BQuick On June 16: Top 10 Stories In Under 10 Minutes  

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

1. India-China Border Row Turns Deadly

A seven-week military standoff between India and China escalated into a deadly conflict along their contested Himalayan border for the first time in more than four decades, signaling a sharp deterioration in ties between the two regional giants.

• It’s unclear how many soldiers died in Monday’s violence -- so far three Indians are confirmed killed.
• Zhang Shuili, a military spokesperson in China’s western battle zone command, said in a statement there were casualties on both sides, without elaborating.
• India’s external affairs ministry spokesperson Anurag Srivastava said “both sides suffered casualties that could have been avoided.”

Follow the latest updates here.

2. NBFCs’ Loan Moratorium Conundrum

Non-bank lenders have provided a loan moratorium to over 60% of their customers, leaving the eventual asset quality of loan portfolios under a cloud until end of August.

• “On average around 60% of NBFC customers have received the moratorium from the top NBFCs,” said Raman Agarwal, co-chairman, Finance Industry Development Council, an industry body.
• “The figure should stay the same for the second phase, given that economic activity on the ground is yet to pick-up and normalise across the country,” he said.
• Unlike in the case of private banks, most of whom have seen between 30-40% of their loan book go under moratorium, NBFCs have seen a wide variation.

Here’s what disclosures by NBFCs on loan moratoriums show about risks and challenges.

3. Nifty Pares Gains; U.S. Stocks Rally

Indian equities pared gains in a volatile session, while the rupee and sovereign bonds declined, after a skirmish between the nation’s soldiers and Chinese troops in a border area reignited geopolitical risks.

• The S&P BSE Sensex ended 1.13% higher at 33,605. The index ended over 600 points lower from its day's high of 34,022.
• The NSE Nifty 50 ended 1% higher at 9,914, 130 points off the day's high.
• Among sectoral indices, the Nifty Bank ended with gains of 2% led mainly by HDFC Bank Ltd. and ICICI Bank Ltd.

Follow the day’s trading action here.

A large number of market advisers suggest putting money in dominant companies, which will get stronger as the Covid-19 pandemic decimates the weak. But investors’ chances of creating wealth lie with applying this principle to the small- and mid-cap stocks, according to Samit Vartak.

Find out why Vartak thinks smaller companies will yield better returns.

U.S stocks pared gains after a report showed that Florida’s coronavirus cases increased.

• The S&P 500 was up about 2% after jumping as much as 2.8% when data showed retail sales surged by the most on record, adding to optimism over the economic rebound.
• Federal Reserve Chairman Jerome Powell said the U.S. economy may be bottoming out during his semi-annual policy report to Congress.
• The dollar weakened against most of its major peers, while the pound strengthened versus the euro on hopes for a Brexit deal.

Get your daily fix of global markets here.

4. Stocks Likely To Be Added Or Excluded From Large- And Mid-Cap Categories

A mix of energy and pharma stocks is likely to be included among India’s top 100 companies by market value, while select financials may be excluded as part of a SEBI-mandated reclassification.

• Abbott India Ltd., Cadila Healthcare Ltd. and Indraprastha Gas Ltd. are among the few to be included in the large caps.
• Piramal Enterprises Ltd., Rural Electrification Corp. Ltd. and Oracle Finance may be excluded from the category, according to Edelweiss Alternative Research.
• The Securities and Exchange Board of India mandates reclassification of stocks based on market capitalisation every six months and mutual funds have to realign schemes within a month. The changes will be effective from July to December 2020.

Here are the stocks that are likely to be included or excluded.

5. India Wants In On JPMorgan’s Bond Indices

India’s government is working with JPMorgan Chase & Co. to potentially include its bonds in the firm’s global indices, people with knowledge of the matter told Bloomberg News.

• India is aiming for a 7% weighting in indices tracked by global investors, one of the people said, without elaborating and asking not to be identified citing rules.
• Inclusion in global indexes could attract billions of dollars into Indian debt, at a time when public finances are deteriorating.
• India’s government in March opened up a wide swath of its sovereign bond market to overseas investors, taking its biggest step yet to secure access to global indices.

