BQuick On Sept. 6: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Chandrayaan 2: Godrej Firm Helping India Propel Into History
As Indian Space Research Organisation prepares for its first lunar landing in early hours of Sept. 7, Godrej Aerospace is part of that history.
- The Mumbai-based arm of the consumer goods-to-real estate Godrej Group built the Vikas liquid propulsion engine and the cryogenic engine used in the second and third stages of the Geosynchronous Satellite Launch Vehicle.
- The firm also made the thrusters that will control the speed of descent of Chandrayaan-2’s Vikram lander, with the Pragyan rover inside, to the moon’s south pole in the last 20 minutes. The thrusters will help counter the moon’s gravity, ensuring a smooth touchdown.
Next up for Godrej Aerospace will be India’s first manned mission to moon.
Meanwhile, ahead of the historic attempt at a soft landing on the moon, ISRO engaged in some banter on its Twitter handle.
2. Infrastructure Projects Suffer A Fresh Blow
Infrastructure projects, already struggling with a host of issues ranging from availability of finance to execution delays, have another problem on their hands.
- Lenders who, until about a year ago, were willing to provide bank guarantees for projects under implementation, have slowly pulled away from the product since the start of this year.
- According to three private sector bankers, lenders have been staying away from issuing bank guarantees to companies in the engineering, procurement and construction sector due to uncertainty about the period over which claims can be raised against the guarantee issued. The bankers spoke on condition of anonymity.
- The inability to secure guarantees, in turn, is hurting the ability of EPC firms to secure projects, adding to the stress in the sector.
Find out what’s prompted this confusion.
3. Nifty Fails To Recoup Weekly Loss
Indian equity benchmarks clocked their best gains of the week on Friday. But resumed weekly declines.
- The S&P BSE Sensex closed 0.92 percent higher at 36,981.77.
- The NSE Nifty 50 closed 0.91 percent higher at 10,946.20.
- The broader markets represented by the NSE Nifty 500 Index ended 0.84 percent.
- This week, the 31-stock index and the 50-share gauge fell 0.94 percent and 0.7 percent respectively.
- The 500-stock gauge declined 0.6 percent.
- “So far, the measures announced have come slightly late, which has led to a loss of confidence in Indian stocks,” Bloomberg reported quoting Deven Choksey of KR Choksey Shares & Securities.
- Eight out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
Also read: New Demat Accounts Jump Despite Stock Slump
4. China Boosts Stimulus
China’s central bank said it will cut the amount of cash banks must hold as reserves to the lowest level since 2007, injecting liquidity into an economy facing both a domestic slowdown and trade-war headwinds.
- The required reserve ratio for all banks will be lowered by 0.5 percentage points, taking effect on Sept. 16, the People’s Bank of China said on its website Friday.
- The PBOC also cut the reserve ratios by one percentage point for some city commercial banks, to take effect in two steps on Oct. 15 and Nov. 15.
- The cuts will release 900 billion yuan ($126 billion) of liquidity, the PBOC said, helping to offset the tightening impact of upcoming tax payments.
- That is more than the previous cuts in January and May, which released 800 billion yuan and 280 billion yuan, respectively, the PBOC said at those times.
This PBOC move could also put pressure on the already weakening yuan - read more here.
5. Brokers Are Stuck Thanks To SEBI’s New Rule
Brokers may be stuck with beaten-down mid caps and illiquid stocks due to the regulator’s decision to segregate client shares from pool accounts.
- Stockbrokers hold Rs 7,800 crore worth of mid caps and shares of companies outside the highly liquid group-A, according to BSE data.
- A portion of such illiquid shares is either partly paid for by brokers or financed by their non-bank lending arm for clients under margin funding, BloombergQuint’s conversations with brokers revealed.
- An exact breakup is not available.
- For shares where clients have not fully paid up, brokers will have to ask them to pay; and, if they don’t, sell the shares in a volatile market within five days.
- The deadline, extended by a month, ends on Oct. 1.
The segregation is aimed to prevent the potential misuse of client shares for trading or use as collateral.
6. Suzlon Scraps Debt Repayment
Suzlon Energy Ltd. withdrew an offer to repay about Rs 8,500 crore ($1.2 billion) to lenders after Vestas Wind Systems A/C, which was backing the proposal, pulled out of the debt-resolution plan, Bloomberg reported citing people familiar with the matter.
- The settlement was the only offer before the lenders led by State Bank of India after Brookfield Asset Management Inc. dropped out last month, the people said, asking not to be named as the information is not public.
- The banks are yet to decide on the next steps to recover their dues, one of the people said.
- The Indian wind-turbine maker has been struggling since 2017 after Prime Minister Narendra Modi’s government shifted to auctions as the preferred method to install wind projects.
7. A New Challenge For India’s Banks
The Reserve Bank of India’s guidelines, asking banks to link all new floating rate retail and micro and small enterprise loan products to an external benchmark rate from Oct. 1, will present lenders with a new set of challenges.
- The new rules will mean that banks will see roughly 25 percent of their loan book linked to an external benchmark.
- However, their deposit base continues to be based on fixed rates.
- One option for banks is to introduce floating rate deposits.
- The other, a more likely one, is that banks will need to start using interest rate derivative products to hedge their risk.
But both options come with their own set of problems. Read more here.
8. Ray Dalio Sounds The Alarm
Ray Dalio, the billionaire founder of the world’s largest hedge fund, said there’s about a 25 percent chance of a U.S. recession this year and in 2020 and that central bankers will be limited in addressing it.
- The Federal Reserve, European Central Bank and Bank of Japan “have to face the fact that when the next downturn comes there will not be the power to reverse it in the same way that existed before,” Dalio, 70, said Thursday in an interview on “The David Rubenstein Show: Peer-to-Peer Conversations.”
- He recommends that the Fed cut interest rates slowly, maybe by 25 basis points, without giving a time period.
- Dalio, the co-chief investment officer of Bridgewater Associates, said a confluence of factors today -- the effectiveness of central banks, the gap between the rich and poor, the U.S. election and the growing influence of China -- need to be considered when weighing the possibility of a recession.
Dalio has lamented the interest rate environment and has been critical of the flaw with capitalism in the recent months.
9. Brand Loyalty? Nah...We’ll Pass
Indians’ love for new brands is the highest in the world as only 2 percent of consumers in the country prefer to stay loyal to brands compared to 8 percent globally, according to a Nielsen study.
- An increase in the number of brands available to people is aiding brand disloyalty.
- “A good majority of them (Indians) said they are looking forward and they love trying new products,” Patrick Dodd, global president and chief commercial officer of Nielsen, told BloombergQuint in an interview.
- Dodd further explained that a few Indian consumers also said they like to try new products, but they need to be swayed a little bit, thus implying that there is a big battle out there for “share of mind and share of stomach or share of wallet”.
Watch the full interview here.
10. Save The World, One Bottle of Wine At A Time
Whatever you’re concerned about—oceans, rhinos, cardiovascular research, hunger, oysters, injured dogs, salmon, veganism, art projects, politics, climate action—there’s a wine out there for you. (And no, not just to forget your woes.)
So-called “activist wines,” those that inspire drinkers to vote with their dollars, have created a “new road map for fine wine,” says sommelier Peter Weltman of Borderless Wine.
As with the broader rise of ethical consumerism, wines that do good, as well as taste good, aren’t just a passing fashion. They represent a serious shift in the industry that’s gone from niche to mainstream over the past few years.
Wines With a Conscience: Seven Great Bottles to Buy