BQuick On July 23: Top 10 Stories In Under 10 Minutes
ainersThis is a roundup of the day’s top stories in brief.
1. IL&FS Fallout: Another Deloitte Auditor Debarred
India’s audit regulator has debarred Rukshad Daruwala, Deloitte India’s engagement quality control reviewer, in the audit of IL&FS Financial Services Ltd. for a period of 5 years.
A penalty of Rs 5 lakhs has also been imposed on him for alleged professional misconduct while discharging audit duties for the non-bank lender.
The National Financial Regulatory Authority found Daruwala guilty of professional misconduct under the Chartered Accountants Act and imposed a penalty on him on account of his failure to highlight both — the loss of statutory auditor’s independence and inadequacies in the audit engagement team.
NFRA had debarred Deloitte’s former audit engagement partner Udayan Sen.
2. Beating The Benchmarks
India’s top portfolio managers returned best quarterly gains at least since 2018 as stocks recovered from the March selloff, the worst in more than a decade, triggered by the Covid-19 pandemic.
While monthly returns remained volatile over four months amid uncertainty, April and June showed recovery, according to data released by the market regulator after four months since deadlines for disclosures were extended.
Portfolio managers outperformed the benchmark in five of the last six months. They lost 8.8% on an average against more than 15% drop in Sensex and Nifty 50 in the first half of the year.
For the quarter ended June, top 59 portfolio management firms returned average gains of 18.1%, the best since BloombergQuint started tracking the data two years ago.
Of the 59 tracked by BloombergQuint, 21 outperformed the benchmark S&P BSE Sensex in June.
3. Best Selling E-Vehicle Hits The Pandemic Speed Breaker
Ravi Rathore, a maker of electric three-wheelers, was expecting 2020 to be a bumper year after demand jumped in the previous two. Then the Covid-19 outbreak struck.
In the two months since the economy started reopening in phases following the world’s most stringent lockdown, Rathore, 26, the owner of Faridabad-based MP Enterprises, has barely sold 20 vehicles, six of which were e-rickshaws.
That number stood at anywhere between 100 and 200 until February.
“This is the first time I have seen a massive dip in the sales, and we don’t know when the demand will revive,” he told BloombergQuint over the phone.
“I’m trying to survive by selling loaders and e-garbage vehicles for the time being,” he said. “But that can’t compensate for loss of demand in the passenger vehicle business.”
India’s electric rickshaw revolution was on the fast lane until the pandemic hit.
4. Rajan Counters MMT Proponents; Government Rules Out Deficit Monetisation
The central banks of many emerging markets, including India’s, are expanding their balance sheets in response to the Covid-19 outbreak. While proponents of modern monetary theory say the exercise needn’t be limited, Raghuram Rajan countered it.
While central banks can expand their balance sheets for a while, it’s really the consolidated balance sheet of the central bank and the governments you’re looking at, and there’s a limit to that, the former Reserve Bank of India governor said in his keynote address at the DBS Asian Insights Conference on Thursday.
Rajan said RBI has been expanding its balance sheet and buying government debt. Effectively, it’s borrowing from banks at the reverse repo rate and lending to the government.
That’s something it can do as long as banks are willing to be passive co-operators in this process, Rajan said.
That can stop in multiple ways.
The government is not considering to monetise its deficit at the moment for funding fiscal measures to lift the economy that’s headed for its first contraction in four decades, according to Economic Affairs Secretary Tarun Bajaj.
“…At this point in time, (deficit) monetisation is not on the table at all,” said Bajaj at an interaction with industry lobby Ficci.
“It is not being discussed with the central bank also.” Still, he said citing improving revenues, that he will be able to better answer the question in three to four months.
The government may miss its revenue targets but the economy won’t see a contraction as anticipated by many, Bajaj said.
5. Nifty Rallies, U.S. Stocks Fluctuate
Indian equity markets resumed gains after snapping a five-day winning streak on Wednesday, ending the weekly options expiry session at the day's high.
S&P BSE Sensex ended 0.7% higher at 38,140.
NSE Nifty 50 index ended nearly 1% higher at 11,237.
Gains on the Nifty 50 were led by Eicher Motors Ltd. which ended the day with a 4.9% rally.
Reliance Industries Ltd. and ICICI Bank Ltd. were the other major gainers.
Rossari Biotech Ltd., which concluded its initial public offering last week, closed 75% higher on the first day of trading in the stock markets.
Follow the day’s trading action here.
