BQuick On Aug. 3: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Bank Loan Growth Lowest In Three Years
Growth in non-food credit for the banking industry dropped to its lowest in at least three years in the fortnight ended July 17.
Non-food credit rose 5.81% year-on-year to Rs 101.33 lakh crore, according to data released by the Reserve Bank of India.
This is the lowest since July 2017, when non-food credit growth was at 5.79%.
Credit growth remains low despite more than adequate liquidity with banks.
Deposit growth continues to run higher than credit growth. For the fortnight ending July 17, deposit growth was at 10.8%.
Banks, however, remain reluctant to lend.
2. Bandhan Bank Meets RBI Ownership Norms
Bandhan Bank Ltd. said it’s now in compliance with the regulatory ownership norms after its majority shareholder sold stake in the Kolkata-based microfinance lender-turned-universal bank.
Promoter Bandhan Financial Holdings Ltd. sold 33.73 crore shares, or 20.95% of its holding, bringing down its total stake to 40% of the entire paid-up voting equity capital of the bank, according to an exchange filing.
The sale of close to 34 crore shares, executed in 27 large deals, was worth Rs 10,600 crore, or $1.4 billion, according to the term sheet accessed by Bloomberg. That was at a discount of 9.3% to Friday’s closing price.
Hopefully, the RBI will remove the freeze on CEO pay hikes. The board of the holding company will decide on how to use the funds they have collected through the sale.CS Ghosh, Chief Executive Officer, Bandhan Bank
Read more on what CS Ghosh told BloombergQuint.
3. Moody’s Upgrades Yes Bank’s Rating
Moody’s Investors Service upgraded Yes Bank Ltd.’s long-term foreign currency issuer rating by a notch after the private lender raised Rs 15,000 crore in a follow-on public offer last month.
The rating agency upgraded Yes Bank from Caa1 to B3, according to its statement on Monday.
Under Moody’s rating scale, Caa1 indicates poor quality with a very high credit risk. B3, though better, still represents a speculative investment with high credit risk.
The fundraising “has bolstered its [Yes Bank's] solvency and is the main driver of the ratings upgrade," the rating agency said
Moody's also upgraded the bank's long-term foreign and local currency bank deposit ratings.
3. Sensex Extends Losing Streak; U.S. Stocks Rise
Indian stocks dropped, extending their losing streak to a fourth day, on concern that the rising virus count and deteriorating health of companies will put the nation’s grim economic state back on investors’ radars.
The S&P BSE Sensex declined 1.8% to 36,939.6, marking its longest losing streak since March.
The NSE Nifty 50 Index lost 1.6% today.
Fourteen of 19 sector sub-indexes compiled by BSE Ltd. fell, led by a gauge of banks
Follow the day's trading action here.
At a time when investors are trying to wrap their heads around the deviation in valuations and earnings, Max Life Insurance Co.’s Mihir Vora has fine-tuned his investment strategy to fit the changing times.
Find out why he's now become more flexible on valuations.
U.S. equities advanced with European stocks as positive economic data countered pessimism over a resurgence of Covid-19 cases.
Tech shares led the S&P 500 Index higher, with Microsoft Corp. gaining as it tried to salvage a deal for the U.S. operations of TikTok.
Europe’s benchmark gauge headed for its biggest jump in two weeks as auto and tech shares surged after the euro area’s first manufacturing expansion in one-and-a-half years.
The dollar bounced higher after its worst July in a decade and Treasuries fell across the yield curve.
Gold weakened 0.7% to $1,962.76 an ounce.
Get your daily fix of global markets.
5. India Manufacturing PMI Slips...
A gauge of India's manufacturing sector fell in July, reflecting the impact that localised lockdowns are having on manufacturing activity. These lockdowns have been imposed by state and local governments to curb the spread of Covid-19.
The India Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, stood at 46 in July compared with 47.2 in June on a seasonally adjusted basis, according to a release on Monday.
A print below 50 indicates contraction in business activity.
The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months.Eliot Kerr, Economist, IHS Markit
The index had fallen to a record low of 7.2 in April.
