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This is a roundup of the top stories of the day.
1. The Men Who Will Decide On RBI’s Reserves
The Reserve Bank of India, in consultation with the government, constituted a committee led by the central bank’s former Governor Bimal Jalan to look into its Economic Capital Framework.
The committee also comprises...
- Former RBI Deputy Governor Rakesh Mohan
- RBI Central board members Bharat Doshi and Sudhir Mankad
- Economic Affairs Secretary Subhash Chandra Garg
- RBI Deputy Governor NS Vishwanathan
The committee is expected to submit its report within 90 days of its first meeting.
The decision to create the committee was taken at the RBI’s central board meeting on Nov 19. That meeting came after differences between the RBI and the government spilled out in the open followed by Urjit Patel’s resignation as RBI governor nine months ahead of his term ended.
Here are the terms of reference for the Economic Capital Framework committee.
2. Stricter Rules For Online Retailers
Tightening norms for online retailers like Flipkart and Amazon, the government on Wednesday took a host of steps and barred them from selling products of companies in which they have a stake.
- “An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” according to a statement by the Commerce and Industry Ministry.
- It also prohibited e-commerce companies from entering into an agreement for exclusive sale of products.
- These and other changes will come into effect from Feb.1 this year.
This will impact the private (self-owned) labels that many e-commerce platform retail online. The bar on exclusive sale arrangements will also hurt e-commerce players.
Read the full story here.
3. Indian Markets Fight Back
Indian equity benchmarks snapped a three-day decline to stage a sharp comeback in afternoon deals led by HDFC twins, Reliance Industries and Larsen & Toubro.
- The Sensex rose 0.51 percent or 180 points to 35,650.
- The NSE Nifty 50 Index rose 0.62 percent or 66 points to 10,730.
- Earlier in the day, the benchmarks fell sharply but a short-covering rally in afternoon trade along with Brent crude extending its drop below $50 per barrel lifted the markets.
- The Sensex surged 640 points from day's lowest level while the Nifty touched a high of 10,747.
- Thirteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Telecom Index's 1.92 percent gain.
Follow the day’s trading action here.
U.S. stocks too have rebounded from the worst-ever pre-Christmas session. The S&P 500 halted a four-day rout of almost 8 percent, clawing back from the brink of a bear market.
More on U.S. market action here.
4. Are The Bears Lurking Near Dalal Street?
The divergence in returns by the U.S. and Indian markets is at its widest in five years, according to BloombergQuint analysis.
Going by history, that suggests turbulence for the domestic market ahead.
- Since mid-November, S&P 500 Index plummeted 10 percent while India’s Nifty 50 rose 4 percent during the period.
- That caused India VIX, a measure of volatility, to cool 11 percent while the U.S. fear gauge surged 40 percent. In fact, the benchmark measure of expected volatility in U.S. stocks is trading higher than the usually rockier Indian counterpart.
- The current divergence in volatility is comparable with August 2015 when China’s Black Monday rattled the global markets as S&P 500 Index tumbled more than 10 percent in five days. The Indian benchmark fell around 8 percent, causing volatility to spike 55 percent. The spread went up sharply from -2.50 to 12.60 in a week then.
Read BQEdge here - U.S. Market Has A Bearish Signal For Indian Equities
5. Brent Crude Dips Below $50, Then Rises
Oil in London fell below $50 a barrel for the first time since July 2017 as broader financial market turmoil and worries over U.S. supply countered signs the OPEC+ coalition may extend or deepen output cuts.
- Futures fell as much as 1.1 percent, after Monday’s 6.2 percent drop.
- Russian Energy Minister Alexander Novak tried to reassure investors, saying the market will be more stable in the first half of 2019 due to the deal between OPEC and its allies to cut output, and that producers will react if the situation changes.
- Meanwhile, S&P 500 Index futures fluctuated Wednesday while the benchmark U.S. gauge is at the brink of sliding into a bear market.
Oil has plunged more than 40 percent from a four-year high in October.
6. Gold Hits Six-Month High
Gold is rallying into the end of 2018 as turmoil in global equities, the partial U.S. government shutdown and concerns about the outlook for next year stoke demand, lifting prices to the highest in six months.
- Bullion climbed as much as 0.5 percent on Wednesday, extending last week’s gain and on course for the biggest monthly advance since January 2017. Money managers are the most bullish on prices they’ve been in half a year.
- The metal is proving to be a beneficiary of the sell-off that’s engulfed global equities after U.S. shares tanked on Monday followed by losses in Asia on Christmas Day.
- Investors are turning away from risk amid further signs of dysfunction in Washington, with multiple sources of concern including President Donald Trump’s showdown with the Federal Reserve, the impasse over the budget, and fall-out from the resignation of Defense Secretary James Mattis.
Silver has also been lifted by the rush for precious metals.
7. NBFCs Want Easier Regulation
A delegation of representatives from the non-banking finance company and housing finance industries met Prime Minister Narendra Modi on Wednesday to seek easier norms regulating the sector as they battle a funding crunch that started due to a spate of defaults by Infrastructure Leasing and Financial Services Ltd.
“Lately, the regulatory framework has been amended with the objective of aligning it with that for banks. As a result the focus has been more on the asset side of our balance sheet which as on date is subject to regulation which have been harmonized with that for banks,” the delegation noted in its request. “However, the liability side ie, fund raising activity still remains highly restricted creating a funding crunch.”
What NBFCs want - Here’s the list.
8. Cement Prices Tumble
All-India cement prices fell for the fifth straight month in December because of excess supply from the south and year-end volume push by pan-India players like ACC Ltd. and Ambuja Cement Ltd.
- Prices fell for the fifth month in a row in the south, according to BloombergQuint’s interaction with dealers and separate surveys by at least two brokerages.
- Demand remained muted in northern, central India and western India. On an average, cement was cheaper by Re 1 per bag across regions, continuing the downtrend that started in August.
9. Cutting Down Your TV Bill
Smita Gaikwad, 45, spends her evenings watching English movies and news on television. For that, she pays Tata Sky Rs 8,000 a year. She also binges on series and movies on Netflix and Amazon Prime, paying around 11,000 a year. The Mumbai-based media and marketing professional is unaware that from Dec. 29, she is allowed to create her own pay TV packages that can help lighten her Rs 19,000 yearly bill.
The DTH operator is yet to inform her about it, Gaikwad said. “I want only certain channels but invariably pay for the entire bundle I am offered,” she said. “Also, HD channels are expensive.”
She is not alone. Consumers BloombergQuint spoke to in four cities shared the view.
Here’s how consumers are managing content costs.
10. Surrogacy Regulation Bill: Cause For Congratulation Or Concern?
This unnuanced ban on commercial surrogacy will only drive the practice underground, unwittingly serving to increase, rather than diminish, the exploitation of the very women it hopes to protect, write Bronwyn Parry of King's College London and Rakhi Ghoshal.
- The presumption that any woman found undertaking a compensated surrogacy must have been “compelled to do so by her husband, the intending couple or any other relative” is deeply patriarchal.
- The bill simply displaces exploitation to a wholly unprotected invisible class of ‘close relatives’.
- There can thus be no ethically sustainable grounds for discriminating against those with structural infertility in the way this bill currently does.
A surrogate is a last resort, not the first, they argue in this column.
. Read more on Business News by BloombergQuint.