Debt-ridden Indian retailer Future Retail Ltd. slumped in credit markets after missing a dollar bond interest payment Wednesday, the latest sign of mounting strains in the nation from the pandemic.
The company’s dollar notes slid 10 cents to 51 cents on the dollar on Thursday afternoon, the biggest drop in over three months, according to Bloomberg-compiled prices.
The retailer’s debt woes add to further signs of pain in India.
U.S. stocks fluctuated as investors assessed data showing an unexpected rise in jobless claims and a slate of solid earnings from the likes of Tesla Inc. and Twitter Inc.
The S&P 500 Index was little changed following four days of gains, while the Nasdaq 100 Index declined.
Twitter rose after daily-user growth surged. Microsoft Corp. slumped after cloud growth slowed. Tesla Inc. rose after its results beat estimates.Intel Corp. reports after the close.
The dollar strengthened after U.S. initial claims posted the first increase since March.
West Texas Intermediate crude declined 0.4% to $41.74 a barrel.
Get your daily fix of global markets.
6. RBI Seeks HDFC Bank Probe Details
India’s banking regulator has asked HDFC Bank Ltd. to provide details of an internal investigation into allegations of improper lending practices in its vehicle-financing operation, people familiar with the matter told Bloomberg News.
The Reserve Bank of India is also seeking information on steps taken by HDFC Bank to remedy any issues identified during the investigation, the people added, asking not to be named as the information isn’t public.
A spokesman for HDFC Bank declined to comment, saying that the lender has nothing to add to recent remarks on the investigation by Managing Director Aditya Puri.
Puri said on Saturday that the inquiry was triggered by a whistle-blower and uncovered “personal misconduct” by some of the bank’s employees.
HDFC Bank has said that it has already taken appropriate action against the set of employees.
7. L&T’s Optimism
India’s largest engineering-to-construction company is seeing green shoots as the economy reopens after the world's strictest lockdown to contain the pandemic.
“We find that there are lots of green shoots. We see projects in many sectors, especially in heavy civil [infrastructure], power transmission distribution and in water areas,” said SN Subrahmanyan, managing director and chief executive officer at Larsen & Toubro Ltd., told BloombergQuint in an interview.
These projects, he said, will come to fruition during the course of the year.
Some of them may come in the second quarter, and some may go to the third and fourth quarter or even the next fiscal, he said.
Subrahmanyan also expects a fall in government capex amid tight fiscal conditions and diversion of funds to social sector.
8. Flipkart's Wholesale Strategy
Flipkart acquired a 100% stake in Walmart Inc.’s cash-and-carry business as part of the strategy of the online retailer’s majority owner to consolidate its portfolio in the country, strengthen supply chain and ramp up offerings to mom-and-pop stores.
Walmart India—the wholly owned subsidiary of the world’s largest retailer that acquired Flipkart two years ago for $16 billion—operates 28 cash-and-carry stores.
These outlets, branded as Best Price Modern Wholesale, will come under Flipkart Wholesale, which will be launched in August, according to a company statement.
Getting a wholesale piece right becomes important for online retailers.
9. Jail Even After Bail For Shivinder Singh
The Delhi High Court granted bail to Shivinder Singh in an alleged money laundering case registered against him by the Enforcement Directorate.
The court granted bail on a bail bond of Rs 1 crore, two sureties of Rs 25 lakh each, among other conditions, according to the order pronounced on Thursday.
That, however, won't result in his release as he continues to be under the judicial custody of the Economic Offences Wing of Delhi Police on allegations of fraud.
After the arrest, Shivinder claimed that he was a victim of fraud and offered to cooperate with the investigating agencies.
10. Covid-19: India Cases Cross 12 Lakh, Deaths Near 30,000
India continues to witness a rapid rise in coronavirus cases as the highly contagious pathogen spreads rapidly in the world’s second-most populous nation.
The country added nearly over 45,000 fresh cases in 24 hours, taking the total tally over 12.3 lakh, according to the Health Ministry’s update as of 8 a.m.
Of these, more than 7.8 lakh have recovered.
The country reported 29,557 recoveries on Thursday, the most number of patients discharged in a single day.
Track all updates around the Covid-19 outbreak in India here.
Globally cases reached 1.52 crore with over 6.23 lakh dead.
Tokyo and Hong Kong were among cities grappling with a spike in infections after worldwide Covid-19 cases exceeded 15 million.
U.S. infections increased 1.8%, matching the daily increase in the past week.
Follow the global spread of the virus here.