BQuick On May 7: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Covid-19: Surat’s Full Lockdown, Karnataka’s U-Turn On Migrants
The total number of confirmed Covid-19 cases in India breached the 50,000-mark and inched closer to 53,000, all in the last one day.
- India reported 3,561 new cases in 24 hours, according to the Health Ministry’s 8 a.m. update today.
- Total confirmed cases stood at 52,952.
- This includes over 15,267 people who've been discharged and 1,783 people who've died.
- The country saw 1,084 new recoveries and 89 deaths over the last one day.
- AIIMS-Delhi Director Dr. Randeep Guleria today said that the Covid-19 pandemic is likely to peak by June-July in India.
- Maharashtra Chief Minister Uddhav Thackeray held an all-party meet today to discuss the worsening Covid-19 situation in the state.
- As many as 531 Maharashtra police personnel have tested positive for Covid-19 so far, according to the state Home Minister Anil Deshmukh. 39 of them have recovered, while five policemen have died due to the virus.
- Civic authorities in Surat announced that all shops selling vegetables and fruits will remain closed in the city from May 9 - 14. The announcement came a day after the Ahmedabad civic authorities ordered closure of all shops, except those selling milk and medicines, for a week.
- Kerala saw another day of no new cases being reported. Meanwhile, the first of the two flights from the UAE carrying 177 Indian nationals left for Kerala. A total of 354 Indian nationals will return home as part of the repatriation exercise named 'Vande Bharat Mission.'
- Meanwhile, the Bharatiya Janata Party government in Karnataka took a U-turn, and decided to deploy special trains from Friday to send back stranded migrant workers to their native places, days after it abruptly withdrew a request sent to the Railways.
Track latest developments around the Covid-19 outbreak in India here.
Globally, cases crossed 37 lakh leaving over 2.64 lakh people dead.
- The number of new cases in Russia surged above 10,000 for a fifth day.
- Germany announced the most new infections in almost a week.
- The World Health Organization is considering a new mission to seek the source of the coronavirus in China.
- The U.K. is set to ease parts of its nationwide lockdown on Monday.
Follow the global spread of the pandemic here.
2. Tragedy In Vizag: Gas Leak At LG Polymers Plant Kills 11
A major gas leak at a polymer plant near Visakhapatnam has killed eleven people and affected more than 1,000 in the area, the central government said.
- Styrene gas, used for making polystyrene plastic, fiberglass, rubber and latex, leaked from LG Polymers Ltd.’s plant at RR Venkatapuram village in Gopalapatnam in the wee hours of Thursday, affecting villages in a five-km radius.
- The gas leak happened when workers at the plant were making preparations for reopening of the facility after easing of lockdown restrictions.
- The Andhra Pradesh government has ordered a probe into the incident.
- There was no more leakage of gas and the situation was now “stable and under control”, he said.
- The National Human Rights Commission has issued notices to the central and Andhra Pradesh governments over deaths due to the Vizag gas leak.
The daybreak saw some grim scenes as people were being rushed for medical assistance.
3. RIL Considers Selling Asian Paints Stake
Reliance Industries Ltd. is considering selling its stake in India’s largest paint maker valued at about $989 million as the conglomerate steps up efforts to trim its debt, people familiar with the matter told Bloomberg News.
- The company controlled by Mukesh Ambani, Asia’s richest person, is in discussions with banks for a potential sale of its 4.9 percent stake in Asian Paints Ltd. through a series of block trades, the people said, asking not to be identified as the information is not public.
- Reliance holds the stake through Teesta Retail Pvt.
- Shares of Asian Paints closed 1 percent lower at Rs 1,594.3 rupees on Thursday in Mumbai.
- Reliance’s 4.9 percent stake in the paint maker is worth about Rs 7,490 ($989 million), based on the last price.
A stake sale would be the latest in a string of fundraising plans unveiled by Reliance.
4. Sensex Falls, Oil Jumps
Indian markets remained stuck in a narrow range to end Thursday’s trading session with losses.
- S&P BSE Sensex traded in a 400 point range throughout the session to end 0.76 percent lower at 31,443.
- NSE Nifty 50 ended at 9,199, down 0.77 percent.
- Forty out of the 50 Nifty constituents ended with losses.
- Both benchmarks have declined for three out of the four trading sessions this week.
- Among sectoral indices, Nifty FMCG index and the Nifty Bank index ended with losses of over 1 percent.
Follow the day’s trading action here.
Even as investors remain bullish on consumer goods makers amid Covid-19 pandemic, Envision Capital’s Nilesh Shah said such stocks were very expensive and would only become attractive at lower valuations.
Shah explains why valuations do not support the challenges that FMCG may face.
U.S. equities climbed, with the Nasdaq Composite Index briefly turning positive for the year, as investors sift through the latest company earnings and data showing another surge in the number of out-of-work Americans.
- All three of the main U.S. equity benchmarks were higher after a mixed session on Wednesday.
