BQuick On Sept. 19: Top 10 Stories In Under 10 Minutes

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

1. Doom And Gloom Mood Not Going To Help Anyone - RBI Governor

Reserve Bank of India Governor Shaktikanta Das said that despite a “hostile” global economic environment, India has exhibited resilience and viability. Das was speaking on Thursday evening at the Bloomberg India Economic Forum in Mumbai.

Das listed parameters that show how India is relatively insulated from the global slowdown:

• The current account deficit has averaged 1.4 percent of the GDP over the last five years inspite of global spillovers.
• Level of foreign exchange reserves at $425 billion on Sept. 13 is sufficient for 10 months of imports or 21 months of debt of residual maturity up to 1 year.
• Indian economy remains preferred habitat of FDI and is among the top destination of greenfield projects.
• Level of external debt at 19.7 percent is the lowest among emerging economies.
• Forex reserves covered 76 percent of the debt.
  

Das answered several question regarding the economy, growth, currency and also suggested that all stakeholders cheer up, an exhortation he’s made before.

Watch/follow the RBI Governor’s speech and interview here.

2. Stressed Assets Will Not Be Labelled As NPA, Says Finance Minister

Speaking to the media after her meeting with public sector banks, Finance Minister Nirmala Sitharaman said that the banks have been instructed to not declare any stressed Micro, Small and Medium Enterprise as a non-performing asset, even after 90 days of a default.

• Lenders have been told to do this till March 31, 2020.
• Banks already have this power under the RBI’s existing provisions, Sitharaman said, adding that the government has only invoked these guidelines.
  

Updates on the Finance Minister’s comments here.

3. Rana Kapoor Sells Yes Bank Shares

In an effort to pare debt taken on by his private business entities, Yes Bank Ltd.-promoter Rana Kapoor today sold a 2.3 percent stake in the bank for Rs 337.3 crore, bringing down his family’s stake in the bank to 7.4 percent.

• The Yes Bank shares sold today were held by Morgan Credits Pvt. Ltd., a promoter entity that does venture funding.
• The company sold 5.8 crore shares in the bank at Rs 58.16 each, aggregating to Rs 337.3 crore.
• This reduces MCPL’s stake in Yes Bank from 3.03 percent to 0.73 percent, while the total promoter group ownership in the bank—Rana Kapoor and Madhu Kapur families—stands reduced to 15.7 percent.

Yes Bank’s stock price closed 15 percent lower today at Rs 55 on the NSE. The bank’s shares have lost 70 percent of their value since the beginning of the year.

Here’s why Rana Kapoor is selling stake in the bank he founded.

4. Essel Group Granted A Longer Lifeline

Mutual funds and non-bank lenders agreed to give Essel Group up to six more months, beyond the Sept. 30 deadline, to repay debt, according to a person aware of the details, as the Zee Group promoters have serviced nearly half their liability by selling assets.

• The management fulfilled 50 percent of the payout and the risk has reduced, the person told BloombergQuint on the condition of anonymity as the details are not public yet.
• The lenders agreed to extend the timeline till March to help the Subhash Chandra-led Essel Group realise adequate value of the assets it’s looking to sell, the person said.
• Essel Group is in dialogue with the consortium of lenders, a company spokesperson said in an emailed statement to BloombergQuint.

Here’s how much Essel Group has already repaid after selling stake in Zee and divesting its solar farms.

5. Sensex, Nifty At Seven-Month Low

Indian equity benchmarks resumed declines after a one-day upmovep and ended near a seven-month low.

• The S&P BSE Sensex ended 1.29 percent lower at 36,093.
• The NSE Nifty 50 closed 1.25 percent lower at 10,704.80.
• The broader markets represented by the NSE Nifty 500 Index ended 1.25 percent lower.
• The 31-share Sensex has wiped out all the gains clocked so far this year.
• The investors, who had taken positions during the earlier selloff, are now unwinding them, leading to the current declines, according to Emkay Investment Managers’ Sachin Shah.

• All the 11 sectoral gauges compiled by NSE ended lower.

Follow the day’s trading action here.

Meanwhile in international markets, U.S. equities advanced with European stocks as investors processed a slew of fresh monetary-policy decisions and favorable comments about trade talks.

• The S&P 500 Index climbed to within 1% of a record, led by software makers.
• Banks helped push the Europe Stoxx 600 higher.
• Treasuries advanced while European government bonds slipped.
  

Catch up with all the global market action here.

6. Global Growth To Be Lowest In 10 Years

Intensifying trade conflicts have sent global growth momentum tumbling toward lows last seen during the financial crisis, and governments are not doing enough to prevent long-term damage, the OECD said in its latest outlook.

• The Paris-based organisation cut almost all economic forecasts it made just four months ago, as protectionist policies take an increasing toll on confidence and investment, and risks continue to mount on financial markets.
• It sees world growth at a mere 2.9 percent this year—the lowest in a decade.
• The OECD is the latest institution sounding the alarm over the state of the global economy.
• In the past two weeks, the Federal Reserve, the European Central Bank, the People’s Bank of China and numerous of their peers have eased policy to shore up demand, urging governments at the same time that fiscal stimulus will be needed to ensure their efforts won’t be futile.

