BQuick On June 22: Top 10 Stories In Under 10 Minutes    

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

1. Stores Are Open. Are Customers Shopping?

India continues to ease restrictions intended to curb the spread of the Covid-19 virus. Early indications suggest that consumption has seen a spurt as the lockdown eased but economists and company executives remain uncertain about the sustainability of that pick-up.

• Private consumption, with a share of about 60% in the economy’s nominal GDP, typically leads growth.
• However, growth in private consumption had weakened even before the pandemic struck.
• Over the lockdown, consumption of essentials remained broadly stable but discretionary purchases stalled.

BloombergQuint spoke to a cross-section of retailers to understand demand from apparel and footwear to jewellery and electronics.

2. Get Ready For Cheaper Broadband

India is considering a proposal to reduce the license fee for fixed-line broadband services to households, a move that would boost access and lower cost for internet service in Asia’s third-largest economy.

• Under the proposed plan, license fee on the so-called adjusted gross revenue earned from households for providing fixed-line broadband services will be slashed to Re 1 a year (0.01 cents), people with knowledge of the matter told Bloomberg News.
• The note said the estimated license fee for fixed-line broadband services, calculated at the rate of 8% of adjusted gross revenue, is about Rs 880 crore a year.
• Relevant ministries have been asked to share their view on the proposal before it goes to the cabinet for approval.

There will be no change for services provided to commercial users.

3. Nifty Ends Off Day’s High; U.S. Stocks Swing

Indian equity markets managed to hold on to gains but ended off the highest point of the day, with the NSE Nifty 50 index reversing from its 200-week moving average.

• The S&P BSE Sensex ended 0.5% higher at 34,911. The index fell over 300 points from the day's high of 35,213.
• The NSE Nifty 50 index could not sustain above its 200-WMA of 10,375 and fell over 80 points from the day's high of 10,393.
• Among the sectoral indices, the PSU Bank index emerged as the top gainer, ending 3.9% higher.

Follow the day’s trading action here.

Financials, “the lifeblood of the economy”, will always give the best money-making opportunities to investors, according to Marcellus Investment Managers Pvt.’s Pramod Gubbi, even as the sector faces the risk of rising bad loans due to loan moratoriums amid the coronavirus pandemic.

Here are the three things investors should look at while picking financials.

U.S. stocks fluctuated after rising in the overnight session as investors weigh the strength of the economic recovery against rising virus infection rates that have sparked some new temporary shutdowns.

• The S&P 500 was mixed after advancing almost 2% last week. The Nasdaq tech-heavy indexes were little changed.
• Gold neared a seven-year high, while the dollar weakened.
• European stocks slumped, with Wirecard AG in freefall after more than $2 billion in assets went missing.
• Crude oil hovered below $40 a barrel in New York.

Get your daily fix of global markets here.

4. How Far Can Covid-19 Drugs Boost Glenmark, Cipla?

Analysts expect the launch of two anti-viral drugs to treat Covid-19 patients to benefit Glenmark Pharmaceuticals Ltd. and Cipla Ltd. in the short term but subside as competition increases.

• Glenmark received the Indian drug regulator’s approval to manufacture and market a generic of Favipiravir for treating mild to moderate infection.
• Cipla launched a generic of Remdesivir under brand name Cipremi to treat patients with severe symptoms.
• Reacting to the drug launch, Glenmark shares surged as much as 40% on Monday, the biggest single-day jump on record, while those of Cipla rose nearly 9.5%.

Find out what market analysts and brokerages expect from the two stocks.

5. RIL Is Debt-Free, But When Will It Show?

Reliance Industries Ltd. has sold stake worth more than $15 billion in its digital and telecom unit and raised funds from shareholders, keeping Mukesh Ambani’s promise of making the telecom-to-energy company debt-free this year. At least, technically.

• Its actual impact on the balance sheet, however, will be visible by next fiscal.
• The sale of stake in Jio Platforms are binding pacts with high-profile investors, including Facebook Inc and sovereign and private equity funds. The money will, however, flow in after regulatory approvals.
• Assuming all stake sales get approval soon, the company’s balance sheet will turn completely net debt-free only by next year when it receives the full proceeds of the rights issue.
• So far, RIL has only received Rs 13,281 crore, or 25% of the proceeds, for the partly paid shares.