- News that top U.S. and Chinese negotiators will speak as soon as next week on trade helped boost sentiment.
- The number of new claimants for unemployment benefits surged by about 3.2 million, though a bad number was expected by investors and the market took it in stride.
- Crude jumped to more than $26 a barrel in New York after Saudi Arabia raised prices.
Get your daily fix of global markets here.
5. Will Amazon Be Future Group’s Savior?
Amazon.com Inc. is considering adding to its investment in Future Retail Ltd. as the debt-ridden Indian retailer battles a cash crunch, according to people familiar with the matter.
- Amazon, which holds an indirect stake of 1.3 percent in Future Retail, is in talks with the company’s parent Future Group over the potential stock purchase, said the people, who asked not to be identified as the information is private.
- The U.S. online retail giant could raise its holdings in the retailer to as much as 49 percent, the people said.
- As a purchase of more than a 25% stake could trigger an open offer under stock exchange rules, Amazon is considering lining up local investors to join the deal, the people said.
A change of ownership at Future Retail looms after the Biyani family breached loan terms and came under pressure to sell their assets.
6. Yes Bank Eyes Rs 15,000 Crore Capital Raise
Private lender Yes Bank Ltd. is looking to raise up to Rs 15,000 crore by June 30, Prashant Kumar, chief executive officer of the bank, told BloombergQuint.
- The bank will try to raise the entire amount in one tranche, if the market allows it, he said.
- Yes Bank, which reported fourth quarter earnings on Wednesday, is still falling below regulatory capital requirements.
- The bank’s common equity tier-1 or CET-1 ratio is at 6.3 percent compared to the minimum requirement of 7.375 percent.
- To bridge this gap, the bank is targeting a fund-raise from investors other than those who contributed capital as part of the lender’s reconstruction scheme in March
As a strategy we would like to diversify our investor base. We may look at a combination of FPO (follow-on public offer) and QIP (qualified institutional placement). We would be very happy if we are able to raise the entire Rs 15,000 crore, but if not that, we would look at raising at least Rs 10,000-12,000 crore.Prashant Kumar, CEO, Yes Bank
The bank is currently in talks with institutional investors, Kumar said.
7. The ‘Bad Bank’ Idea Resurfaces
The Indian Banks’ Association is once again pitching the idea of creating a structure akin to a ‘bad bank’, which can ease the burden of stressed assets on the books of Indian lenders.
- Bankers are keen that a chunk of bad loans be transferred to an independent asset management company for resolution, two bankers with direct knowledge of the matter said.
- Preliminary discussions have started within the IBA and a proposal is likely to be sent to the government, the bankers quoted above said.
- The proposed AMC can be owned by a consortium of banks, the government, private sector investors and global funds, the bankers said.
The AMC will identify the right assets to purchase, the price at which to buy them and make decisions on resolution plans.
8. How RBL Bank And HCL Tech Fared In Q3
RBL Bank Ltd. reported a smaller profit for quarter ended March as the private lender increased provisions for bad loans in a virus-struck economy.
- Net profit fell 54 percent to Rs 114 crore.
- Net interest income, or core income, rose 38 percent to Rs 1,021 crore.
The bank’s asset quality deteriorated modestly in fourth quarter.
HCL Technologies Ltd.’s profit rose and margin expanded in the quarter ended March at a time the new coronavirus pandemic upended economies worldwide and disrupted trade.
- Net profit rose 3.9 percent sequentially to Rs 3,154 crore in the January-March period.
- Revenue in U.S. dollars remained terms flat at $2,543 million.
- Margin rose 70 basis points to 20.9 percent.
However, the result doesn’t show a complete impact of Covid-19 on business.
9. Hindalco’s Novelis Boost
Hindalco Industries Ltd.’s U.S. subsidiary Novelis Inc. reported better-than-expected operating income in the quarter ended March despite the disruption caused by the Covid-19 pandemic.
- Novelis, a supplier of aluminium for beverage cans and automotive companies, reported adjusted earnings before interest, tax, depreciation and amortisation of $383 million in the three months ended March, registering a growth of 7 percent from a year earlier, the company said in a statement.
- Most brokerages estimated $334-350 million.
- The standalone numbers do not include Aleris Corp.’s financials, which Novelis will start reporting when publishing earnings for the ongoing quarter.
Higher operating income is expected to reflect positively in the earnings of parent Hindalco.
10. SEBI Wants To Clear The Road For White Knights
To help listed companies tide over financial stress and avoid large-scale insolvencies, the market regulator has proposed to ease the preferential allotment rules for capital raising.
- Listed companies, which meet the eligibility criteria, will be permitted to use this route to raise funds from entities that are not part of the promoter group.
- Some experts believe that the criteria companies need to meet to qualify as “stressed” needs to be made less onerous, while others say the Securities and Exchange Board of India also needs to account for situations where the incoming investor is giving promoters an exit.
Is the eligibility criteria too stringent? Read more here.