BQuick On March 12: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. CPI Rises, IIP Falls
Retail Inflation in India rose for the first time in four months as the year-on-year fall in food prices eased.
- CPI inflation stood at 2.57 percent in February compared to a revised 1.97 percent in January 2019.
- A Bloomberg poll of economists had estimated inflation at 2.4 percent for February 2019.
- At current levels, CPI inflation is still well below the mid-point of India’s inflation target of 4 (+/-2) percent.
Here are the inflation internals.
India’s industrial production declined slightly in January, missing analyst expectations.
- The Index of Industrial Production rose by 1.7 percent in January, compared with 7.4 percent growth in the year-ago period.
- A Bloomberg poll of 25 economists had projected a growth of 2.1 percent.
- Industrial growth stands at 4.4 percent in the April-January period compared with the year-ago period.
Here’s how various sectors performed.
2. Priyanka, Rahul Attack Modi On His Home Turf
Congress President Rahul Gandhi and his sister Priyanka Gandhi, who was recently made a party General Secretary, criticised Prime Minister Narendra Modi's government for failing to deliver on the various promises he made while campaigning for the 2014 Lok Sabha elections.
- At a rally in Gujarat, after the Congress Working Committee Meeting, Rahul asked if the people got "Rs 15 lakh into their bank accounts as promised by Narendra Modi".
- He also criticised Goods and Services Tax in its current form. “Gabbar Singh Tax can’t be understood by our traders even today”.
- Priyanka said the Modi government did not fulfill its promise of providing jobs to crores of people in the country.
- She was addressing her first political rally after assuming charge as Congress general secretary.
- The CWC also passed a resolution that said that Modi was "cynically exploiting the issue of national security to divert attention from colossal failures".
Here’s everything that happened at the meeting in Gujarat and the rally thereafter.
3. Modi Will Be PM Again: Gadkari
The crisis in India’s agriculture sector is of a magnitude that can’t be fixed in the five years that the Narendra Modi government has been in power, said Union Minister Nitin Gadkari.
- A global glut in commodities has led to surplus production in every major crop, and the government has attempted to find solutions via higher minimum support prices, farm loan waivers, and irrigation programs, Gadkari told BloombergQuint.
- “We have done a lot, but the problem is immense,” he said.
- Gadkari asserted that Narendra Modi will be prime minister again, and that the BJP will exceed its 2014 tally of 282 seats in the upcoming general elections.
Watch the full interview where Gadkari talks elections and Modi government’s track record.
4. RBI Vs Kotak Mahindra Bank
The Bombay High Court again refused to grant any interim relief to Kotak Mahindra Bank Ltd. on the Reserve Bank of India’s direction to dilute promoter shareholding.
- Harish Salve, senior counsel for Kotak Mahindra Bank, said since the RBI’s contention was with the concentration of control of power in the lender, it could give an undertaking that the founder won’t exercise his voting control in excess of 20 percent until May 2020.
- The suggestion, however, was rejected by Justice AS Oka, who said the solution wasn’t “as simple as that”.
- The court adjourned the case till April 1.
Both parties will make fresh submissions.
5. Nifty Rallies, U.S. Stocks Gain
Indian equity benchmarks ended higher for the second consecutive day, following the rally in Asian peers.
- The S&P BSE Sensex ended 1.3 percent or 481 points higher at 37,535.
- The NSE Nifty 50 Index ended above 11,300, up 1.19 percent.
- Both the indices ended at a fresh six-month high.
- Nine out of 11 sectoral gauges compiled by NSE ended higher, led by the NSE Nifty Realty Index’s 2.6 percent rally.
Follow the day’s trading action here.
Most U.S. stocks edged higher and the dollar slipped on speculation an unexpectedly weak inflation reading will give the Federal Reserve room to stay patient on rate hikes.
- The S&P 500 added to its best advance since January, with major media shares leading gains.
- Boeing again weighed on the measure, as more countries closed air space to the 737 Max plane.
