BQuick On Aug. 25: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Tata Motors' 'Near Zero' Debt Target
Tata Motors Ltd., the owner of British luxury carmaker Jaguar Land Rover, plans to cut the company’s debt to “near zero” in the next three years.
The firm, part of India’s biggest conglomerate Tata Group, has net automotive debt of Rs 48,000 crore ($6.5 billion), Chairman Natarajan Chandrasekaran told shareholders at its annual general meeting Tuesday.
“We are deleveraging this business substantially. We have set a target that TML group will significantly bring down the debt in the next three years.”
JLR will continue to invest in disruptive areas like autonomous and connected vehicles, and Tata Motors remains committed to the brand, Chandrasekaran said.
Tata Motors shares rallied 5%.
2. RBI Is Back With Another Twist
India’s central bank will resume its Federal Reserve-style Operation Twist after weak demand at two successive auctions and inflation concerns drove up yields. Sovereign bonds climbed.
The Reserve Bank of India will purchase Rs 10,000 crore ($1.3 billion) of bonds and sell an equivalent amount of shorter debt on Aug. 27 and Sept. 3, respectively, it said in a statement.
The last such operation was held on July 2.
Indian government bonds have been under pressure after the RBI left rates unchanged at its August meeting and refrained from announcing measures to support a market facing a debt supply this fiscal year.
Analysts said the monetary authority must be more frequent in its interventions, given the huge supply.
3. RBI Annual Report Takeaways: Consumption Shock, Bank Frauds, And More
Reserve Bank of India has said private consumption in India, hurt by lower incomes, job losses and behavioural restraints, will take time to revert to pre-pandemic levels as the recovery has lost strength.
“An assessment of aggregate demand during the year so far suggests that the shock to consumption is severe, and it will take quite some time to mend and regain the pre-Covid-19 momentum,” the central bank said in its annual report for 2019-20 published on Tuesday.
The uptick seen in high frequency indicators in May and June after the lockdown curbs were eased appears to have lost strength in July and August, the report said.
The RBI attributed it to reimposition of lockdowns, saying that economic contraction will likely prolong into the second quarter of FY21.
While private demand remains weak, government consumption is expected to support the economy. But that too will be limited.
Bank frauds jumped more than twofold in the previous fiscal on delayed detection even as the Reserve Bank of India mandated implementation of early warning signals by lenders.
Bank frauds worth more than Rs 1.85 lakh crore were reported in the year ended June 2020 compared with over Rs 71,500 crore in the previous fiscal, according to the RBI’s annual report for 2019-20.
“Frauds have been predominantly occurring in the loan portfolio (advances category), both in terms of number and value. There was a concentration of large value frauds, with the top 50 credit-related frauds constituting 76% of the total amount reported as frauds during 2019-20,” the annual report said.
Here’s why there has been a delay by banks in detecting frauds.
4. Sensex Ends Flat; Crude Rallies
India’s benchmark stock index closed little changed after swinging between gains and losses as investors assessed the recent rally that drove the gauge to a six-month high on Monday.
The S&P BSE Sensex rose 0.1% to 38,843.88, having fluctuated between an advance of 0.5% and a decline of 0.3%.
The NSE Nifty 50 Index was also steady.
The Sensex formed a golden cross on Monday -- a technical indicator when the 50-day moving average rises above the 200-day line that some investors read as a sign of more gains to come.
Follow the day’s trading action here.
U.S. equities were mixed after setting consecutive record highs. Treasury yields increased while the dollar weakened.
The S&P 500 edged higher, while the Nasdaq Composite declined.
Futures had risen as America and China signaled progress on their phase-one trade deal.
Oil rose as traders eyed Tropical Storm Laura, which is expected to strengthen into a hurricane before making landfall later this week.
West Texas Intermediate crude rose 1.9% to $43.45 a barrel, the highest in almost six months on the largest advance in a week.
Get your daily fix of global markets.
5. VA Tech Wabag Gets Rekha Jhunjhunwala’s Backing
VA Tech Wabag Ltd. has raised as much as Rs 120 crore from three high net-worth investors, including the wife of market veteran Rakesh Jhunjhunwala.
