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This is a roundup of the day’s top stories in brief.
1. Import Curbs Unveiled
The Finance Ministry today announced an increase in the basic customs duty on 19 items to curb imports and narrow the current account deficit.
- The increase in rates of basic customs duty will be effective from midnight today, according to a statement by the Finance Ministry.
- The total value of imports of these items in 2017-18 was about Rs 86,000 crore.
- A higher oil import bill along with strong growth in non-oil non-gold imports have led to a wider trade deficit for India.
- While export growth has picked up in recent months, it has remained below the rate of growth of imports, leading to a widening of the trade gap.
Will the measures help?
2. Aadhaar Upheld, With Riders
In a landmark decision today the Supreme Court of India upheld the Aadhaar Act, the use of the money bill route for its legislative passage and the use of mandatory Aadhaar-based identification for government welfare schemes, the expenditure for which is drawn from the Consolidated Fund of India. Most mandatory private use of Aadhaar has been struck down.
"We may record here that (Aadhaar) enrolment is of voluntary nature. However, it becomes compulsory for those who seeks to receive any subsidy, benefit or service under the welfare scheme of the government expenditure whereof is to be met from the Consolidated Fund of India." - Supreme Court Majority Judgment
In a 567 page majority judgment, authored by Justice Sikri and concurred upon by two other judges—Chief Justice Dipak Misra and Justice AM Khanwilkar—the Supreme Court answered five questions:
- Whether the Aadhaar project creates or has tendency to create surveillance state and is, thus, unconstitutional on this ground?
- Whether the Aadhaar Act violates the right to privacy and is unconstitutional on this ground?
- Whether children can be brought within the sweep of Sections 7 and 8 of the Aadhaar Act?
- Whether several sections of the Act are unconstitutional?
- Whether the Aadhaar Act could be passed as ‘Money Bill’ within the meaning of Article 110 of the Constitution?
3. Another Sugar Stimulus
In a third incentive package for sugar mills in four months, the Union government on Wednesday announced a Rs 5,500-crore package for the sugar industry, including over two-fold jump in production aid to cane growers and transport subsidy to mills for exports.
- The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, approved the package to address the surplus production and stock of sugar in the country.
- The measures since June have ranged from higher price for ethanol extracted from sugarcane to financial assistance to sugar mills to create ethanol capacity and are aimed at helping the cash-starved mills clear Rs 13,000 crore they owe currently to farmers before the 2019 general elections.
"Sugar production is high (in the last two years). It’s expected that sugar output next year will remain high. Therefore, a comprehensive policy has been approved by the CCEA to deal with the excess production." - Arun Jaitley, Finance Minister
The Centre will also give assistance to sugar mills.
Also Read: Cabinet Approves New Telecom Policy
4. Indian Markets Dip; U.S. Stocks Steady
Indian equity benchmarks resumed decline after a day's breather weighed down by information technology and consumer goods shares.
- The S&P BSE Sensex Index fell 0.3 percent or 110 points to 36,542.
- The NSE Nifty 50 Index declined 0.12 percent or 14 points to 11,054.
- For most part of the day, benchmarks traded with a negative bias as volatility creeped in a day ahead of expiry of derivative contracts for the month of September.
Follow the day’s trading action here.
U.S. equities edged higher as markets largely entered a holding pattern before the Federal Reserve’s rate decision. The dollar climbed with Treasuries.
- The S&P 500 Index rose 0.2 percent as of 9:47 a.m. in New York.
- The euro declined 0.3 percent to $1.173, the weakest in a week.
- West Texas Intermediate crude decreased 0.5 percent to $71.91 a barrel.
Get your fix of global markets update here.
5. How Much IL&FS Thinks It’s Worth
Infrastructure & Leasing Finance Services Ltd., which has triggered concerns in the bond market after multiple defaults, plans to raise funds from its shareholders at less than half the valuation assigned by bankers.