...While Diesel Sales Report Stark Reversal
Indian sales of diesel -- the lifeblood of the Asian giant’s economy -- appear to have fallen sharply last month as several provinces imposed small-scale lockdowns to curb record daily infection rates.
Diesel sales at India’s three biggest fuel retailers dropped 13% in July from the previous month and were down 21% year-on-year, according to preliminary data from officials with direct knowledge of the matter.
It’s a stark reversal from the previous couple of months when rebounding sales of the fuel were heralded as evidence the economy was on the mend following the world’s biggest national lockdown.
While diesel demand typically falls at this time of the year due to the monsoon, the decline exceeds the 8% month-on-month drop at the same point last year.
Indian Oil Corp. said that it had slashed throughput at its plants to 75% from 93% in the first week of July.
6. The Life And Times Of India’s First Monetary Policy Committee
India’s first Monetary Policy Committee will certainly find a special place in the country’s economic history.
After decades of monetary policy driven from the office of the Reserve Bank of India’s governor, decisions on whether interest rates should be cut, hiked or held were transferred to a six-member committee starting October 2016.
The idea was that six heads are better than one and a committee would be less susceptible to potential pulls and pressures from New Delhi. The MPC was handed a legal mandate of maintaining retail inflation at 4%, within a tolerance band of +/-2%.
The committee voted most frequently to ‘hold’ interest rates, followed by votes to cut rates. It voted to hike rates on only two occasions.
Over these four years, the committee has seen it all, from abrupt departures to emergency meets.
7. Ekta Kapoor’s Strategy For AltBalaji
Ekta Kapoor, maker of some of India’s most popular television series and blockbuster Bollywood films, says she isn’t competing with Amazon Prime or Netflix, the subscription services that got Indians hooked to online content. Her target is the nation’s low- and mid-income consumers.
“We don’t want to cannibalise and compete with the international apps,” Kapoor told BloombergQuint in an interview via videoconference.
“We know the mass market here, and we know the need for individualised content in mass market.”
Kapoor said the content she puts on television and on ALTBalaji, her Balaji Telefilms Ltd.’s OTT service, is different.
Television content consumption is a communal activity where the entire family sits together to watch a show, which means it can’t be radical or upsetting for anyone.
Price sensitivity will create its own audience, said Kapoor.
8. India's Covid-19 Tally Shoots Past 18 Lakh Mark
Covid-19 cases in India continue to rise at a quick pace amid the third phase of reopening the economy.
India added over 52,000 fresh cases in a matter of 24 hours, taking the total tally to over 18 lakh in the world’s third-worst infected country, according to the Health Ministry’s update as of 8 a.m.
This includes over 38,000 deaths and 11.8 lakh patients who have recovered.
India has added over 2.5 lakh cases in just five days.
Monday’s fresh cases however, is the lowest in the last four days.
Follow the latest updates from the pandemic here.
9. Yuri Milner To Invest In Byju's
DST Global, the investment firm headed by billionaire Yuri Milner, is close to investing as much as $400 million in Indian online education startup Byju’s, a person familiar with the negotiations told Bloomberg News.
The deal values Byju’s at $10.5 billion and could be signed as early as this weekend, said the person, who didn’t want to be identified as the talks are private.
The transaction would make Byju’s India’s second-most valuable startup after Alibaba Group Holding-backed financial payments brand, Paytm.
The Russian-Israeli billionaire, one of the world’s best-known technology investors, is an early backer of the largest internet firms including Alibaba, Facebook Inc. and Twitter Inc.
His DST has also funded a string of high-profile Indian startups.
10. National Education Policy: The Hits And Misses
It will need some heavy-lifting if we are to educate students in a way that they can compete and win in the world, writes Meeta Sengupta.
This is the first policy that seeks to unshackle students from the tyranny of administrative constraints
The most significant change, from a systems view, is the separation of regulation and operation of schools.
The contribution of the private sector and civil society to the quality of education has not only been ignored, it has also been disrespected.
Transitional structures, such as bridges between school and higher education, or gateways to opportunity such as community colleges find no room.
The NEP is but one step towards freedom in education.