A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

BQuick On Oct. 11: Top 10 News Stories In Under 10 Minutes 

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

1. TCS Delivers A Strong Quarter

Tata Consultancy Services Ltd.’s profit rose on the back of margin expansion as the software services exporter benefited from a seasonal jump in business and a falling rupee.

  • Net profit in the July-September quarter rose 7.6 percent over the previous three months to Rs 7,901 crore.
  • Revenue in local currency rose 7.6 percent sequentially to Rs 36,854 crore.
  • Operating profit increased 13.9 percent to Rs 9,771 crore.
  • Margin expanded 150 basis points to 26.5 percent. This is the first time in seven quarters that TCS’ margin rose to more than 26 percent.
  • Dollar revenue rose 3.2 percent to $5.2 billion, slightly higher than the anticipated $5.19 billion.

2. Sensex Slumps, Dow Dips

S&P BSE Sensex erased its 2018 advance as the biggest stock sell-off since February rolled from the U.S. through Asia.

  • The Sensex fell 2.2 percent or 760 points to 34,001.
  • The NSE Nifty 50 Index dropped 2.2 percent or 225 points to 10,235.
  • Seventeen of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Metal Index and S&P BSE IT Index, both of which fell over 3 percent each.
  • The S&P BSE Oil & Gas Index rose 2.8 percent after oil retailers jumped tracking drop in crude prices.

U.S. stocks looked to end the longest losing streak of Donald Trump’s presidency as technology shares rebounded from the worst rout in seven years.

  • The S&P 500 remained near the lowest since July, while the Nasdaq 100 Index rallied after a rout of more than 4 percent.
  • Major benchmarks swung as much as 70 basis points in early trading that saw volumes surge to 63 percent above the 30-day average.
  • The Bloomberg Dollar Spot Index decreased 0.4 percent to the lowest in more than a week on the largest dip in three weeks.
  • The yield on 10-year Treasuries climbed one basis point to 3.17 percent.
  • West Texas Intermediate crude decreased 1.3 percent to $72.19 a barrel, the lowest in two weeks.

3. Time To Go Hunting

Indian benchmarks are close to bottoming out after dropping more than 6 percent in October, according to experts.

  • Basant Maheshwari, who heads the namesake wealth advisory firm, sees the next big support for Nifty at 10,000. “We believe that the damage has been done and the same is reflecting in the price. We don’t see any small-cap stocks becoming a large cap for now.”
  • The 9,500-10,000 level for Nifty will be challenging to break on the lower side, according to N Jayakumar, managing director at Prime Securities. “I will be surprised if Nifty goes significantly below 9,800.”
  • About 60 percent of the stocks are quoting at 50 percent lower from their all-time highs, Jayakumar said in an interaction with BloombergQuint.
With the current market scenario, I think this is a great time for bottom-fishing in the markets.
N Jayakumar, MD, Prime Securities

4. The Perfect Storm

U.S. President Donald Trump can blame more than just the Fed for the recent market sell-off. It was the perfect storm that gave U.S. stocks their worst day in eight months, sending European shares to the lowest since December 2016 and driving more than 1,000 Chinese companies to fall by the daily limit.

  • The U.S. 10-year government bond yield surged to the highest since 2011 on Friday after Federal Reserve Chairman Jerome Powell heaped praise on the American economy, stoking expectations that monetary tightening will continue.
  • More companies are speaking up about the trade conflict’s impact on their business.
  • The International Monetary Fund cut its forecast for global growth this week, blaming rising trade tensions and stress in emerging markets.
  • The sell-off has seen investors rotating into previously overlooked styles or sectors and discarding old favorites, hitting index heavyweights.

Understand why global equities are suddenly selling off now.

5. Rupee Rebounds From Record Low

The rupee gained 0.12 percent to close at 74.13 per U.S. dollar after hitting a record low of 74.45 against the dollar in early trade today.