There are additional risks too. Find out more here.

7. Lupin’s Problems Keep Piling Up, But It May Have A Plan

Lupin Ltd. said the U.S. drug regulator has issued a warning letter to its plant in Mandideep, Madhya Pradesh over manufacturing practices, a move that may delay future approvals for exporting to its largest market.

• The warning letter—issued when the U.S. Food and Drug Administration finds that a manufacturer has violated a regulated activity—was based on an inspection of unit-1 of Lupin’s active pharmaceutical ingredient (API) facility.
• The plant had received an “official action indicated” status in March after an U.S. FDA inspection in December, according to an exchange filing by India’s fifth-largest generic drugmaker.
• Shares of Lupin today dropped as much as 3.3 percent, the most in nearly a month, compared with 1.4 percent fall in the NSE Nifty Pharma Index.

Read more on the warning letter here.

India’s fifth-largest generic drugmaker faces intense competition and pricing pressure in the U.S., its largest market. Shares have declined by nearly a quarter in the last two years compared with the Nifty Pharma Index’s 15 percent decline.

• Nilesh Gupta, managing director of the Mumbai-based company, is optimistic that a turnaround is near.
• Pricing concerns in the U.S. are bottoming out, he told BloombergQuint in an interview. “We’ll be able to achieve double-digit growth in the market over the next few years.”

Here’s how Lupin plans to tackle its problems - watch an exclusive interview with Nilesh Gupta.

8. Decoding The Slowdown With JPMorgan

A sentiment of “gloom and doom” has made key economic participants risk averse and this could prolong a recovery for the Indian economy from the lowest quarterly growth seen in nearly six years, according to JPMorgan’s Chief India Economist Sajjid Chinoy.

• “When you are in the midst of a three-four quarter slowdown and sentiment turns adverse, all economic agents—whether it is households, firms, financial intermediaries—turn to become more risk averse,” he told BloombergQuint in an interview on the sidelines of the JPMorgan Investor Summit in Mumbai.
• Soured sentiment for households and banks particularly is impacting consumption and leading to weaker credit flow to the economy, he said, cautioning that the recovery from this phase may be slow.

Chinoy joins a growing list of analysts who believe that one part of the slowdown is weaker growth in incomes and savings.

India has long struggled to revive its private investment cycle. One way to do this could be selling majority stakes in state-owned entities, according to JP Morgan’s Kalpana Morparia, chairman and chief executive officer of South and Southeast Asia.

• Private sector participation will come when the government starts the asset monetisation cycle, the chairman and chief executive officer of South and Southeast Asia at the investment banking firm told BloombergQuint on the sidelines of the JPMorgan Investor Summit in New Delhi.
• “That’s not only in terms of physical assets like roads and airports,” she said.
• “We’re all hoping that the government moves beyond just floating some more stock in the market or transferring it to an ETF Fund and eventually looks at strategic sales,” she added.

Morparia feels that with GDP growth at a six-year low, the worst is behind us.

9. Cheaper Electric Cars? You May Have To Wait...A Lot

Chetan Maini, who gave India its first electric car Reva, thinks an affordable electric vehicle is a few years away.

• “While battery prices have been going down 8 percent year-on-year, it still constitutes almost 50 percent of the cost,” Maini told BloombergQuint in an interview.
• The cost parity with fossil-fuel driven vehicles will take at least five years, he said.
• But, according to Maini, it’s difficult to achieve that parity for cars priced are under Rs 5 lakh, scooters costing under Rs 80,000, or three-wheelers under Rs 2 lakh. “In these cases, it will take longer.”

Innovative models around battery-swapping and leasing will be critical to bring down the cost of electric vehicles.

10. Swiggy’s New Cash Guzzling Bet

Four years ago, Swiggy survived even as cash-starved peers went out of business. But the food delivery market has since turned even more competitive and continues to bleed, and the startup is looking beyond restaurants.

• Now a unicorn, Swiggy is arming its 2,00,000-plus fleet of motorbike riders to deliver not just your favourite meal but also groceries, office supplies, and even something you left back at a friend’s place.
• It launched multiple on-demand services in the past year.
• The idea is to deliver anything at the speed it brought burgers to biryani to your doorstep.

Even as Swiggy is the best placed to deliver groceries, the new bet comes at a cost.

Must Read!

A few months ago, a couple came to me for advice.
When I asked about their expenses, they said they weren’t too much.
They told me that together they earn Rs 2 lakh and their expenses are about Rs 50,000 a month.
When I asked them what they have managed to save in the last one year—they said Rs 4 lakh.
If that were the case, what has happened to the rest of the Rs 14 lakh, I asked.

Bewildered, they replied that they didn’t have a clue.

The culprit: The beloved credit card!

The Credit Card And Personal Loan Debt Trap...By Shweta Jain