BQuick On June 15: Top 10 Stories In Under 10 Minutes  

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

1. Lakshmi Vilas Bank: Second Suitor?

The Lakshmi Vilas Bank Ltd., a stressed old private sector bank, has found a second possible investor after a merger proposal with Indiabulls Housing Finance Ltd. was rejected in October.

• In a notification to stock exchanges on Monday, Lakshmi Vilas Bank said it has received a preliminary non-binding letter of intent from Clix Capital Services and Clix Finance India Ltd.
• It was considered for “further processing” at the bank’s board meeting held on June 15.
• “Under the non-binding LOI, the proposed transaction is subject to completion of due diligence, which the bank and the intending parties will be carrying out and will be subject to regulatory and other customary approvals,” the bank said.

Find out who Clix Capital is, and more about the troubles of Lakshmi Vilas Bank.

2. Period Of Deflation?

India’s wholesale inflation fell to the lowest in more than four years, led by a fall in fuel and power prices.

• The Wholesale Price Index fell 3.21% in May on an annual basis, the most since November 2015, after an increase of 0.42% in March, according to a media statement released by the Ministry of Commerce and Industry.
• The contraction in wholesale prices in May is the first in four years.
• Economists expect it to continue, indicating the onset of deflation in wholesale prices.
• Deflation occurs when there is a general decline in prices because of poor demand.

Here’s what deflation could mean for retail prices.

3. India’s Trade Improves Slightly In May

India’s trade fared slightly better in May than a month ago as restrictions to contain the coronavirus pandemic were eased and parts of the global economy reopened.

• Exports contracted 36.5% from a year earlier, while imports declined 51%, leaving a trade deficit of $3.15 billion, according to data released by the Commerce Ministry Monday.
• The double-digit decline was still better than the sharp contraction seen in April at the height of a nationwide lockdown to check the virus’s spread.

Four of the country’s top 30 export categories showed growth in May.

4. Tata Motors’ Rs 9,894-Crore Loss

Tata Motors Ltd. reported a quarterly loss as the Covid-19 pandemic led to a slump in vehicle sales.

• Net loss stood at Rs 9,894.2 crore in the quarter ended March.
• The loss is exaggerated as the company made a Rs 2,549-crore provision for impairment in its passenger vehicles business, onerous contracts and subsidiaries.
• Revenue fell 28% year-on-year to Rs 62,493 crore.
• Operating profit declined 70.4% to Rs 2,373.4 crore.

Still, Tata Motors said the worst of the pandemic-hit is yet to come.

5. Indian Stocks Join Global Selloff; Crude Slips

Indian equity markets mirrored the sell-off across global equities as investors remained concerned over a second wave of Covid-19 infections.

• The S&P BSE Sensex ended 1.63% lower at 33,228. The index managed to recover 300 points from the day's low of 32,923.
• The NSE Nifty 50 index too ended with losses of 1.6% at 9,813, gaining almost 90 points from the day's low of 9,726.
• Shares of tyremakers rallied after India imposed curbs on imports of certain pneumatic tyres, used in cars, buses, trucks, motorcycles and scooters, in a move to protect domestic manufacturing.

Follow the day’s trading action here.

U.S. stocks began the week on a down note and Treasuries rallied on signs that a second wave of the pandemic is emerging.

• The benchmark S&P 500 Index dropped as much as 2.5% before cutting the decline in half. Energy, financial and industrial stocks led the losses.
• The dollar strengthened against most other major currencies.
• Investors sought the safety of havens, pushing the yield on 10-year Treasuries down by three basis points.
• West Texas Intermediate crude fell 2.9% to $35.20 a barrel, the lowest in more than two weeks.

Get your daily fix of global markets here.

6. Covid-19: Silver Linings For India Inc.

Disruption caused by the Covid-19 pandemic will improve the overall capital efficiency of the corporate system. And that’s only one of the advantages that will come out of the current crisis, according to Bharat Shah.