The board of the water and sewage treatment company has approved a preferential issue of up to 75 lakh shares at Rs 160 apiece to raise up to Rs 120 crore, according to an exchange filing on Tuesday.
The issue price is at a discount of 30% to the stock’s closing price on Aug. 25.
Rekha Rakesh Jhunjhunwala will be issued up to 50 lakh shares, according to the filing, while the remainder will be distributed among Basera Home Finance, Sushma Anand Jain and Anand Jaikumar Jain (of Jai Corporation).
The company had in June planned to raise funds to explore growth opportunities.
6. An Online Apple Store In India
Apple Inc. is poised to open an online store for the first time in the fast-growing smartphone market of India next month, a person with knowledge of the matter told Bloomberg News, taking advantage of a relaxation of once-strict prohibitions against foreign direct retail.
The online store will be ready for operations just ahead of the festive Dussehra-Diwali spending season, according to the person, who asked not to be named discussing confidential plans.
The iPhone maker, which lobbied New Delhi for years to get around regulations that force companies such as Apple to source 30% of components locally, had originally planned to start online sales within months after the government relaxed the rule last year.
Those plans were disrupted by the coronavirus pandemic.
Apple also plans to open a second brick-and-mortar store in Bengaluru, following an outlet in Mumbai.
7. India’s New Economy Can’t Be A Monopoly Board
The concentration of economic power is now a broader trend in India, particularly in businesses where the government supplies a key ingredient, such as telecom spectrum or aviation, writes Andy Mukherjee.
The worry is that dominance by a handful of capitalists may not leave enough space for others.
But then, who’s even ready or willing to compete, especially in sectors where state policy has a big role in determining winners?
Barring some notable exceptions, the Indian business class is overextended, trapped in the debris of assets created with the help of syndicated loans from pliant state-run banks.
It’s impossible to carry on this way.
8. Consistent Compounders And The Antifragility Test
Some companies have the ability to not only withstand unpredictable events—like Covid-19—but to benefit from them and come out stronger rather than weaker, write Saurabh Mukherjea and Sudhanshu Nahta.
Why are some companies antifragile whereas their competitors aren’t?
Is antifragility an innate trait or can it be cultivated?
What are the policies which mark out the antifragile companies?
9. Covid-19: More Daily Recoveries Than Cases In India
Covid-19 cases in India continued to mount even as daily recoveries topped new cases for only the second time.
India added nearly 61,000 new cases in a matter of 24 hours, taking the total tally to over 31.6 lakh.
This includes over 58,000 deaths and over 24 lakh patients who have recovered.
Recoveries rose to over 66,000 on the same day, coming in higher than new cases for the second day.
Track all Covid-19 related news and updates in India, here.
New survey estimates are producing Covid-19 fatality rates for India that are lower than virtually anywhere else in the world by orders of magnitude.
But the current narrative around these fatality rates could be doing a disservice to India’s understanding of the disease by being too quick to attribute them to the government’s “successful strategies” rather than searching for the underlying biological and sociological causes that could explain them, experts say.
India's frequently-reiterated claim of low mortality is based on a crude measure called case fatality rate.
But a single headline CFR number for a country misses taking into account a host of factors that affect that number--most crucially, age.
Given that India is a relatively young country, this could drive down its CFR, experts have suggested.
Yet, a number of studies have now shown that taking age into account, India’s age-adjusted CFR is not particularly low.
10. Green Shoots Of Dissent In India… Finally!
One year ago, it was as if 1.3 billion Indians had collectively pressed the mute button. Until now... writes Raghav Bahl.
Mainstream dissent went silent after the BJP’s renewed mandate in May 2019. This August, it has stirred back to life.
After the spark lit by Attorney General KK Venugopal and Prashant Bhushan, suddenly, it’s been open season.
In Kashmir, the silence of the political graveyard was broken by a joint clarion call by opposition parties.
Perhaps the most unexpected plume of dissent rose from within the Congress party.
Finally, it was the turn of a multinational. Read more.