BQuick On July 14: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. Google Wants In On The Jio Platforms Frenzy

Google is in advanced talks to buy a $4 billion stake in Indian billionaire Mukesh Ambani’s technology venture, people familiar with the matter said, seeking to join rival Facebook Inc. in chasing growth in a promising internet and e-commerce market.

• The Mountain View, California-based company has been discussing the investment in Jio Platforms Ltd., the digital arm of Ambani’s Reliance Industries Ltd., the people said, asking not to be identified because the information is private.
• An announcement could come as soon as the next few weeks, according to the people.

Should the talks with Google result in a deal, that would further burnish Jio’s credentials in its digital push.

When Mukesh Ambani rises to address shareholders at his flagship's annual general meeting on Wednesday, he would have met most of his promises made a year ago.

• Reliance Industries Ltd. undertook a deleveraging exercise at breakneck speed in the last three months amid a Covid-19-induced lockdown.
• All these initiatives have ensured RIL will be net debt-free as promised by Ambani at the last AGM.

Find out what shareholders can expect at this year’s AGM.

Shares of Reliance Industries Ltd. touched an all-time high a couple of days before its annual general meeting.

Find out how the stock has performed, AGM to AGM.

2. Flipkart’s $1.2-Billion Fundraise

Flipkart Group raised $1.2 billion in fresh funds from majority owner Walmart Inc. and other existing investors as the online retail battle intensifies amid the pandemic.

• The investment, led by Walmart, values Flipkart Group at $24.9 billion, according to a company statement on Tuesday.
• Money will come in two tranches over the remainder of the fiscal ending March.
• This is the first such investment from Walmart after it acquired the e-commerce firm for $16 billion nearly two years ago.

Get more details here.

3. Sachin Pilot Gets The Sack

The Congress on Tuesday removed Sachin Pilot from the posts of Rajasthan’s deputy chief minister and the party's state unit chief.

• Cracking the whip on the party leader, Congress also removed his loyalists Vishvendra Singh and Ramesh Meena from the state cabinet.
• Chief Minister Ashok Gehlot met Governor Kalraj Mishra immediately after the Congress Legislature Party meeting where the decision to remove the three ministers was taken.
• Rajasthan Education Minister Govind Singh Dotasara will be the new Pradesh Congress Committee chief.

A Congress spokesperson said that the decision to oust Pilot was taken with a “heavy heart”.

4. Wipro’s Delivers A Margin Surprise

Wipro Ltd.’s quarterly profit rose even as the Covid-19 pandemic continued to take a toll on business.

• Net profit rose 2.8% over the previous quarter to Rs 2,411 crore
• Revenue fell 5.3% over the previous quarter to Rs 14,922 crore.
• Operating profit rose 1.3% to Rs 2,573 crore.
• IT services margin expanded to 19% from 16.1% earlier.
• Wipro was able to improve its operational metrics despite the decline in revenue mainly on the back of lower employee costs which is its largest expense.

Yet, it’s a long road ahead for the company which is playing catch up with its larger rivals.

5. Sensex’s Worst Fall In A Month

Indian equity markets had their biggest single-day drop since early-June, tracking weakness in Asian peers and sustained selling among large-cap financial stocks.

• The S&P BSE Sensex ended 1.8% lower at 36,033 while the NSE Nifty 50 index managed to hold on to the 10,600 mark, ending 1.79% lower at 10,609.
• Only 3 out of the 50 Nifty constituents managed to end the trading day with gains.
• Sell-off in banking stocks continued. The Nifty Bank ended lower for the third straight day. Metals and auto stocks were the other sectoral laggards.
• Pharma was the only outperformer, with the Nifty Pharma index ending 0.5% higher.
• Broader markets declined in today’s session. The Midcap index ended 1.1% lower while the smallcap index declined 1.5%.

Follow the day’s trading action here.

U.S. fluctuated and European shares declined as investors weighed earnings season and the economic hit of rising virus cases.

• The S&P 500 swung between gains and losses in early trading.
• While JPMorgan Chase & Co.’s shares initially climbed after reporting record trading revenue, Chief Executive Jamie Dimon voiced concern about the longer-term impact of the recession.
• Treasuries and the dollar were steady.
• Oil slipped for a second day on signs of a slower emergence from lockdown in some corners of the globe.

