BQuick On Sept. 3: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Supreme Court Pauses NPA Clock
Accounts that weren’t non-performing assets as on Aug. 31 won’t be declared such until further orders, the Supreme Court has said.
The top court’s interim order came while hearing a batch of petitions from individuals, construction bodies, hotel associations, among others, who are seeking relief from interest payments.
A bench headed by Justice Ashok Bhushan will next hear the case on Sept. 10.
The Reserve Bank of India had urged banks to grant a moratorium on term loans to help soften the economic blow of the Covid-19 outbreak.
The moratorium, which was initially for a period of three months till May 31, was later extended till Aug. 31.
During the hearing, the petitioners sought waiver of interest on loans.
...Meanwhile, Government Urges Banks To Support Borrowers
Finance Minister Nirmala Sitharaman urged banks to support borrowers who are in distress after the loan moratorium is lifted, and not let pandemic-related stress impact assessment of their creditworthiness.
Sitharaman, in a meeting to review banks’ preparedness for implementation of loan resolution framework for Covid-19-related stress, told the lenders “to proactively respond to the needs of companies and businesses, as well as those of individual borrowers, and to spearhead the efforts for rebuilding businesses desperate for help”.
The lenders, in turn, have told the Finance Ministry that they’re ready with resolution policies.
2. Diesel Prices Cut For First Time In Almost Six Months
Diesel price on Thursday was cut for the first time in close to six months after state-owned fuel retailers reduced retail selling rate by 16 paise per litre.
Diesel now costs Rs 73.40 per litre in Delhi, as against Rs 73.56 a litre previously, according to a price notification of state-owned fuel retailers.
Petrol, which witnessed the second rally in rates beginning mid-August, was unchanged at Rs 82.08 a litre.
More details on fuel prices here.
3. Vodafone Idea Eyes Fundraise For Revival
Vodafone Group Plc’s India unit is planning to raise about $1.5 billion as it seeks to turn around its fortunes in the country’s fiercely competitive wireless market, people familiar with the matter told Bloomberg News.
Vodafone Idea Ltd. is discussing a funding plan that could include a share sale, according to the people, who asked not to be identified because the information is private.
It is working with advisers including New York-based investment bank PJT Partners Inc. as it seeks potential strategic partners to buy stakes, the people said.
The telecom operator is working to identify potential investors in the U.S., the people said.
Vodafone Idea plans to discuss the options at a board meeting on Friday.
4. Sensex Flat; Nasdaq Slumps
Indian equity markets ended the weekly options expiry session little changed, having stayed in a narrow range throughout the day.
The S&P BSE Sensex ended 0.2% lower at 38,990.
The NSE Nifty 50 ended almost unchanged at 11,527.
Banks were the major underperformers in today's session.
Follow the day’s trading action here.
Investors should focus on large companies that are market leaders in their sectors as a broad-based recovery may still be out of sight due to the Covid-19 pandemic. That’s according to Macquarie India’s head Sandeep Bhatia, who sees larger stocks as a safer bet to tide over the pandemic uncertainty.
Watch the full interview to see why he feels large-caps are better placed right now.
U.S. equities fell as the rotation away from high-flying tech stocks gained steam.
The S&P 500 Index pulled back from a record high and the Nasdaq 100 headed for its biggest drop in six weeks amid declines in Nvidia Corp. and Zoom Video, while financial shares including JPMorgan Chase & Co. and Bank of America Corp. outperformed.
European shares rose after France introduced new stimulus measures to drive the economy and spur job creation.
Get your daily fix of global markets.
5. Why BSE Failed To Boost Equity Derivative Volumes
BSE Ltd. saw its equity derivatives turnover hit a record on Aug. 25 and 31 as Asia’s oldest exchange offered another round of incentives to boost volumes. But that’s half the story.
The daily turnover stood at an all-time high of Rs 1.44 lakh crore on Aug. 31, BSE said in a statement.
Yet, it doesn’t either truly reflect an increase in volumes or the success of the incentives, called Liquidity Enhancement Scheme.
Offered as a fee, these incentives are aimed at bringing liquidity to new products and increase participation.
Still, incentives and changes in the index didn’t help improve participation.
BSE’s low premium turnover underscores its struggle to gain a foothold in the equity derivatives.
6. How Marico Is Coping With Changing Consumer Preferences
Marico Ltd. is seeing a “reset” in consumption patterns in the aftermath of the Covid-19 outbreak and subsequent lockdowns that has resulted in job losses.
The maker of some of India’s most widely known household goods, including Parachute and Saffola oil brands, said it expects secular downtrading to play out in the coming quarters as consumers’ disposable income remains under stress.
Premiumisation of brands and products, according to the company, will decelerate.
Saugata Gupta, managing director and chief executive officer of the company, said that in such a situation, controlling product pricing will be imperative to protecting revenue stream.
This can be done by ensuring value products and passing on all cost advantages to the consumers. Read the full story here.
7. Uptick In Services Activity, But Still Lower Than Pre-Covid Level
A gauge of India’s services sector saw a pick up in August as economic activity gradually improves after the nation eased lockdown restrictions. Yet, it remained in the contraction zone.
The India Services Business Activity Index, compiled by IHS Markit, stood at 41.8 in August compared with 34.2 in July, according to a media statement.
That's the highest reading since March. A reading below 50 indicates contraction in business activity.
The Composite PMI Output Index, which measures combined services and manufacturing output, rose from 37.2 in July to 46.0 in August, led by the spike in manufacturing PMI.
With the services sector continuing to operate below capacity, firms reported job losses for a sixth consecutive month.
8. Beware The Government Debt-To-GDP Ratio
Quoting government debt levels as a percentage of GDP is misleading, writes Paul Sheard.
An elementary rule of data analysis is to use the correct units.
Expressing government debt levels as a percentage of GDP violates this basic rule.
It risks leading policymakers up the fiscal and monetary garden path.
The correct unit of a debt-to-GDP ratio is the time unit of the denominator: number of years.
9. What A Parliament Session Without Question Hour
The curtailment of Question Hour will put a dent in Parliament’s ability to hold the government accountable for its work in the last six months, writes Chakshu Roy of PRS Legislative Research.
MPs questioning ministers is a robust mechanism for Parliament’s scrutiny of government functioning.
Question Hour was central in uncovering newly-independent India’s first financial scandal.
Written responses constitute 92% of the total questions in Lok Sabha.
But it is the oral questioning whose live broadcasting which puts pressure on the ministers.
10. Softbank Eyes TikTok India
SoftBank Group Corp. is exploring assembling a group of bidders for TikTok’s India assets and has been actively looking for local partners, people familiar with the matter told Bloomberg News.
Over the past month, the Japanese conglomerate, which owns
a stake in TikTok’s Chinese parent ByteDance Ltd., has held
talks with the heads of India’s Reliance Jio Infocomm Ltd. and
Bharti Airtel Ltd., the people said, asking not to be identified
because the details are private.
While discussions have fizzled since, SoftBank is still exploring options, according to the people.
Representatives for SoftBank, ByteDance, Reliance and
Bharti Airtel declined to comment.
TikTok is considering selling its operations in several countries after local governments shut out the app.