BQuick On July 13: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Retail Inflation Breaches MPC's Tolerance Band
Retail inflation in India remained elevated in June despite a sharp plunge in economic activity, as the cost of some food articles and transportation remained high.
Consumer Price Index inflation stood at 6.09% in June 2020, according to data released by the Ministry of Statistics and Program Implementation on Monday. A Bloomberg poll of 34 economists had estimated inflation at 5.3% for June.
At over 6%, inflation remains just above the Monetary Policy Committee’s tolerance band of 4 (+/-2)%.
In March, headline retail inflation stood at 5.91%.
A break-up of the inflation data showed that higher prices of food articles and of transportation contributed to the elevated inflation.
2. Yes, It’s A Bad Bank
Yes Bank Ltd. is considering segregating its bad assets into a separate entity as it aims to lower the stress on its balance sheet.
The proposed organisation will be “professionally run, where there will be investors”, said Prashant Kumar, chief executive officer and managing director.
This is subject to regulatory approvals.
The bank has already created a separate vertical internally with more than 100 staffers to solely work on resolution and recovery of stressed accounts, he said.
If the banking regulator gives approval to the proposed “bad bank” entity, according to Kumar, any upside will be shared by the lender and investors.
3. HDFC Bank’s Internal Investigation
HDFC Bank Ltd. has conducted a probe into allegations of improper lending practices and conflicts of interests in its vehicle-financing operation involving the unit’s former head, people familiar with the matter told Bloomberg News.
India’s most valuable lender by market capitalisation decided against proceeding with an earlier proposal to extend the employment of Ashok Khanna, an 18-year veteran at the bank, after the investigation was completed, said the people, who asked not to be identified as the information remains confidential.
The vehicle financing unit he headed had outstanding loans of more than Rs 1.2 lakh crore.
The result followed issues thrown up by an internal audit of the bank’s vehicle-dealer lending, as well as allegations of conflicts of interest.
4. Nifty Ends Off Day’s High; U.S. Stocks Rise
Indian equity markets ended significantly off the day's high as private financials dragged.
The S&P BSE Sensex ended 0.27% higher at 36,693 while the NSE Nifty 50 index ended at 10,815, up 0.44%.
Both benchmark indices fell 330 and 80 points respectively from the highest points of the day.
Nifty Bank and the PSU bank index ended 1.3% and 1.6% lower respectively.
I.T., FMCG and metal stocks outperformed.
Follow the day’s trading action here.
U.S. equities rose as investors braced for earnings that will offer a window into the health of the world’s biggest economy amid a raging pandemic.
The S&P 500 climbed for a second day as traders awaited outlooks this week from a slew of companies that have yet to provide concrete guidance on the impact of the virus.
Shares of PepsiCo Inc. rose after the snack-maker reported stronger-than-expected second-quarter sales.
Maxim Integrated Products Inc. surged after rival Analog Devices Inc. agreed to acquire the semiconductor firm.
Oil fluctuated ahead of an OPEC+ meeting at which the group may announce plans to start tapering historic production cuts.
Get your daily fix of global markets here.
5. Indian Lenders Fill Up Their Coffers
Indian banks have concluded or approved over Rs 1 lakh crore in equity fundraising as they attempt to hunker down for a period that could bring a rise in bad loans and increase in provisions.
So far, private and public sector banks have announced over Rs 1 lakh crore in capital raising, according to a July 8 report by Jefferies.
Much of this has come from private sector banks—using a mix of private placements, rights issues and follow-on public offers to raise the funds.
Among government-owned lenders, three have so far have announced plans to raise equity capital.
Non-bank lenders, including housing financiers, may also join the queue to raise capital.
The pipeline for bank fundraising may continue to swell with the RBI asking lenders to raise capital preemptively.
6. Vedanta Delisting: Hindustan Zinc pitches in
Hindustan Zinc Ltd., controlled by billionaire Anil Agarwal, is seeking to raise as much as Rs 5,000 crore ($665 million) through local currency bonds to help finance a plan to take its parent private, people familiar with the matter told Bloomberg News.
The proceeds are intended to repay part of the proposed $2.75 billion financing for the delisting of its parent, Mumbai-listed Vedanta Ltd., the people said, asking not to be identified as the information isn’t public.
Agarwal announced in May that he plans to take the Indian commodities giant private as he continues to simplify his investments.
Hindustan Zinc is looking to sell bonds maturing in three years.
7. Google’s $10-Billion India Bet
Google said it plans to invest $10 billion (about Rs 75,000 crore) in India in the next five to seven years as the search giant looks to deepen presence in the the world's second largest internet market by users.
The company will make the investment through 'Google for India Digitisation Fund', Sundar Pichai, chief executive of Google and Alphabet Inc, said on Monday in an annual event online.
The investment, he said, will be made through a mix of equity investments, partnerships, and operational, infrastructure and ecosystem investments.
The investments will focus on four areas that are pivotal to India’s digitisation. Find out what they are.
8. Limiting Facebook, Google's Data Dominance
India needs a new data regulator to oversee the sharing, monetisation and privacy of information collected online, an expert committee appointed by the government has recommended.
In a 72-page report seen by Bloomberg News, the eight-person panel said that “market forces on their own will not bring about the maximum social and economic benefits from data for the society” and identified key issues that a new regulator would have to tackle.
It would have to ensure that all stakeholders follow rules, provide data when legitimate requests are made, evaluate risks of re-identification of anonymised personal data and also help level the playing field for businesses, the report advised.
The rules proposed in the report would govern collection, analysis, sharing, distribution of gains, as well as the destruction of data.
9. TRAI, Vodafone-Idea At Loggerheads Over 'Priority' Plans
Vodafone Idea Ltd. has approached the Telecom Disputes Settlement and Appellate Tribunal against the telecom regulator’s direction asking it to put on hold priority plans.
The Telecom Regulatory Authority of India has written to Vodafone Idea and Bharti Airtel Ltd., questioning them about their individual plans that promised faster speeds to certain priority users.
The regulator has asked if priority to high-paying customers in those specific plans came at the cost of service deterioration for other subscribers.
TRAI has also asked them how they plan to protect the interest of other general subscribers.
Vodafone has now filed a petition in the Telecom Disputes Settlement and Appellate Tribunal, requesting for an early hearing on the matter.
TRAI had asked the operators to withhold the specific plan in the interim period while the issue is being examined.
10. India Adds Nearly 29,000 Covid-19 Cases
The number of new Covid-19 infections in India hit yet another all-time high.
The nation added 28,701 cases in just 24 hours to take the total tally to nearly 8.8 lakh, according to the Health Ministry’s 8 a.m. update.
Of these, more than 5.5 lakh have been cured or discharged.
India now has over 3 lakh active cases.
The country has added 1.42 lakh cases in the last five days.
Track news and developments around the outbreak in India.
Globally, total cases topped 1.28 crore with over 5.68 lakh dead.
U.S. virus cases rose to 32.7 lakh with almost 56,000 new infections, less than the one-week average daily increase.
Hong Kong reported 38 new cases on Sunday, feeding fears of a resurgence in the Asian financial hub after weeks of near-normal activity.
Follow the global spread of the virus here.