A 2013 attempt at inclusion into JPMorgan indices had fizzled out. Find out why.

6. Direct Tax Collections Slump

India’s direct tax collections dropped by over a third in the three months through June as economic activity froze during the Covid-19 lockdown.

• Tax collected until June 15—the last date for first instalment of advance tax—stood at Rs 92,681 crore, a senior government official told BloombergQuint on the condition of anonymity.
• That compares with Rs 1.37 lakh crore collected in the same period last year.
• Total corporate tax collected during the period was Rs 36,033 crore, while personal income tax collection amounted to Rs 54,025 crore, the official said.

India has budgeted to collect Rs 13.19 lakh crore in direct taxes in the ongoing fiscal

7. Fuel Prices: 10th Straight Hike

Fuel prices in India were hiked for a tenth straight day since the oil refiners resumed daily price revisions following a near three-month pause.

• Petrol price in Delhi was hiked to Rs 76.73 per litre from Rs 76.26.
• Diesel rates were increased to Rs 75.19 a litre from Rs 74.26.
• In the ten hikes, petrol price has gone up by Rs 5.47 per litre and diesel by Rs 5.8 a litre.
• Rates have been increased across the country and vary from state to state depending on the incidence of local sales tax or value added tax.
• Prices of jet fuel or aviation turbine fuel too saw a second straight increase. Rates were increased 16.3% to Rs 5,494.5 per kilolitre.

Industry officials said the hike was necessitated because benchmark international rates have bounced back from a two-decade low.

8. Covid-19: New Cases Fall For Second Day; Modi Sees Green Shoots

More than 3.4 lakh people have been infected by the Covid-19 strain of coronavirus in India, with the total number of deaths on course to cross the 10,000-mark.

• India added over 10,667 cases in the 24 hours preceding the Health Ministry’s 8 a.m. update on June 16, taking the total tally to 3,43,091.
• This includes 1,80,012 patients who’ve recovered and 9,900 deaths.
• India's cases may nearly triple to reach 8 lakh by the end of July as it abandoned a costly lockdown, a team of data scientists from the University of Michigan have predicted.
• Meanwhile, Prime Minister Narendra Modi today interacted with some state chief ministers and said the lockdown helped India control the spread of the virus.
• Modi also said that the economy is showing green shoots of recovery.

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

9. U.S. Bars Anti-Malarial Drugs For Covid-19

Analysts say U.S. drug regulator’s decision to revoke authorisation to use anti-malarial drugs to treat Covid-19 patients in cases of emergency will impact Indian pharma companies in the short term but won’t hurt earnings.

• India is one of the largest suppliers of chloroquine and hydroxychloroquine to the U.S., with Cadila Healthcare Ltd. and Ipca Laboratories Ltd. being the largest exporters.
• Brokerages Prabhudas Lilladher and Nirmal Bang Securities said the exports, allowed on humanitarian grounds, will be impacted.
• “Other countries may likely to follow the guidelines as the U.S. FDA is leading standard globally in treating Covid-19 patients through multiple therapies,” Prabhudas Lilladher said in a note.
• The brokerage, however, said this a positive for profitability as the medicines were to be supplied at least profitability amid the pandemic.

It doesn’t see any impact on the earnings for 2020-21 and 2021-22.

10. Restaurants Vs Swiggy, Zomato

India’s restaurateurs are looking to take back control from Zomato and Swiggy when they need them the most.

• The National Restaurant Association of India, with more than 50,000 members, said it’s focusing on building an alternative to food delivery apps to reduce dependence on what it calls “digital landlords”.
• It’s working with a tech platform and logistics service providers to allow restaurants to take orders through social media sites such as WhatsApp, like China’s super app WeChat.
• “We’re trying to get control of the ecosystem back into our hand which has moved completely to the aggregators,” Anurag Katriar, president of NRAI, told BloombergQuint over the phone.

The restaurant lobby is now looking to partner with about eight third-party delivery firms to keep a check on discounting.