BQuick On May 28: Top 10 Stories In Under 10 Minutes

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

1. Google Eyeing Stake In Vodafone Idea?

Alphabet Inc.’s Google is considering acquiring a stake in Vodafone Group Plc’s struggling Indian business, the Financial Times reported, joining Facebook Inc. in investing in the world’s fastest-growing mobile arena.

• Google may take a stake of about 5% in Vodafone Idea, a partnership between the U.K. telecom carrier and the Aditya Birla Group, though the deliberations are at a very early stage, the FT cited people familiar with the matter as saying.
• Alphabet had also held talks about buying stake in Reliance Jio but it lagged behind rivals in securing a deal, FT reported.

Google has big ambitions for India.

2. Raamdeo Agrawal’s Biggest Learning

Raamdeo Agrawal is not as bullish on equities as he usually is. And the veteran investor is doing at least one thing differently than Warren Buffett, whose advice he keenly follows, during this period of Covid-19 uncertainty.

• Buffett is certain that liquidity will be a key asset during this period of extreme volatility and unknowns, according to Agrawal.
• One reason he is so cautious could also be because of his age, he said, stressing that a 25-year-old investor would behave differently than a 50-year-old and a 90-year-old.
• For Agrawal, the biggest learning is that strong businesses can turn worse than you thought.
• While good businesses do turn bad, he said citing Buffett’s change in stance on airlines, Agrawal said the law of averages suggests that the chances of losing money by betting on good businesses is lesser.
  

Given a choice, Agrawal said he would not mind sitting on 5% of cash.

3. D-Mart: Cause For Concern?

Just as the novel coronavirus began to roil markets worldwide, investors retained faith in billionaire Radhakishan Damani-controlled supermarket chain, making it India’s most expensive large-cap stock. But now the steep valuation and muted outlook have turned analysts skeptical.

• Avenue Supermarts Ltd. trades at 101 times its estimated earnings for 2020-21, the highest among the top 100 large caps defined by the Association of Mutual Funds in India.
• The stock’s premium valuation leaves a little room for error in the company’s performance. Its consensus earnings per share was cut by 4% from a week ago to Rs 23.7.
• While the consensus revenue growth is pegged at 15% for the ongoing fiscal, it’s half of the company’s five-year average.
• And as growth recedes, operating margin may also face some pressure.

Find out the other risks that may hurt Avenue Supermarts’ growth potential.

4. Nifty Rallies; U.S. Stocks Mixed

Indian equity markets ended the May series on a strong note, logging in its second straight day of gains.

• The S&P BSE Sensex ended 1.9% higher at 32,200 while the NSE Nifty 50 index ended just below the 9,500 mark at 9,490, up 1.9%.
• The Sensex ended the May series down 4.5% while the Nifty ended 3.75% lower on a Series-to-Date basis.

Follow the day’s trading action here.

Global funds reduced their ownership in India’s top 500 companies to a five-year low in the March quarter amid the virus-induced meltdown in risk assets, according to Motilal Oswal Financial Services Ltd.

• Their holding in the Nifty500 Index fell 140 basis points during the three-month period to an average 21%, analysts Gautam Duggad and Deven Mistry wrote in a note.
• On a sequential quarter basis, foreigners increased stakes in telecom, shadow lenders and insurance among others, while cutting holdings in metals, autos and capital goods sectors.

Find out more highlights on ownership of India Inc. firms from the report.

U.S. equities rose amid a batch of economic data that showed the deep damage to the American economy last month was less severe than anticipated.

• The S&P 500 climbed as data showed another 2.1 million Americans filed for unemployment claims in the week ended May 23, while continuing claims fell for the first time during the pandemic era.
• Tech shares underperformed, with Twitter and Facebook dropping as President Donald Trump prepared to order narrower liability protections for social media platforms.
• Sino-American tensions flared again, with Chinese lawmakers approving a proposal for new national-security legislation in Hong Kong, in defiance of Trump.

Get your daily fix of global markets here.

5. Exim Bank: RBI’s ‘Insurance’

The Export-Import Bank of India is hunkering down and preparing for a period in which the world may continue to face dollar shortages.

• A sharp slowdown in trade has meant reduced velocity of dollars in the global market while nervousness in global markets have driven up the cost of accessing dollar funding.
• In order to ensure that India’s Exim Bank does not run into dollar shortages, the Reserve Bank of India, last week, said it would extend a Rs 15,000 crore line of credit to the lender.
• The line of credit would be provided for a period of 90 days, with an ability to rollover the line up to a period of one year.
• This line of credit would enable Exim Bank to avail a U.S. dollar swap facility to meet

Read more on Exim Bank’s financials and why the RBI had to step in.

