Weekly Wrap: AGR Case; M&M’s Stock Slump; Double Whammy For India’s Economy

The Department of Telecommunications ordered operators to clear AGR dues before Friday midnight after it faced the Supreme Court’s ire for putting on hold recovery of dues from them. Mahindra & Mahindra Ltd. posted its worst weekly decline in nearly seven months. And core inflation surged, while factory output contracted.

Here’s what happened in the business world and across the globe between Feb. 10 and Feb. 14...

Telecom Woes

The Supreme Court threatened to hold India’s beleaguered telecom operators in contempt for not complying with its order to pay thousands of crores worth of dues within the deadline. The apex court summoned managing directors and directors of all companies on March 17, the next date of hearing, and directed them to clear all dues by then. It also initiated contempt proceedings against the DoT officer for violating its orders.

Later on Friday, the DoT asked operators, including Bharti Airtel Ltd. and Vodafone Idea Ltd., to clear adjusted gross revenue dues before Friday midnight. It started issuing circle or zone-wise demand notices to firms.

M&M Slips

M&M’s shares slumped 8.1 percent this week, the steepest since July 21, 2019.

The stock had dropped 7.15 percent on Monday, prompted by a plunge in its quarterly profit. Through the week, it fell in three of the five trading sessions.

The automaker’s net profit fell 73 percent year-on-year to Rs 380 crore in the quarter ended December, according to the company’s exchange filing. The company made a provision of Rs 600.56 crore toward impairment of certain Investments. The financials include numbers of its commercial vehicle unit, Mahindra Vehicle Manufacturers Ltd.

Other Key Earnings Highlights (Q3, YoY)

• Revenue fell 6 percent to Rs 12,120 crore.
• Ebitda up 1.6 percent to Rs 1,793 crore.
• Margin at 14.8 percent versus 13.7 percent.

Double Trouble

India’s retail inflation jumped to the highest since May 2014, pushed up by expensive food items and higher telecom tariffs. Inflation measured by the Consumer Price Index stood at 7.59 percent in January compared to 7.35 percent in December, according to data released by the Ministry of Statistics and Program Implementation. Inflation in food and beverages rose to 11.8 percent compared with 12.2 percent in December 2019.

On the other hand, industrial output contracted in December, countering signs that suggested the economy is bottoming out. The Index of Industrial Production fell 0.3 percent in December compared with an increase of 1.82 percent in November, according to a statement by the Ministry of Statistics and Programme Implementation.

How Indian Markets Fared This Week

Indian equities gained for the second straight week, with the Sensex and the Nifty 50 Index rising 0.28 percent and 0.12 percent, respectively, to end at 41,257.74 and 12,174.65.

The earnings season has almost ended and the movements in the global markets will now have a major impact on the Indian market, Santosh Meena, senior analyst at TradingBells, said. “Coronavirus is still dominating as a key factor in the global market and it will continue to remain a dominant factor for the next week as well,” Meena said in an emailed statement.

Nine of the 11 sectoral gauges compiled by the NSE suffered losses this week, led by the Nifty PSU Bank Index’s 4.41 percent fall. The NSE Nifty IT Index was the top gainer, up 1.1 percent.

How The Broader Market Fared

The broader market, represented by the Nifty 500 Index, fell 0.4 percent this week, led by the decline in Vodafone Idea Ltd., Gayatri Projects Ltd. and CARE Ratings Ltd.

Key Earnings Announced This Week

• GAIL
• Grasim Industries
• Coal India
• Hindalco Industries
• Bharat Petroleum Corporation
• Nestle India
• Oil & Natural Gas Corporation

Big Talking Points This Week

• Inflows into equity mutual funds hit a five-month high in January.
• Amazon moves Court seeking stay on Competition Commission order.
• Domestic pharma sales fall for second straight month.
• India’s auto sales continue to decline in January.
• Delhi defeat marks third straight state poll loss for Modi.
• Infosys to acquire Simplus in $250 million deal.
• DMart sees Singapore Government, ICICI Prudential MF as top investors in Rs 4,100-crore QIP issue.
• Two reasons India’s steelmakers are going slow on expansion.
• Expect Ssangyong Motor to turn profitable by 2022, says Pawan Goenka.
• RBI proposes alternative retail payments system.
• Jeff Bezos’s record $4.1 billion sale ends years of restraint.
• CPI: At 7.59%, retail inflation spikes to the highest since May 2014.
• IIP Data: Industrial production falls 0.3% in December.
• India’s sustainable GDP growth rate may be between 6% and 7%: V Anantha Nageswaran
• Wockhardt agrees to sell select branded generics business to Dr. Reddy’s for Rs 1,850 crore.
• This best-performing portfolio manager says risk-reward tradeoff not favourable yet.
• India’s crypto geeks live on to fight another day.
• Cabinet approves fund infusion in three state-run general insurance companies.
• ‘Kem Chho, Trump!’: U.S. President to attend ‘Howdy Modi’-style event in Ahmedabad.
• What India’s top three mutual funds bought and sold in January.
• S&P keeps India rating unchanged citing intact GDP growth potential.
• 15th Finance Commission forms panel for separate defence and internal security fund.
• Economic policy in disarray after Javid quits: U.K. Reshuffle.
• These Indian firms are expanding like never before with some help from China.
• RBI sets the stage for a competitor to NPCI. But why?
• Often, the Supreme Court is neither right nor final: Chintan Chandrachud
• Jeff Bezos sets record with $165 million Beverly Hills home purchase.