- The board of the infrastructure lender approved selling shares to raise Rs 4,500 crore from existing shareholders led by the Life Insurance Corporation of India.
- It approved a price of Rs 150 apiece for the rights issue subject to approval at its Sept. 29 annual general meeting.
- That’s a 57 percent discount to the valuation of Rs 350 per share arrived at by SBI Capital Markets Ltd. for the share sale.
Here’s why there is such a steep discount.
6. Why 8K Miles’ Woes Are Increasing
The auditor resignation saga in India continues to take interesting twists and turns. An auditor of 8K Miles Media Pvt. Ltd. quit alleging that the company forged his signatures on bank investment certificates to transfer money abroad.
- In April, Chennai-based GHG Associates Chartered Accountants tendered its resignation to 8K Miles Media alleging that the company misused the audit firm’s letter head, seal and signature of one of the audit partners, according to the resignation letter that surfaced recently.
- The alleged forgery was done in nine overseas direct investment certificates submitted by 8K Miles Media to Indian Bank’s Porur Branch for transferring a total of $7.15 million to the company’s unit in New Jersey.
- Shares of 8K Miles Software Services Ltd. hit the 5-percent lower circuit for the fourth consecutive day.
- 8K Miles Media is connected to publicly listed company 8K Miles Software Services. Its directors Suresh Venkatachari and Rama Subramani Ramani are promoters of the listed company, with Venkatachari holding a 55 percent stake. He’s also chief executive officer in both companies.
Yet, 8K Miles Software says that it is not involved in any way.
7. Blue-Chip Favourites Lose Sheen
The biggest change in the last month has been the pruning of positions in names that investors saw as the most premium stocks in the market, writes Niraj Shah.
- For quite a while, a few ‘high quality’ stocks were decoupled from the rest of the market.
- But the price movement of the last one month is bringing these outliers closer towards where the rest of the market is.
- Market participants are now not hesitant in saying that these ‘crazy’ valuations needed to correct.
In this most recent market sell-off, cracks have begun to appear.
8. Technology Propels Tatas, Mahindras Ahead Of Birlas
In a volatile year for Indian stocks, the Tatas and the Mahindras outperformed the Birlas. At least according to the group indices compiled by the National Stock Exchange of India Ltd.
- The Nifty Tata Group Index, comprising 24 listed companies from India’s largest business house, returned 13 percent gains this year, beating the 5 percent rise in the benchmark Nifty 50.
- In comparison, the Nifty Mahindra Index rose 5 percent while the Nifty Aditya Birla Group Index declined 18 percent.
- For the Tata and Mahindra groups, the gains were driven by their software services businesses that have a 69 and 30 percent weight, respectively, in their respective indices.
Here are the largest contributors in each group’s indices.
9. Lupin Starts Strategic Review of Japanese Arm
Lupin Ltd. has started a strategic review of its Japanese operations, people with knowledge of the matter said, as the Indian pharmaceutical company seeks to focus on higher-growth areas.
- The Mumbai-based drugmaker is working with advisers as it explores options for the Japan business.
- Japanese subsidiaries of Lupin produce treatments in therapeutic areas including psychiatry and neurology.
- Its business in the country, which generated 35.5 billion yen ($314 million) of revenue in the latest financial year, is the sixth-largest generic drugmaker in Japan.
10. U.S. Fed Poised For Third Hike Of 2018
The Federal Reserve is poised to increase interest rates for a third time this year as it publishes forecasts that are expected to bolster expectations for another move in December and a continued pace of gradual tightening in 2019.
- The Federal Open Market Committee is almost certain to raise rates a quarter point at the end of its two-day meeting Wednesday to a target range of 2 percent to 2.25 percent -- the highest level in more than a decade.
- In June, the FOMC was nearly evenly divided, with eight participants favoring at least four hikes this year, while seven favored three or fewer moves. The balance is likely to become more lopsided this week.
Here's what more can be expected from the Fed tonight.
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