• Stronger businesses will have the opportunity to grow and eventually be much bigger and better in the event of marginal players getting decimated, the executive director of India’s largest portfolio manager, ASK Investment Managers Pvt., said at a virtual PMS AIF World Investor panel discussion.
• As bad capital gets destroyed and is replaced with good capital, the overall efficiency of the system rises, he said.
• On the other hand, cost of capital will also fall as a result of the crisis, as India has remained disciplined in terms of its fiscal deficit and has managed to structurally tame inflation, he said.

Watch the full conversation where Shah explains why it is a good time to invest if investors are patient enough.

7. Mall Owners Vs Retailers

While mall owners either waived or deferred rents for retailers during the world’s strictest lockdown, they have so far rejected calls for renegotiating contracts. Fear of lower-income is just one reason. Many developers have borrowed money against future rentals and charging tenants less may curtail their ability to meet this obligation.

• Lease rental discounting and securitisation of receipts are ways to borrow against expected payments.
• And as shopping complexes thrived in India even as online retail is killing malls elsewhere, large developers obtained loans against this future income.
• Anticipating no recovery anytime soon, retailers want malls to also restructure leases to ease their burden. Most prefer a shift to revenue sharing.
• Mall owners so far have been firm on sticking to contracts.

BloombergQuint spoke to retail chains, mall owners and developers on the issue.

8. As Covid-19 Cases Rise, Chennai To Go Under Another Lockdown

More than 3.3 lakh people have been infected by the Covid-19 strain of coronavirus in India, with the pace of new cases increasing at a time the country is reopening for business.

• India added over 11,500 cases in the 24 hours preceding the Health Ministry’s 8 a.m. update on June 15, taking the total tally to 3,32,424.
• This includes 1,69,798 patients who've been discharged and 9,520 who've died.
• Authorities reported 11,502 new cases, 325 deaths and 7,419 recoveries in the 24 hours.
• Home Minister Amit Shah held a meeting with the leaders of all political parties of Delhi on Monday to discuss about the novel coronavirus situation.
• The Covid-19 tally climbed by over 10,000 and breached the 40,000 mark in Delhi.
• Chennai and adjoining areas will be under lockdown from June 19 to 30 and a full-scale shutdown will be observed on two Sundays, Chief Minister EK Palaniswami said.

Track news and developments around the Covid-19 pandemic in India here.

Desperation for a way to keep economies from collapsing under the weight of Covid-19 could mean settling for a vaccine that prevents people from getting really sick or dying but doesn’t stop them from catching the coronavirus.

• At least one of the fastest-moving experimental shots has already advanced into human trials after showing an impact on severe disease -- but less so on infection -- in animals.
• Experts say such a product would probably be widely used if approved, even if that’s as much as it contributes until a more effective version comes to market.

There are drawbacks, though.

9. A ‘Google Tax’ To Raise Revenue?

The governments across the world should consider imposing high taxes on large firms having monopoly or limited competition and lower rates for smaller companies in highly competitive sectors to raise revenue during the pandemic, according to a report.

• As countries are in “pressing need” for fiscal resources, maintaining the present tax rules will not be sufficient, said the report by the Independent Commission for Reform of International Corporate Taxation, a fair tax advocacy.
• The governments should consider a progressive digital services tax, which countries like India, Austria, Brazil, France, the U.K., Italy, Indonesia, Spain, Turkey have either adopted or are considering introducing, the report said.
• The progressive tax rate would mean an increasing tax rate as sales increase.

As the world economy recovers, tax cuts will not lead to more corporate investments due to excess capacity and uncertainty on expansion.

10. Cheque Bouncing: Join The League Of ‘Civil’ised Nations

Society has nothing to gain by imprisoning a person who cannot pay their debts even after all of their assets have been attached and possessed by their creditors, writes Prashant Reddy.

• Section 138 is an embarrassment to the Indian legal system.
• Most of the civilised world has done away with the idea of sending people to prison due to their inability to discharge their contractual debts.
• It is better for such persons to engage in productive activity in society and pay back their debts to their creditors.

Apart from being in violation of both international law and the basic norms of civilised countries, there are strong policy reasons to oppose Section 138.