Get your daily fix of global markets here.

6. WPI Falls. But What’s Inflation Telling Us?

India’s wholesale prices contracted for the third straight month, albeit at a slower pace, as prices of food and manufactured articles rose.

• The Wholesale Price Index fell 1.81% in June on an annual basis compared with a decline of 3.21% in May, according to the Ministry of Commerce and Industry.
• A Bloomberg poll of 18 economists had pegged a 2.4% fall.

Here are the wholesale inflation internals.

Economists have been divided on whether the Covid-19 crisis will prove to be inflationary or deflationary. Early indications — from inflation expectation surveys and now inflation data — suggest a mix of forces leading to higher inflation headline.

• They, however, still believe that a collapse in demand will eventually lead to deflationary pressures overwhelming any supply-driven inflation.
• “As the forward and backward linkages of economic activity are gradually repaired, the supply shock will likely fade while the demand shock will remain, pushing core inflation lower,” said Pranjul Bhandari, chief India economist at HSBC.

The inflation data is a mix of “noise and signal” right now. Get a better picture here.

7. Survival Of The Fittest

Demand from technology firms, online retailers and startups meant India’s commercial real estate market boomed when the residential sector hobbled from one setback to another. But the world’s strictest lockdown to contain the Covid-19 outbreak was tough to fend off.

• Offices have either opted to work remotely or move to smaller places to cut costs.
• That’s putting pressure on landlords when the economy isn’t expected to bounce back soon. Many have agreed to cut rents rather than lose tenants.
• Foregoing rent is better than bringing down the rent which can affect overall yield and value of the property, according to Sumanth Reddy, president of National Association of Realtors India.

Read this BQ Blue Exclusive to find out how commercial realtors are taking on the Covid-19 challenge.

8. What Hurt Auto Sales In June

India’s automobile sales tumbled in June, the first full month of economic activity since the nationwide lockdown to curb the coronavirus pandemic.

• Domestic sales of passenger vehicles declined 49.59% year-on-year to 1.05 lakh units last month, according to data released by the Society of Indian Automobile Manufacturers.
• While monthly factory-gate car sales fell 57.98% over the last year to 55,497 units in June, shipments of utility vehicles declined 31.16% to 45,201 units.
• There’s a slowdown on the supply side leading to lower wholesale numbers, according to SIAM.
• Retail numbers are higher because of the pent-up demand.

How long will it take for automakers to recover? Find out here.

9. Mapping India’s Post-Covid Capex Recovery

A meaningful recovery in private sector investments is still at least half a decade away, write India Ratings’ Arindam Som and Abhishek Bhattacharya.

• Since FY14, the capacity utilisation of even those entities with relatively strong balance sheets has persistently remained below 80%.
• Till their capacity utilisation peaks, these corporates will explore diversification opportunities along with vertical integration plan.
• For stressed corporates, capex growth has been significantly lower at around 2-4% in the last decade.
• Even after their capacity utilisation peaks, their leverage levels will continue to dampen their animal spirits

Read more.

10. Covid-19: India Tally Tops 9 Lakh

India reached another grim milestone as confirmed coronavirus cases crossed 9 lakh, only three days after the country crossed the 8-lakh mark.

• Authorities reported nearly 28,500 cases in just 24 hours, taking the total tally to 9,06,752, according to the Health Ministry’s 8 a.m. update on July 14.
• Of these, more than 5.7 lakh have been cured or discharged while 3.1 lakh are active cases.
• The country has seen over 28,000 fresh cases pour in for the third straight day now.
• As cases mount, cities like Bengaluru and Pune have gone into a seven-day lockdown in an attempt to limit the spread of the pandemic.
• Several other states and districts are imposing partial but renewed restrictions.

Track news and developments around the pandemic in India here.

Globally, cases crossed 13 million, leaving over 5.73 lakh dead.

• Hong Kong imposed its strictest social distancing measures yet; Japan said a new state of emergency is possible; while the Australian state of Queensland imposed a quarantine on some visitors.
• The European Union will recommend keeping its external borders shut to Americans and most other foreigners for at least two more weeks as fears grow of a second coronavirus wave.
• The World Health Organisation said Covid-19 probably won’t disappear in the coming months, and called for caution over hopes for a perfect vaccine.

Follow the global spread of the virus here.