Here’s the other way the balance sheet would become net debt free earlier.

6. Bad News For Yes Bank Tier-II Bondholders

Yes Bank Ltd. will skip payment of interest on upper tier-II bonds as the private lender fails to meet regulatory requirements on capital adequacy.

• The bank will be unable to pay 10.25% interest/coupon on the unsecured non-convertible debt instruments, due for payment on June 29, according to an exchange filing.
• Yes Bank said it received a communication from the Reserve Bank of India, expressing its inability to accede to the private lender’s request for payment of interest as it doesn’t meet the minimum capital requirements currently.
• The unpaid interest amount, according to the filing, shall be accumulated and paid out to investors later, if the bank meets the stipulated regulatory requirements.

This is also not the first time that the regulator has stopped the bank from repaying dues to bondholders.

7. Manmohan Singh’s Advice To Narendra Modi

In his first remarks on the India-China Ladakh faceoff, former Prime Minister Manmohan Singh said his successor Narendra Modi must be mindful of the implications of his words and cannot allow China to use them as a vindication of its position.

• Noting that disinformation is no substitute for diplomacy or decisive leadership, Singh called upon the prime minister to ensure justice for soldiers who died defending India's territorial integrity.
• "To do any less would be a historic betrayal of people's faith," the former prime minister said in a statement.
• Singh said this is a moment where we must stand together as a nation and be united in our response to this brazen threat.

India is standing at a historic crossroad, Singh said.

8. What Cards Does India Hold?

There are two: economic and diplomatic. Neither is singly sufficient to counter Chinese behavior, nor are they mutually exclusive, writes Raj Bhala.

• A purely economic response underestimates the national security threat to India and the world.
• A purely diplomatic response brands India as weak. India’s best option is to pursue both simultaneously, tailoring each to historical lessons and present realities.

India’s best option is to pursue both simultaneously.

9. Covid-19: BMC’s Mission Zero, India’s New Hotspots

The Covid-19 outbreak in India continued to spread rapidly with the country reporting over 4.25 lakh confirmed cases so far.

• The country added 14,821 new Covid-19 cases in the last 24 hours, according to Health Ministry’s 8 a.m. update.
• The total tally rose to 4,25,282. This includes 1,74,387 active cases, 2,37,196 recoveries and 13,699 deaths.
• The Brihanmumbai Municipal Corporation today launched a rapid action plan called ‘Mission Zero’ aimed at breaking the chain of spread in Borivali, Dahisar, Malad, Kandivali, Bhandup and Mulund.
• Meanwhile, Uttar Pradesh Chief Minister Yogi Adityanath directed all district magistrates and chief medical officers to make a work plan for launching a screening drive while stressing on increasing the coronavirus testing capacity.

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

After overwhelming India’s megacities, the coronavirus is now moving through the country’s vast hinterland.

• The states of Bihar, Assam, Jharkhand, Odisha and Uttar Pradesh received the most number of returning laborers -- now they are also witnessing the sharpest rise in new cases in the two weeks to June 8, according to internal government estimates seen by Bloomberg.
• In the rural districts of Rajasthan and Karnataka, the virus is also spreading rapidly, it showed.

Infections have now spread to 98 of the country’s 112 poorest rural districts.

10. The ‘Pay Before Stay’ Question

A pertinent question has arisen in the Tata Trusts income tax case—one that will impact all taxpayers defending their positions before Income Tax Appellate Tribunals across the country. A larger bench, to be constituted by the president of the ITAT, will soon decide whether it is mandatory for a taxpayer to deposit 20% tax or interest before an appeal can be admitted.

• The Income Tax Department had raised a Rs 99-crore tax demand on Tata Education and Development Trust—a body registered for charitable activities.
• The demand was raised on grounds that the trust had no requisite approvals from the Central Board of Direct Taxes for claiming exemption from tax on the income remitted by it to foreign educational bodies. This demand was challenged by the trust before Mumbai ITAT.
• But the tax department insisted that the trust must deposit 20% tax before proceeding with the appeal in accordance with a recent amendment in the Income Tax Act.

What do legal experts make of this questionable policy? Find out here.