BQuick On Nov. 27: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. India, Now Officially In A Recession
The Indian economy contracted for the second straight quarter, albeit at a slower pace, as restrictions to curb the spread of Covid-19 were eased and economic activity resumed.
India’s real GDP fell to 7.5% in the July-September quarter compared to a contraction of 23.9% in the three months ended June.
GDP at current prices was estimated at Rs 47.22 lakh crore, showing a contraction of 4.0%.
In gross value added terms, the economy contracted 7% compared to a contraction of 22.8% last quarter.
Private consumption, investments and government spending all fell during the quarter. Get complete details here.
2. Economic Data Update: Core Sector, Fiscal Deficit And Forex Reserves
The output of eight core infrastructure sectors dropped by 2.5% in October, contracting for the eighth consecutive month.
The decline was mainly due to a fall in production of crude oil, natural gas, refinery products and steel.
The production of eight core sectors had contracted 5.5% in October 2019
More details here.
India’s fiscal deficit widened further to Rs 9.53 lakh crore, at nearly 120% of the annual budget estimate, in October.
In the first seven months of the previous fiscal, the deficit was at 102.4% of the annual target.
The deficit widened mainly on account of poor revenue realisation.
The fiscal deficit or gap between the expenditure and revenue had breached the annual target in July this year.
The country's foreign exchange reserves in nominal terms increased by $64.9 billion in FY20 compared to a reduction of $11.7 billion in FY19, according to RBI.
The valuation gain, reflecting an increase in gold prices, amounted to $5.4 billion during 2019-20 as against a loss of $8.3 billion during 2018-19.
On a balance of payments basis, foreign exchange reserves surged by $59.5 billion during FY20 as against a decrease of $3.3 billion during FY19.
Net foreign direct investment flows were also higher.
3. Ola, Uber Drivers To Get 80% Of Fare
Cab aggregators in India can only draw a fee of 20% of the fare applicable on each ride, and the surge price has been capped at 1.5 times the base fare, as the Transport Ministry brings ride-hailing apps under a regulatory framework for the first time.
The app-based cab aggregators have been brought under the Motor Vehicles Act 2019.
Drivers of vehicles shall now receive at least 80% of the fare on each ride.
Cancellation fee will be set at 10% of the total fare and not exceed Rs 100.
A taxi licence is granted to be valid for five years.
Here are key highlights of the new guidelines for cab aggregators.
4. Nifty’s Best Month Since April; Gold Drops Below $1,800
India stocks clocked fourth straight week of gains, the longest streak since July and its best monthly gains since April.
The S&P BSE Sensex ended the trading session 0.35% lower at 44,149.72, while the NSE Nifty 50 Index also closed 0.35% lower at 12,968.95.
Surging inflows from foreign investors have helped drive Indian equities.
Follow the day’s trading action here.
U.S. stocks climbed back to records in thin post-holiday trading as investors assess valuations with pandemic still raging in parts of Europe and the U.S.
The S&P 500 added to its 11% November rally. The stock market closes at 1 p.m. in New York, while bond trading ends an hour later.
Treasuries advanced and the dollar headed for a second weekly decline.
Oil retreated amid rising tensions among OPEC+ members.
Gold slid below $1,800 an ounce to the lowest since July as positive vaccine news and a clearer political picture continued to undermine the haven.
Get your daily fix of global markets.
5. M&M Struggles With Supply Chain Issues
This Diwali, while dealers of automakers Maruti Suzuki India Ltd. and Hyundai Motor India Pvt. were stocked with 40-45 days of inventory, Mahindra and Mahindra Ltd. dealers were sitting on just 14 days worth of potential sales.
This was not due to some just-in-time supply strategy or anticipation of weak demand by the Mumbai-based utility vehicle major.
M&M has been struggling with myriad supply chain issues that have slowed production and deprived the company of sales sparkle during the festive season.
Here’s why production lines at Mahindra factories moved slowly despite festive optimism in the auto industry.
6. Vedanta Vs Hedge Fund: Spotlight On Cairn India Holdings
A recent tussle between a hedge fund and Indian mining giant Vedanta Ltd. is spotlighting growing scrutiny of a unit based in the British crown dependency of Jersey.
That entity is Cairn India Holdings Ltd. (CIHL). Vedanta’s shareholder, hedge fund Kyma Capital, said earlier this month that a $956 million loan from Vedanta Ltd. to its holding company Vedanta Resources Ltd. -- channelled through CIHL -- represented an “improper transfer of value”.
Since then, Vedanta Resources’ dollar bonds have declined. The company’s $670 million of notes due June 2021 slumped as much as 7.7 cents Thursday.
Read more to see why scrutiny of Cairn India Holdings is rising now.
7. DHFL Bids ‘Abysmally Low’, Says Promoter
Kapil Wadhawan, the promoter of Dewan Housing Finance Corp., has approached the National Company Law Tribunal seeking permission to participate in the resolution process of the company.
In his application, Wadhawan said the bids received during the resolution process of the company are abysmally low and cannot ensure the maximisation of the value for the company.
For instance, he said, Oaktree has bid Rs 31,000 crore for the entire company. Out of this, only one-third is payable upfront and the balance is deferred payment.
This deferred payment, according to Wadhawan, is payable over several years from DHFL’s accruals itself. But the value of DHFL’s assets, he pointed out, comes to Rs 68,000 crore.
Wadhawan argued that this matter requires the intervention of the NCLT.
8. Credit Downgrades In India Abate
The pace of credit-rating cuts for Indian companies has slowed to the lowest since before the pandemic amid signs the local economy is coming out of its worst-ever contraction.
There have been about three downgrades for every upgrade of rupee debt since Oct. 1, the lowest since the last three months of 2019, according to data from India’s four biggest rating firms compiled by Bloomberg.
That compares with a ratio of more than four to one in favour of cuts for the previous quarter, and a record 11 to one in the April-to-June period.
A slower pace of downgrades may open the door to funding for weaker borrowers in India.
9. India Notifies Access Codes For New City Gas Distributors
The Petroleum and Natural Gas Regulatory Board has notified access codes for new city gas distributors that would help them transport, distribute and price natural gas.
The move is expected to simplify gas pipeline tariffs and attract investment for building new gas infrastructure.
The regulations will also increase competition in newer cities coming under gas distribution networks.
Oil marketers already selling CNG will not be allowed to participate through the open access route.
Here's why this benefits existing players.
10. Centre Budges, Allows Protesting Farmers To Enter Delhi
Agitating farmers have been allowed to enter Delhi and hold protests against the new farm laws after an elongated standoff with the police forces at the Haryana border. Thousands of farmers started entering the national capital from the Tikri border after braving water cannons and tear gas shells from the police.
“We have been allowed safe passage to Delhi,” said Krantikari Kisan Union president Darshan Pal.
The farmers will be allowed to hold peaceful protests at the Nirankari Samagam Ground in the Burari district, the Delhi Police Commissioner said, according to ANI.
Punjab Chief Minister Captain Amarinder Singh welcomed the decision and urged the central government to hold immediate talks with the farmers and resolve their concerns.
Follow updates from the farmers’ march against new farm laws.