investors.

8. Babri Verdict: All 32 Accused Acquitted

A special court has acquitted senior leaders of the Bharatiya Janata Party, including a former deputy prime minister, in the Babri Masjid demolition case.

• The court in Lucknow found no evidence against former deputy prime minister Lal Krishna Advani, BJP parliamentarians Murli Manohar Joshi, Uma Bharti, and 29 other politicians and Hindu activists who were charged with criminal conspiracy, unlawful assembly, and provoking riots.
• Delivering his findings, judge Surendra Kumar Yadav said the demolition was not planned and some members of the crowds impulsively attacked the structure.

While the court did not find any evidence of a conspiracy, the verdict can be challenged in higher courts.

9. More Time To File Income Tax Returns

The income tax department has extended the due date for filing returns for the assessment year 2019-20 by two months due to the ongoing Covid-19 pandemic.

• The due date for filing income tax returns has been extended to Nov. 30 from Sept. 30 earlier.
• The CBDT extended the deadline after considering the “genuine difficulties being faced by taxpayers" due to the coronavirus outbreak.
• This is the fourth time the tax department has extended the deadlin to file both original and revised returns for the year.

10. U.S. Presidential Debate Chaos Underscores Case Against Trump

Even by the standards of a bleak year, Tuesday night’s U.S. presidential debate was deeply dispiriting, writes the Bloomberg’s Editorial Board.

• There was no real engagement with questions of policy.
• Worse, there was no sign that good-faith disagreement is any longer possible in American politics.
• Presidential debates are rarely enlightening or apt to change voters’ minds, but this one marked a new low. It suggested a political system on the point of collapse.

At the end of this dismal evening, one brief moment of clarity appeared.