BQuick On Dec. 4: Top 10 Stories In Under 10 Minutes
Here’s a roundup of the day’s stories in brief.
1. RBI Distances Itself From Proposal Of Corporate Entry Into Banking
The recommendation to allow entry of large corporate and industrial houses into banking was an independent proposal of the Reserve Bank of India’s internal working group, and should not be construed as the central bank’s point of view on the issue, according to Governor Shaktikanta Das.
“The internal working group had two independent members who are part of the RBI’s central board and the group has acted independently of the RBI and has given a certain point of view,” Das said over a video conference call, after announcing the monetary policy committee’s decision on benchmark rates.
A decision on the matter by the RBI, he said, is still pending.
According to the RBI governor, the regulator’s decision-making process is consultative.
For now, the working group’s report has been put in the public domain for comments.
2. Window For Rate Cuts Is Closed, Economists Say
India’s Monetary Policy Committee unanimously voted for a status quo in its bi-monthly meeting. While that was in line with expectations, raising growth and inflation forecasts prompted most economists to say that there may not be any room for further rate cuts.
The MPC decided to keep repo unchanged at 4%. It also pledged to maintain its accomodative stance at least during the ongoing fiscal.
The RBI also now expects GDP to contract 7.5% in FY21 compared with a 9.5% decline estimated earlier.
It also hiked its inflation estimate to well above 6% in the second half of 2020-21.
Bonds rallied as the RBI desisted from announcing measures to remove excess banking liquidity.
Find out what economists have to say about the growth and inflation outlook for the rest of the fiscal.
3. Sensex Crosses 45,000; Burger King Becomes 2020's Second Best IPO
Indian equity markets witnessed a surge in the final minutes of trade to register yet another record high and end the truncated week with healthy gains.
The S&P BSE Sensex ended 1% higher at 45,079, its first close above the 45,000-mark.
The NSE Nifty 50 too gained 1% to end at 13,258.
Both Sensex and Nifty have closed higher for the fifth straight week, their longest run of weekly gains since July.
Burger King India Ltd.’s initial public offering became India's second-most subscribed issue of 2020, getting bids for over 156 times the shares on offer.
Follow the day’s trading action here.
U.S. Stocks Gain; Dollar Extends Decline
U.S. stocks gained and Treasury yields rose after a report showing U.S. employment gains slowed in November bolstered expectations for more federal stimulus.
The S&P 500 climbed along with the Nasdaq Composite and Dow Jones Industrial Average.
The dollar headed for its biggest weekly decline in five, while Treasury yields pushed higher.
Labour Department figures showed nonfarm payrolls increased by a less-than-forecast 245,000 from the prior month, as the unemployment rate dipped 0.2 percentage point to 6.7%.
Get your daily fix of global markets.
4. Earnings Report Card: Who Stood Out, Who Failed
India Inc.’s performance in the quarter ended September was not as bad as feared as the companies continued to cut costs and economic activities resumed after the nation lifted lockdown curbs.
Of the 500 BSE constituents, 462 companies that have reported results so far saw their aggregate sales revenue rise 29% over the preceding three months, according to data compiled from Bloomberg.
On a year-on-year basis, the cumulative top line, however, declined 0.46%.
Excluding banking, finance, and insurers, the sales revenue dropped 4.7% over the year earlier.
Aggregate net profit of the 462 companies, however, jumped both year-on-year and over the preceding quarter.
Read more to see the sectors that stood out or lagged in the second quarter.
5. Axis Bank CEO's Bad Loans Warning
Axis Bank Ltd.’s top executive warned that loans to individuals in India may sour as borrowers emerge from a repayment holiday stemming from the coronavirus pandemic.
“Slippages will emerge in the system, especially on the retail side,” Chief Executive Officer Amitabh Chaudhry said in a Bloomberg Television interview on Friday.
Retail loans souring in the next couple of quarters “will be definitely higher than what the system has seen in the last eight to 10 years,” he said.