- The dollar fell and 10-year Treasury yields turned negative after U.S. core inflation cooled.
- The pound slumped and U.K. bonds pared a drop after the chances lawmakers approving a Brexit deal lessened.
- Crude oil climbed after Saudi Arabia was said to extend deep supply cuts.
Get your daily global markets fix here.
6. Lakshmi Vilas Bank Shares Mystery
Shares of Lakshmi Vilas Bank Ltd. spiked unusually in the last few sessions even as the Tamil Nadu-based private lender grapples with bad loans and a capital crunch. Strangely, the surge came after a rating downgrade.
- On Feb. 21, Brickworks Ratings wrote to the lender informing that it had downgraded the bank’s unsecured redeemable non-convertible debentures of Rs 50.50 crore to BBB- from BBB+.
- The rating agency cited losses, rising bad loans and higher provisions for its decision.
- Trading volumes of Lakshmi Vilas Bank also jumped five-fold during the period.
Here’s how it happened.
7. Ipca Labs’ Recovery Strategy
Ipca Laboratories Ltd. is scripting a turnaround in fortunes as its revenue in the first nine months of the fiscal grew at the fastest pace in five years even as it battles a slowdown in Africa and looks to resolve the U.S. regulatory issues.
- Since 2015, the Mumbai-based drugmaker, with nearly half its sales coming from overseas, has been trying to diversify and increase focus on the domestic formulations over pharma ingredients, and is also looking at alternative markets.
- Post FY13, the top line growth slowed and a contraction followed because of an import alert for three of its plants, barring exports to the U.S.
- Then Switzerland-based Global Fund terminated its contract to supply anti-malarial drug in the African market.
- But over the last few quarters, the company’s financials have shown signs of a recovery. And the management is optimistic that it will improve.
Shares have risen more than 10 percent so far this year.
8. Litigation Finance To The Rescue
Last week lenders to engineering and construction company Hindustan Construction Company Ltd. approved a resolution plan that restructures over Rs 4,000 crore of its total debt. Some portion of that debt will be converted into long term equity-like instruments leaving the company with a serviceable amount of loans. More interesting though is a new feature in the resolution plan.
- HCC has over Rs 10,000 crore in claims that are currently in arbitration. These are claims for project work undertaken but not paid for, mostly by central or state government agencies that commission infrastructure projects.
- Contractual disputes or project delays are often at the center of such claims.
- HCC’s resolution plan involves the sale of claims worth nearly Rs 10,000 crore to an investor, said three people involved in the process.
9. How Can India Inc. Get Over Its Financing Hump?
India’s corporate funding market is what Winston Churchill might have described as a riddle, wrapped in a mystery, inside an enigma, writes Andy Mukherjee.
- The riddle, according to India Ratings and Research Pvt., a unit of Fitch Ratings Inc., is that borrowers’ credit metrics aren’t likely to worsen from here.
- And yet in the financial year starting April 1, their borrowing costs may rise even if the central bank cuts policy rates further.
- India Ratings’ researchers have attempted to solve the puzzle by looking at demand and supply of funds.
- There’s likely to be a sizable mismatch, they say, as pumped-up government borrowings – as well as debt issuance by public agencies – crowd out private borrowers.
- There’s a further mystery on the supply side of funding.
The answer to overcome the financing hump may lie in the upcoming general elections, Mukherjee writes.
10. Why Election Commission Chose The Schedule It Has
Aspersions have been cast on the Election Commission’s neutrality in determining the dates and the phases of the Lok Sabha elections. So let me attempt to answer, writes former Chief Election Commissioner SY Quraishi.
- If we had enough paramilitary forces, EC would have happily done all elections in a single day.
- So who really stands to benefit from a stretched-out schedule? No one, and everyone.
- The government should also be conscious about not harming the image of the commission by stretching pre-poll announcements to the last minute.
Free, fair and bloodless elections are a collective concern.