  • This comes amid sharp losses in global equity markets, including India.
  • The rupee has fallen over 14 percent this year so far, making it the worst performer among major Asian currencies, after a widening current account deficit left the local unit vulnerable to rising oil prices, trade tensions and rising interest rates in the U.S.

Here’s how the local unit did in trade.

6. More Import Curbs?

India is considering a proposal to increase import duties on a raft of products ranging from plastic to steel as it seeks to curb a ballooning current-account deficit and prop up a sagging rupee, people familiar with the matter said.

  • Prime Minister Narendra Modi’s administration is planning to increase tariff on items including furniture, chemicals and mobile phone components.
  • The prime minister’s office is planning a meeting in New Delhi as early as this week to review measures including curbs to curtail the trade gap, they said. Finance ministry spokesman D.S. Malik declined to comment.
  • The South Asian nation is trying to curb overseas shipments to prevent a further widening of the current-account deficit and stem the fall of the rupee.

Will more import curbs work?

7. Following SBI’s Lead

More banks will join State Bank of India in increasing their planned purchases of assets from non-banking financial services companies, according to a senior government official.

  • A lot of other banks are also considering portfolio purchases from NFBCs and see this as a business opportunity, the official added, requesting anonymity.
  • There were concerns that NBFCs will find it tough to refinance their market borrowings, which could severely impair their ability to grow.
  • The risk emerged first out of tight liquidity conditions and then a trust deficit that hit the market after defaults by Infrastructure Leasing & Financial Services Ltd. and its subsidiaries.

Here are the other steps the government may take.

8. The Biggest Beneficiary

InterGlobe Aviation Ltd.-operated IndiGo will benefit the most from the government’s move to lower excise duty on aviation turbine fuel.

  • Under the new tax structure, excise duty on jet fuel—which accounts for more than a third of an airline’s operating costs—will be lower at 11 percent. Fuel used for regional and UDAN routes will be charged at a lower rate, while that for international flights will not attract any taxes.
  • IndiGo pays higher tax on fuel as it has deployed nearly 85 percent of its capacity on domestic routes.
  • That will be followed by SpiceJet Ltd. and Jet Airways (India) Ltd.—which have comparatively higher portion of their capacity deployed on international routes.

9. Congress’ 2019 Coalition Conundrum

Ahead of the 2019 Lok Sabha election, several parties opposed to Bharatiya Janata Party are rallying around the idea of forming state-level coalitions to block the Narendra Modi-led party’s dominance. Such a strategy is regularly touted by Congress President Rahul Gandhi. However, among India’s fifteen largest states, representing 85 percent of India’s Parliament seats, about half are unlikely to be impacted by such a strategy, writes Richard Rossow.

  • In many states, the main fight will be directly between the BJP and Congress, with regional parties playing a very minor role.
  • There are several states where the BJP remains quite weak and is not expected to contest for a substantial number of seats.
BQuick On Oct. 11: Top 10 News Stories In Under 10 Minutes 

10. Erratic Monsoon Wreaks Havoc

The thunderous rains of India’s monsoon season determine the nation’s fate for the rest of the year. The June-through-September downpours deliver more than 70 percent of the annual rainfall. When there’s too much rain, floods cause landslides and wash crops away; hundreds of people die each year. When there’s too little, families go hungry and power plants go dark. This year’s monsoons brought both too much and too little rain, depending on the region.

  • Agriculture accounts for 16 percent of the country’s GDP and 40 percent of jobs, so a failed monsoon season hurts India’s economy.
  • Rainfall around the country this year was 9 percent lower than the 50-year average, and more than 30 percent of the country was drier than normal.
  • This year’s monsoon means T-shirts and bedsheets may get more expensive. A smaller-than-expected cotton crop in India this year—mainly due to dry weather and unseasonable rainfall in some parts—and forecasts for a global deficit in 2018–19 may help boost New York prices, which are trading near a nine-month low.