Indian banks have been grappling with swelling bad loans for years, particularly in the corporate sector.
Here’s who Chaudhry thinks will come out of the crisis stronger.
6. CBI Investigates Alleged Rs 1,800-Crore Fraud At SBI
The Central Bureau of Investigation has carried out searched at three locations in Delhi in connection with an alleged Rs 1,800-crore fraud at State Bank of India, officials said Friday.
CBI had earlier booked Jay Polychem Ltd. in connection with the alleged fraud.
The agency had received a complaint from SBI against the Lajpat Nagar-based company and its promoters and directors for causing Rs 1,800.72 crore loss to a consortium led by the bank, officials said.
A forensic audit by EY showed alleged diversion and siphoning off of bank funds, CBI said.
7. Contactless Card Payment, UPI Auto Pay Limits Raised To Rs 5,000 From Jan. 1
The Reserve Bank of India more than doubled the limits for contactless card and recurring payments through multiple modes to further boost cashless transactions.
"In order to expand the adoption of digital payments in a safe and secure manner, it is proposed to enhance, at the discretion of the user, the limits for contactless card transactions and e-mandates for recurring transactions through cards (and UPI) from Rs 2,000 to Rs 5,000 from Jan. 1, 2021," Reserve Bank of India Governor Shaktikanta Das said in the monetary policy statement on Friday.
This covers contactless and recurring payments through debit and credit cards, prepaid instruments, wallets, and the Unified Payments Interface.
The move could help increase the depth of digital payments in India.
8. Vedanta’s Bonds Sink Further
Vedanta Resources Ltd. dropped in the bond market after a credit rating cut deeper into junk territory by Moody’s Investors Service.
The miner’s 2026 dollar note fell 4.8 cents on the dollar to about 58 cents, the biggest drop since Oct. 12, Bloomberg-compiled prices show.
Moody’s lowered its corporate family rating to B2 from B1 Thursday, citing weak liquidity and high refinancing needs.
It’s the second downgrade this year after the rating firm cut its grade by a notch in March.
Pressures have been mounting at the mining giant after a failed attempt in October to delist its India unit.
9. Covid-19: India’s Active Cases Fall Below 4.2 Lakhs
India’s coronavirus tally continues to rise even as the country works to prevent new outbreaks.
India reported over 36,500 new cases in 24 hours, taking the total tally over 95.7 lakh in the world’s second-worst infected country.
That includes over 90.1 lakh recoveries and more than 1.39 lakh deaths.
Authorities reported nearly 43,000 recoveries in a day, making it the seventh straight day that new cases trailed recoveries.
Track news and developments of the Covid-19 outbreak here.
Vaccination To Begin Once Scientists Give Go Ahead, Says Modi
Prime Minister Narendra Modi on Friday said India's vaccination programme against Covid-19 would begin as soon as a go-ahead from scientists is given and asserted that healthcare workers involved in treating coronavirus patients, frontline workers and old people suffering from serious conditions would be inoculated on priority.
In his closing remarks at an all-party meeting with leaders of various political parties to discuss the Covid-19 pandemic situation in the country, Modi said experts believe the wait for Covid-19 vaccine will not be long and it may be ready in a few weeks.
Nearly eight vaccines are at different stages of trial with their manufacturing assured in India, Modi said.
10. Farmers ‘Ready To Die’ In Showdown With Modi
As India’s virus numbers swell and the economy stumbles, Prime Minister Narendra Modi has another crisis to deal with: Tens of thousands of angry farmers vowing to camp outside the capital for months.
The protest sites on the Delhi border that popped up about a week ago have turned into semi-permanent camps featuring almost a festive atmosphere, with some leaders saying they have enough supplies to stay put for six months.
Tractor-trolleys loaded with blankets, mattresses, vegetables, gas cylinders and utensils showed they’ve come prepared for the long haul.
The sheer determination of the protesters may test Modi’s credentials like never before.