6. Supreme Court Relief For Migrants, At Last

The Supreme Court directed that no fare should be charged from migrant workers stranded across the country because of the nationwide lockdown to curb the coronavirus pandemic.

• The fare must be shared by the states, both originating and receiving, and railways must provide food and water during the journey, the top court ordered.
• “Migrant workers who are stranded shall be provided food by the concerned state at places which shall be publicised and notified for the period that they are waiting for their turn,” the Supreme Court said.
• “Migrant workers found walking on the roads must be immediately taken to shelters and provided with food and all facilities,” it said.

The hearing was attended by several intervenors. Here are some of the key arguments.

7. P Chidambaram Calls Out ‘Cruel Blow’ By Government

Senior Congress leader P Chidambaram on Thursday hit out at the government for discontinuing the Reserve Bank of India's bonds scheme, saying it is another "cruel blow" to the citizens.

• He said the government has dealt another blow to the citizens who save, especially senior citizens, as it has discontinued the 7.75% RBI bonds.
• Deploring the government action, he urged people to demand from the government that the RBI bonds be restored immediately.
• "After lowering the interest rates in PPF and small savings instruments, the abolition of the RBI Bond is another cruel blow," he said on Twitter.

Chidambaram said effectively, after tax, the bond will yield only 4.4%.

Related Coverage

• Modi government providing back-door help to BJP-ruled states, says Jharkhand Chief Minister.
• Automakers evaluating if lockdown-spurred online sales are a fad.
• India fertiliser maker sees virus outbreak delaying expansion.

8. Total Covid-19 Cases Top 1.58 Lakh In India

The number of confirmed coronavirus cases in India is close to the 1.6-lakh mark with just days left in the fourth phase of the nationwide lockdown.

• Total cases now stand at 1,58,333 including 67,692 who have recovered and 4,531 deaths.
• India added more than 6,000 fresh cases of infection for the seventh straight day.
• Authorities reported 6,566 new cases, 3,266 recoveries and 194 deaths in the 24 hours preceding the Health Ministry’s update at 8 a.m. on May 28.
• India today said that the final battle against the infectious Covid-19 can only be won through drugs and vaccines.
• “A vaccine is not a switch that it will be made available to everyone on day one,” said K Vijay Raghavan, the principal scientific advisor to the government of India.
• “In this disease everybody will need it. The logistics of making the vaccine accessible to everyone is a big challenge, and that is also being discussed now,” he said.

Track developments around the Covid-19 outbreak in India here.

Globally cases crossed 56 lakh leaving over 3.55 lakh people dead.

• Cases continued to soar in Brazil, and America reached the grim milestone of 100,000 deaths, the most in the world.
• The U.K.’s coronavirus tracing program was hit by technical problems on the day of its launch, with some health-care workers unable to log-on to the system.
• South Korea reported its biggest spike in new coronavirus cases in nearly two months, raising concerns about a second wave of infections.

Follow the global spread of the virus here.

9. ITC Taps Into Amway’s India Reach

ITC Ltd. has partnered with Amway India Enterprises Pvt. to launch its B Natural+ range of juices, opening a new channel of distribution for the maker of cigarettes to staples.

• The maker of Aashirvaad wheat flour will distribute its two variants of B Natural+ juices—orange and mixed fruit—priced at Rs 130 a litre through Amway India, according to a joint statement by the companies.
• The juices will eventually be rolled out through other channels.
• The partnership opens the possibility for ITC to distribute its other products as well through Amway India, which sells directly to consumers through its 5.5 lakh micro-entrepreneurs.

The companies didn’t elaborate what other categories of products would be involved.

10. India Risks Losing More Territory To China

China’s “occupy, build-up, intimidate, occupy some more, build-up” policy has hollowed out India’s paper claims, writes Bharat Karnad.

• What’s unusual about the latest provocations are the medieval arms the People’s Liberation Army wielded in the Pangong Tso encounter.
• The still greater surprise was the non-response of the Indian Army and government.
• Invariably there’s strategic intent behind Chinese moves.
• The Modi government needs to implement a policy of absolute reciprocal actions.

Failing which, India should be prepared for a map thoroughly changed by China.