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BQuick On Nov. 21: Top 10 Stories In Under 10 Minutes

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This is a roundup of the top stories of the day.

1. Airlines' Distress Signal

Airlines in India are asking the government to help them obtain unsecured credit from oil companies and airports, as fuel-price increases push them deeper into losses and imperil their survival.

  • Competition and aggressive pricing are stopping fares from rising to reflect higher input costs, the Federation of Indian Airlines said in a letter sent to the aviation ministry’s top bureaucrat last week and obtained by Bloomberg News.
  • Airlines are “facing challenging times and substantial losses in the domestic environment,” the communication addressed to Aviation Secretary Rajiv Nayan Choubey said.

The plea is the latest signal of the crisis facing airlines in India.

2. Half Of India’s ATMs May Shut Down

Regulatory changes are making it unviable to operate ATMs and may lead to the closure of half of the 2.38 lakh machines in the next five months, the Confederation of ATM Industry warned.

“Service providers may be forced to close down almost 1.13 lakh ATMs across the country by March 2019. These numbers include approximately one lakh off-site ATMs and a little over 15,000 white label ATMs,” Catmi said in a statement today.

  • Closure of the ATMs will impact thousands of jobs and also the financial inclusion efforts of the government, it said.
  • The industry body said that recent regulatory changes, including those on hardware and software upgrades, coupled with mandates on cash management standards and the cassette swap method of loading cash, will make ATM operations unviable, resulting in the closure.

The body wants banks to step in bear the additional costs.

3. Indian Markets Continue To Fall

Indian equity benchmarks ended lower for the second day, posting their worst two-day decline in nearly a month.

  • The S&P BSE Sensex Index ended dropped 0.77 percent, or 274 points, to 35,199.
  • The NSE Nifty 50 Index fell 0.53 percent, or 56 points, to 10,600.
  • Six out of 11 sectoral gauges compiled by National Stock Exchange advanced, led by the NSE Nifty Pharma Index’s 1.7 percent gain.
  • On the flipside, NSE Nifty IT Index was the top sectoral loser, falling 2.8 percent.

Follow the day’s trading action here.

4. Edelweiss Says Look Past 2019 Elections

While investors in India are worried about upcoming elections and threats to economic expansion, it’s not yet time to lighten up on equities, according to Edelweiss Financial Services Ltd.

  • The polls are mere “interruptions” that won’t disrupt the nation’s economic structure or business cycle, analysts led by Aditya Narain wrote in a note earlier this week.
  • Edelweiss is urging investors to focus on the second half of next year -- a period that may see optimism return and the business cycle kicking into high gear.
  • The NSE Nifty 50 Index may end 2019 at 11,800, about 11 percent higher than Tuesday’s close, the brokerage said.

"Don’t split hairs on India’s macros, earnings and valuations -- split 2019 into two halves. The second half should be a smoother ride." - Edelweiss Report

Here are the sectors Edelweiss recommends.

5. What Suboxone Win Means For Dr. Reddy’s Labs

Dr. Reddy’s Laboratories Ltd. is expected to get an earnings boost after a court ruling allowed it to sell a generic of Indivior Plc’s opioid treatment drug Suboxone in the U.S., its largest market.

  • Dr. Reddy’s, in an exchange filing, said it will resume launch activities of Suboxone as soon as permitted. “The temporary restraining order did not include a prohibition on commercial manufacturing of the product.”
  • The U.S. contributes, according to Dr. Reddy’s filings, around 38 percent of the company’s total sales.
  • IMS estimates the market for Suboxone—one of the two key drugs used to fight addiction along with Alkermes Plc’s Vivitrol—at $1.8 billion.

Here's what brokerages are saying.

6. Four Sisters And A $2 Billion Empire

About a decade ago, Suneeta Reddy and her three sisters took over most executive functions at Apollo, India’s largest hospital chain, from their father. They embarked on a multi-year building spree in a bet that India’s economic growth would spread from its metropolises to second-tier cities, where patients are getting richer. But Apollo’s stock tumbled as the sisters’ investments weighed on profits.

  • Now, almost Rs 2,000 crore ($280 million) and four years of construction later, there are signs that strategy is about to pay off.
  • Analysts are predicting that annual earnings are poised to climb for the first time since 2015.
  • Apollo’s shares have gained about 30 percent after hitting a four-year low in June, and stock forecasters are more bullish than they have been in a decade.

But there are hurdles that could hamper Apollo’s growth.

7. Patanjali Hits A Roadblock

Sales of Patanjali Ayurved Ltd. fell for the first time in five years as the goods and services tax left the distribution network of the homegrown consumer goods maker broken.

  • Yoga guru Ramdev-backed company’s standalone consumer goods revenue declined more than 10 percent to Rs 8,148 crore in the year ended March 2018—the first time since 2013, according to a report by Care Ratings.
  • The fast-moving consumer goods company’s sales grew more than fourfold in three years through March 2017, and it aimed to overthrow market leader Hindustan Unilever Ltd. and No. 2 ITC Ltd. by selling everything from staples to salt.

"The decline was primarily because of its inability to adapt in time to the goods and services tax regime and develop infrastructure and supply chain." - Care Ratings

Patanjali said distributors were slow to transition to the new indirect tax system.

8. Redesign ICAI For The Contemporary World

The Institute of Chartered Accountants of India faces the worst crisis of credibility in its history. There can be no better way to benefit from the crisis than making sure the accounting profession is fit for purpose, writes IIM-Bangalore professor R Narayanaswamy.

  • ICAI’s governing council is fraught with conflict. CAs elect the council members, who are them expected to discipline them.
  • CAs’ legal monopoly in accounting, audit and tax has led to regulatory capture of RBI, SEBI and IRDAI boards and key government committees.
  • Naming and shaming sloppy and dodgy auditors will help separate the wheat from the chaff.
  • Tax audit should be prohibited because of the inherent conflict.

CAs will be given a licence to practice but should have no say in running the organisation, he concludes.

9. Anti-BJP Alliance In Jammu And Kashmir

The Peoples’ Democratic Party, the National Conference and the Congress have agreed to form an alliance in Jammu and Kashmir, senior PDP leader Altaf Bukhari said.

  • The alliance is expected to stake claim to form the government in the state, which is currently under governor's rule, media reports indicated.

"My leadership has confirmed it to us that the three parties have agreed to make a coalition to defend the special identity of the state politically and legally. Very soon, you will get the good news." - Altaf Bukhari, Leader, PDP

  • In the 2014 Assembly elections in the state, the PDP got 28 seats, the NC 15 and the Congress 12.
  • The BJP got 25 seats.
  • 44 seats are needed to secure a majority.

Follow updates here.

10. Beijing’s Big Brother

China’s plan to judge each of its 1.3 billion people based on their social behavior is moving a step closer to reality, with Beijing set to adopt a lifelong points programme by 2021 that assigns personalised ratings for each resident.

  • China’s capital city will pool data from several departments to reward and punish some 22 million citizens based on their actions and reputations by the end of 2020, according to a plan posted on the Beijing municipal government’s website on Monday.
  • Those with better so-called social credit will get “green channel” benefits while those who violate laws will find life more difficult.
  • The Beijing project will improve blacklist systems so that those deemed untrustworthy will be “unable to move even a single step,” according to the government’s plan.

China has long experimented with systems that grade its citizens.

. Read more on Business News by BloombergQuint.