The sun sets behind buildings in Tokyo, Japan. (Photographer: Tomohiro Ohsumi/Bloomberg)  

BQuick On Jan. 3: Top 10 Stories In Under 10 Minutes

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

1. India’s New Project Slowdown

New projects announced during the December quarter fell sharply to the lowest level seen over the tenure of the Narendra Modi-led government, showed data from the Centre For Monitoring Indian Economy.

  • Project additions fell to Rs 1 lakh crore from an annual high of Rs 4 lakh crore in the March quarter, Rs 2.95 lakh crore in the June quarter and Rs 2.12 lakh crore in the September quarter of calendar year 2018.
  • There could be some upward revision in the new projects data to about Rs 1.4 lakh crore in a few weeks, Mahesh Vyas, chief executive officer of CMIE told BloombergQuint.
  • But even at that level, this will be one of the lowest new investment proposals being made in 14-15 years, Vyas added.

2. Sunil Mittal Can Afford A Smile

Billionaire Sunil Mittal won’t be too unhappy after his company lost subscribers for the second straight month in October. That’s because Bharti Airtel Ltd.’s active users, a metric that matters more, rose for the first time in four months.

  • The number of users actively using services jumped by close to 34 lakh for India’s second-largest telecom operator, according to the latest data released by Telecom Regulatory Authority of India.
  • Higher active users don’t necessarily mean more revenue-generating subscribers.
  • Still, it indicates that the customer is frequently using the network and risk of losing the subscriber is low.

Vodafone Idea Ltd. lost active subscribers for the sixth month in a row.

3. RCom Files Contempt Plea Against Telecom Department

Reliance Communications Ltd. filed a contempt plea against the telecom department for not giving its approval for the sale of its spectrum to Reliance Jio Infocomm Ltd.

  • In the last hearing on Dec. 14, the Department of Telecommunications had agreed to issue a no-objection certificate within two days. The Supreme Court will hear RCom’s petition on Jan. 7.
  • The sale of spectrum and towers is crucial for Anil Ambani-led RCom to fend off insolvency proceedings.
  • The company expects to get Rs 18,000 crore from the deal.

4. Sensex, Dow Slump

Indian equity benchmarks fell over a percent for the second day in a row mirroring losses in other Asian and European markets on worries over slowing global economic growth.

  • The S&P BSE Sensex Index fell 1.05 percent or 378 points to 35,514.
  • The NSE Nifty 50 Index dropped 1.11 percent or 120 points to 10,672.
  • Seventeen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Metal Index's 2.35 percent decline.
  • On the flipside, S&P BSE Telecom Index was top gainer, up 0.6 percent.

U.S. stocks slumped after Apple Inc. added to global growth concerns with a cut in its sales outlook.

  • The S&P 500 fell 0.7 percent at the open, trading well off the lows in futures after sentiment got a boost from Bristol-Myers Squibb’s bid to buy Celgene and a strong reading on private hiring for December.
  • Apple’s first revenue cut in a decade dragged the tech giant down 9 percent after it cited an unforeseen slowdown in China, weighing on suppliers and tech-heavy equity measures.
  • The yen remained stronger after wild moves in the currency markets overnight.
  • West Texas Intermediate crude climbed 1.6 percent to $47.27 a barrel, the highest in more than two weeks.

5. Mutual Funds Unfazed By RBI’s Red Flag

Mutual funds said there are enough safeguards to ensure that credit risk from the IL&FS group default is contained, dismissing the Reserve Bank of India’s concerns that asset managers were passing on the entire risk to investors.

  • A fair valuation methodology adopted by mutual funds and the recent approval by Securities and Exchange Board of India to allow side-pocketing—or separating distressed and illiquid assets in a portfolio—reduces the risk to investors, said A Balasubramanian, chief executive officer, Aditya Birla Sun Life AMC.
  • Lakshmi Iyer, chief investment officer, debt and head of products at Kotak Mahindra Asset Management Company, said mutual funds have always passed through the fallout of a credit event to investors.
If capital requirements are brought in for the industry, then what will be the big difference between mutual funds and banks?
Lakshmi Iyer, CIO - Debt, Kotak Mahindra AMC 

6. Advantage Bank Of Baroda?

Bank of Baroda may be slightly better off with the share swap ratios announced for its merger with Vijaya Bank and Dena Bank, according to brokerages, including JPMorgan and Morgan Stanley.

  • The swap ratio for the amalgamation is ‘neutral’ to ‘mildly positive’ for Bank of Baroda, JPMorgan said in a note.
  • Motilal Oswal Research, however, said there will be an overhang on the banks’ near-term performance due to network overlaps, re-locations, and business and team integrations.
  • Also, leadership issues will add to their woes, Antique Stock Broking said in a note. “Managing Director Jayakumar’s reappointment tenure ends in September 2019. While during this phase, the merged entity is likely to operate, the integration process would take a few years to reorganise the business,” it said.

7. Bond Traders Are Worried Again

Fiscal worries are back to haunt India’s sovereign bonds just after they posted the best quarter in four years.

  • Prime Minister Narendra Modi’s party, which recently met with electoral losses in key states, is said to be preparing to unveil a farm-relief package ahead of general elections due by May.
  • The prospect of substantial aid for farmers at a time when the nation’s tax and asset sales collections are lagging estimates is stoking fears that India may miss its fiscal deficit target.
  • “Fiscal concerns are again taking center-stage,” said Badrish Kulhalli, head of fixed income at HDFC Standard Life Insurance Co.

Any extra spending will lead to a high fiscal slippage.

8. Maggi’s Legal Troubles Are Back

The Supreme Court revived the government’s case in the National Consumer Disputes Redressal Commission against Nestle India Ltd. seeking damages of Rs 640 crore for alleged unfair trade practices, false labelling and misleading advertisements.

  • A bench headed by Justice DY Chandrachud said the report of Central Food Technological Research Institute, Mysuru, where the samples of Maggi were tested, will form the basis for the proceedings.
  • The top court had on Dec. 6, 2015 stayed the proceedings before the commission and directed the CFTRI, to place its test report before it.

‘Why should we be eating Maggi with lead in it?’

9. RBI Governor Gets A Wishlist

Hopeful that the Reserve Bank of India, under new Governor Shaktikanta Das, will be more receptive to their concerns, the country’s top bankers have shot off a letter with a list of requests.

  • Among them is an appeal to dilute the tough Feb.12 circular for stressed asset management and a plea to allow banks to retain exposure to IL&FS as a standard asset.
  • Two bankers in the know who spoke on condition of anonymity confirmed the key contents of the letter which was sent in the second half of December.
  • BloombergQuint has not reviewed a copy of the letter. Cogencis had first reported this on Dec. 20.

The bankers also sought a special dispensation for IL&FS.

10. Apple’s iPhone Warning Comes Years Too Late

The optimistic narrative about Apple Inc.’s iPhone business is falling apart in front of our eyes, writes Bloomberg’s Shira Ovide.

  • The company on Wednesday stunningly slashed its own revenue forecast for its first fiscal quarter that ended in December. Apple led by blaming a slowing economy in China and the trade skirmish with the U.S. foe the lower-than-expected sales numbers.
  • In an extraordinary letter to Apple investors, CEO Tim Cook also told stockholders what he should have been saying for years: The company’s iPhone business has shifted into a lower gear because of changes in the smartphone market and consumer behavior.
  • This should have been absolutely predictable to anyone who was able to peer outside of Apple’s bubble.