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This is a roundup of the top stories of the day.
1. Mutual Funds Surpass Insurers
Mutual funds for the first time manage more money in equities than insurers as the last stock rout erased the gap that started narrowing after demonetisation.
- Equity assets managed by insurance companies—largely through equity-linked plans or Ulips—plunged by nearly Rs 1.22 lakh crore in September and October to Rs 9.22 lakh crore, according to data released by NSDL.
- That compares with a Rs 86,800 crore decline to Rs 9.32 lakh crore for fund houses.
- The difference between the value of equities managed by insurers and mutual funds started reducing after Prime Minister Narendra Modi outlawed 86 percent of currency in circulation in November 2016 to crack down on unaccounted wealth. That funnelled more money into the stock markets through mutual funds.
2. Next Tranche Of Capital Infusion
The government may infuse around Rs 42,000 crore—the remaining amount of its Rs 2.11-lakh-crore recapitalisation programme announced last year—by Dec. 15, a senior government official told reporters.
- The latest infusion will help banks meet the regulatory capital requirements, the official said, adding big lenders like State Bank of India and Punjab National Bank may not feature in this list as they do not need any more capital from the government this year.
- Of the Rs 2.11 lakh crore to be infused in public sector banks for two years, Rs 1.35 lakh crore has to come via the issue of recapitalisation bonds.
- To be sure, the Finance Ministry had decided not to curtail the infusion plan for this financial year.
- That comes after the Reserve Bank of India’s decision to defer the deadline to meet the “capital conservation buffer” of 2.5 percent by one year, freeing about Rs 37,000 crore for banks.
3. Indian Stocks Halt Losing Streak
Indian equity benchmarks snapped a three-day decline, their longest losing streak in over a month.
- The S&P BSE Sensex Index closed 1.07 percent or 373 points higher at 35,334.08.
- The NSE Nifty 50 Index ended at 10,628.60, up 0.97 percent or 102 points.
- Nine out off 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty FMCG Index’s 2.36 percent gain.
- On the flipside, the NSE Nifty Metal Index was the top sectoral loser, down 1.32 percent.
4. What’s Fuelling The Paper Rally
Shares of paper makers surged this year on higher demand and prices, defying the rout in the small- and mid-cap benchmarks.
- JK Paper Ltd., Seshasayee Paper & Boards Ltd., West Coast Paper Mills Ltd. and International Paper APPM Ltd. have gained 38 percent to 72 percent in the past one year as of Nov. 23.
- By contrast, the BSE small- and mid-cap gauges have tumbled 11 percent and 19 percent, respectively during the period.
- Investor optimism about paper stocks comes even as global pulp prices have been rising.
5. Buy Now To Profit From Elections 2019
Now is the time for equity investors to bet on India’s election results, even though the polls aren’t likely till May, according to FundsIndia.
- Investing five to six months before the elections in 2009 and 2014 earned an average three to six percent more than the Indian benchmark return in the five-year period to the next vote, said Vidya Bala, head of mutual fund research at the online retail investment platform with assets equivalent to $775 million under management.
- “Elections are a season of volatility and it is good to capture this period,” she said, adding that by the time the results are out, most of the uncertainty is priced in and the equity market moves on from the verdict.
6. Under Review: IndiGo’s Web Check-In Fees
India’s largest airline IndiGo will now charge for web check-in of all seats as carriers continue to look for ways to make up for higher costs.
- The budget carrier, operated by InterGlobe Aviation Ltd., said it has revised its policies since Nov. 14 to make all seats selected online chargeable.
- That will cost between Rs 100 and Rs 800 depending on the preference.
- The Ministry of Civil Aviation in a tweet said it has noted that airlines are now charging for web check-in for all seats.
MoCA has noted that airlines are now charging for web check-in for all seats. We are reviewing these fees to see whether they fall within the unbundled pricing framework.— Ministry of Civil Aviation (@MoCA_GoI) November 26, 2018
7. RCom's Asset Sale To Jio Under Threat
Anil Ambani’s Reliance Communications Ltd. has told the Supreme Court that its asset sale to Reliance Jio Infocomm Ltd. may not go through if approvals aren’t in place by mid-December, putting at risk planned debt repayments by the distressed company.
- India’s government has moved the top court against allowing the sale unless it is given Rs 2,940 crore ($417 million) in bank guarantees from either company toward spectrum usage charges.
- The two-judge bench headed by Justice A.K. Sikri will next hear the case on Nov. 27.
8. What Indian Unicorn Founders Earn
Indian startups raised more than $6.4 billion in two financial years 2016-17 and 2017-18, according to data provided by research firm Venture Intelligence. But what do their founders earn?
- BloombergQuint’s analysis showed that PolicyBazaar’s Yashish Dahiya is the highest-paid founder of an Indian unicorn—his remuneration jumped 78 percent to Rs 4.56 crore in 2017-18.
- To put that in perspective, the average salary of the chief executive officers of Nifty 50 companies was Rs 23 crore in FY18, according to data compiled by BloombergQuint.
9. Without Constitution Comes Chaos: CJI Gogoi
It is in "our best interest" to heed the advice of the Constitution, Chief Justice of India Ranjan Gogoi said today, asserting that not doing so would result in "sharp descent into chaos".
- The Constitution is the voice of the marginalised as well as the prudence of the majority and continues to be a guide in moments of crisis and uncertainty, the CJI said at a function celebrating Constitution Day.
- Constitution Day, also known as Samvidhan Divas, is celebrated on Nov. 26 to commemorate the Constitution being adopted.
10. Cyril Shroff’s Five Questions On Why Boards Are Ineffective
To embed good governance practices into the fabric of corporate culture in India, some tough questions need to be addressed, writes top lawyer Cyril Shroff.
- Are India Inc's boards adequately trained to handle a crisis?
- In the absence of a powerful voice on the board, who will ask tough questions?
- Is the creation of ‘sides’ on the boards, and the subsequent ‘us versus them’ syndrome constructive?
- Is over-regulation disincentivising board effectiveness?
- Are we addressing the gaps that deter high-quality professionals from directorships?
. Read more on Business News by BloombergQuint.