BQuick On Sept. 11: Top 10 Stories In Under 10 Minutes  

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

1. Multi-Cap Mutual Funds: SEBI's New Regime

The market regulator changed the minimum allocations in multi-cap funds to diversify investments, a move that’s expected to drive flows from large caps to small and medium caps.

• The multi-cap schemes are now required to equally divide 75% of their total assets between large, small and mid caps, according a circular by Securities and Exchange Board of India on Thursday.
• What that means is that multi-cap plans will have to invest at least 25% of the assets each in equity and equity-related instruments of large-, mid- and small-cap stocks.
• According to the existing categorisation, a multi-cap fund is an open-ended equity scheme investing across large cap, mid cap, small cap stocks. These schemes were required to invest at least 65% of their total assets in equity and equity-related instruments.
• The regulator attributed the change in allocation to “diversify the underlying investments of multi cap funds” across the three categories to remain “true to their label”.

What will be the impact of the move? Read what experts have to say.

2. Industrial Activity Falls For Fifth Straight Month

India’s industrial output contracted for the fifth consecutive month in July led by a fall in the production of consumer durables and capital goods.

• The Index of Industrial Production contracted 10.4% in July compared to a year ago, according to official data released by the government. The index had fallen 15.7% in June.
• All three key sectors--mining, manufacturing and electricity generation--contracted in July.
• Industrial output, as classified by the end-use of goods, showed that output of consumer non-durables rose for a second consecutive month.

Get full details here.

3. Nifty Caps Week Of Gains; U.S. Stocks Whipsawed

Indian equity markets ended almost unchanged in today's trading session, resulting in gains for the week.

• Both S&P BSE Sensex and the NSE Nifty 50 ended at nearly the same levels as of Thursday at 38,854 and 11,464 respectively.

• The Sensex traded in a 250 point range through the session while the Nifty was stuck in a 70 point range.

Follow the day’s trading action here.

The results of India’s first nationwide serological survey suggests that more than six million people were infected with the coronavirus as early as May, which would place the country well ahead of the current official tally in the U.S.

• The survey enrolled 28,000 individuals across 70 districts in 21 of India’s 29 states. The study was conducted from May 11 to June 4.
• The number of infections is an estimate, extrapolating the results of the study to encompass the entire population.
• The findings in one of the only nationwide serological surveys that’s been conducted confirm suspicions that infections are being vastly under-counted, especially in places where testing is inadequate like India and the U.S.
• Experts also believe that the death toll from the coronavirus is far higher than that have been reported.

Going forward, the cases are likely to increase as is mortality and that could add a huge burden on the healthcare system.

6. RBI’s Quadrilemma

India is simultaneously confronting an unprecedented hit to growth, a pandemic-induced adverse supply-shock that has kept inflation much above target, an unrelenting flood of capital inflows, and a trade-weighted exchange rate that still appears expensive.

With more objectives to target than instruments at hand, how can policymakers navigate this ‘quadrilemma’?

Sajjid Chinoy details the RBI's policy options, trade-offs, and constraints.

7. Get Ready For Higher Credit Card Charges

HDFC Bank Ltd. has raised the late payment fees and interest rates on revolving balances across its credit card portfolio at a time when economic stress brought on by the Covid-19 pandemic can lead to increased defaults. The move by the country’s largest private lender may prompt others to follow.

• The late payment fees for credit cards other than the Infinia range has been raised by Rs 150-350 with effect from Sept. 1, according to the statement of charges and fees available on HDFC Bank’s website.
• Till Aug. 31, the bank was charging a flat fee of Rs 950 on late payments by customers with an overdue balance of Rs 25,000 and above.
• Starting Sept. 1, the charges have been revised, where customers with a credit card balance between Rs 25,000 and Rs 50,000 will pay a charge of Rs 1,100 on late repayments, while those with balances above Rs 50,000 will pay Rs 1,300.

Higher fees will discentivise continued delays in payments and improves recoveries for lenders issuing credit cards.

8. Vedanta Looks To Tie-Down $600 Million Before Going Private

Vedanta Resources Ltd. is in talks with banks for a further $600 million to finance the delisting of its Indian unit, people with knowledge of the matter told Bloomberg News.

• The London-based commodities conglomerate has already secured $3.15 billion in loans and bonds to buy back the shares it doesn’t hold in Vedanta Ltd.
• The company would use the extra funds to cover any shortfalls for the proposed offer of the delisting, the people said, asking not to be identified because the discussions are private.

The firm is in the final stages of arranging the additional funding lines as it awaits approval from SEBI to go private.

9. ARCs Face The Pandemic Heat

Asset reconstruction companies have seen recoveries come to a near halt over the last six months, prompting a downgrade in security receipts issued by these firms against assets purchased by them from lenders.

• Ratings agency ICRA Ltd. on Thursday said a higher proportion of security receipts are being downgraded due to fallout of the Covid-19 pandemic.
• “The recovery for the ARCs are getting affected due to deferment or failure of auctions due to unsatisfactory bids or absence of any bidders, default or delay in payment as per the agreed settlement plan or agreed restructuring terms,” it said.
• It added that resolutions under the Insolvency and Bankruptcy Code have also sharply slowed, with only 16 resolutions in the first quarter of the current financial year, compared to 35 in the previous quarter.

Representatives at ARCs said they are facing multiple challenges at present. Find out what.

10. India’s Auto Sales Grow First Time Since January 2019

Factory-gate shipments of cars and utility vehicles rebounded in August due to pent-up demand and the onset of the festive season.

• Domestic wholesales of passenger vehicles increased 14.16% year-on-year to 215,916 units last month, according to data released by SIAM.
• While monthly factory-gate car shipments rose 14.13% over the year ago to 124,715 units in August, sales of utility vehicles jumped 15.54% to 81,842 units—the second straight month of uptick.
• Overall two-wheeler sales rose for the first time in 20 months, SIAM data showed.

SIAM said the industry is positive that the upcoming festive season will pave the way for its faster revival.