BQuick On Nov. 5: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. One-Time Gain Saves The Day For SBI
The country’s largest lender, State Bank of India, returned to profitability after three quarters helped by a one-time gain and lower provisions.
- Net profit fell 40 percent year-on-year to Rs 945 crore.
- Net interest income rose 12 percent to Rs 20,905 crore.
- The state-owned lender would have reported a fourth straight quarterly loss if not for a one-time gain of Rs 1,087.4 crore from the sale of investments in its general insurance business and merchant banking business.
Though the profit is modest, there is no looking back. From here on, this number will only be bigger and better.Rajnish Kumar, Chairman, SBI
2. Earnings: Cipla Misses, GAIL Surprises
Cipla Ltd.'s quarterly profit for the second quarter missed the lowest analyst estimate.
- Net profit declined 11 percent year-on-year to Rs 377 crore.
- The lowest estimate of analysts tracked by Bloomberg stood at Rs 390 crore.
- Net sales declined 2 percent to Rs 4,011 crore, versus a consensus expectation of Rs 4,290 crore.
GAIL (India) Ltd.’s profit for the quarter ended September rose, beating estimates, on the back of higher revenue from the natural gas marketing business.
- Net profit of the state-run gas utility rose 56 percent sequentially to Rs 1,963 crore.
- The revenue rose 11.4 percent to Rs 19,275 crore.
- Ebitda rose 29 percent to Rs 2,928 crore.
3. Indian Markets Stumble, U.S. Stocks Mixed
Indian equity benchmarks declined after clocking best weekly gains in over two years led by losses in HDFC Ltd., ICICI Bank Ltd., IndusInd Bank Ltd., ITC Ltd. and Tata Consultancy Services Ltd.
- The S&P BSE Sensex declined 0.17 percent or 61 points to 34,951.
- The NSE Nifty 50 Index fell 0.27 percent or 29 points to 10,524.
- Thirteen of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Power Index's 1.6 percent drop.
- On the flipside, the S&P BSE Realty Index was the top gainer, up 1.5 percent.
U.S. stocks were mixed in early trading as investors weighed the outlook for elections this week along with signals that a trade deal between the world’s biggest economies remains a ways off.
- Tech stocks dragged on American equity benchmarks as energy shares provided a lift.
- Treasury yields edged lower and the dollar was little changed against most peers, while the pound strengthened a third day in four on signs of further progress in Brexit negotiations.
- West Texas Intermediate crude increased 0.9 percent to $63.71 a barrel, the first advance in more than a week.
4. Nifty At 11,000 In Two Months?
Indian equities are set for a relief or a short covering rally after getting oversold in September and October, according to S Naganath, president and chief investment officer at Franklin Templeton Alternatives.
- “I won’t be surprised if the Nifty touches 11,000 in the next two months,” Naganath told BloombergQuint in an interview.
- The country’s benchmark indices bounced back after correcting from the all-time highs in August as a drop in crude oil prices eased the strain on the trade account.
- While the weakness in the rupee and higher crude oil prices have been factored in, Naganath said, the market will to remain volatile due to the ongoing U.S.-China trade war.
The rally would last longer if tariff issues get resolved in the interim.S Naganath, CIO, Franklin Templeton Alternatives
5. Cash Crunch At Mortgage Lenders
A segment of non-banking financial companies, housing finance companies, is facing liquidity challenges and steps taken by the government will help address these concerns, Corporate Affairs Secretary Injeti Srinivas told reporters.
- “It’s basically a segment of NBFCs, which is facing liquidity problems, it’s more pronounced there,” said Srinivas.
- Defaults in repayments by infrastructure finance firm IL&FS Ltd. and its subsidiaries led to fears of a contagion in the financial and credit markets.
- This led to concerns that non-banking lenders would be unable to refinance their market borrowings, impairing growth.
6. What The Post-NBFC Crisis ‘New Normal’ Looks Like
Non-banking financial companies were the providers of credit to many segments of borrowers, that banks had shunned, such as construction and real estate, small and medium enterprises, affordable housing, etc. But the current liquidity crisis in the sector will reverse the trend. Given the important role that NBFCs have come to acquire in the Indian financial sector, it will be worthwhile to think about what the ‘new normal’ post this crisis would look like, writes Harsh Vardhan.
- There will be new regulatory steps to avoid a similar crisis.
- Lower funding will lead to slower growth, narrower margins.
- A system-wide credit shortfall may appear.
- And as growth slows, asset quality will decline.
7. TCS Faces U.S. Jury
India’s IT outsourcing giant Tata Consultancy Services Ltd. needs to offer a good explanation for why engineers hired at its American outposts are 13 times as likely to be fired if they’re not South Asian.
- The company is set to go on trial Monday in California over racial discrimination claims by American workers who lost their jobs at TCS offices in the U.S. because they hadn’t been assigned to any of its clients.
- The trial will cast a spotlight on work-visa programs companies use to bring overseas workers to the U.S., a practice President Donald Trump has criticized in his protectionist push.
- TCS, Asia’s largest outsourcer, and rival Indian information technology staffing firms Infosys Ltd. and Wipro Ltd. have all been squeezed by the Trump administration to hire more Americans on U.S. soil.
8. Mondelez Wants More
India’s largest maker of chocolates wants to increase focus on biscuits to widen its reach and tap the nation’s rising consumer demand.
- Mondelez India Pvt Ltd., the leading player in the near $1.8-billion Indian chocolate market, according to Euromonitor International, forayed into the biscuit market six years ago with two brands—Oreo and Bournvita.
- “It’s (India) a big market, which is also growing and hence naturally attractive,” Iyer told BloombergQuint in an interaction. “It sits very well with the categories that we sell, and we see a fairly good headroom to grow this entire business organically.”
- “The biscuit market is growing at a healthy rate, both the unorganised and organised biscuit players are witnessing a decent growth rate which will continue at least for the next five years,” said Dhanraj Bhagat, consumer and retail partner at Grant Thornton India LLP.
9. Services PMI Jumps
India’s services sector expanded at the quickest pace since July, driven by a significant increase in new business orders.
- The seasonally adjusted Nikkei India Services Business Activity Index rose to 52.2 in October, from 50.9 in September.
- A reading above 50 means expansion, while a score below that denotes contraction.
- The services PMI was in the expansion territory for the fifth straight month.
- According to panelists, improved order flows supported the pick-up in output amid favourable market conditions, greater client bases and fruitful advertising. This in turn led to robust workforce expansion.
10. Delhi Choking
Delhi’s air quality deteriorated on Monday to ‘Severe’ for the second time within a week due to a change in wind direction and rampant stubble burning in neighbouring states, authorities said.
- The overall air quality index on Monday was registered in the ‘Severe’ category at 418, a drastic decline from a day before when the index was moderate at 171.
- A thick haze engulfed the national capital two days ahead of Diwali, following which experts warned the air quality is likely to worsen further due to local factors.
- On Sunday, residents of Delhi had breathed the cleanest air in three weeks, according to Central Pollution Control Board data.
- The air quality turned ‘Severe’ for the first time this season on Oct. 30.