This is a roundup of the day’s top stories in brief.
1. What India’s Top Three Mutual Funds Bought And Sold
Inflows into Indian equity funds rose to a five-month high in January amid signs of a revival in small- and mid-cap stocks, a battered corner of the $2.2 trillion market for two straight years.
- Stock plans took in Rs 7,880 crore ($1.1 billion) last month, according to the Association of Mutual Funds in India.
- That’s the highest since August.
- India’s largest money manager HDFC Mutual Fund held $22 billion in equities, with financials accounting for a third of the stock assets, followed by industrial companies at 12 percent.
- ICICI Prudential Mutual Fund held equity assets of $21 billion, with financials making up 28 percent, followed by materials at 9 percent.
- The fund house held about $28 billion in over 300 stocks. Financials made up about 41 percent of the assets, followed by technology at 9 percent.
Find out which stocks these money managers bought and sold in January.
2. S&P Keeps India’s Ratings Unchanged
Standard & Poor’s Global Ratings has retained India’s sovereign ratings at ‘BBB-‘ with stable outlook, saying the country’s GDP growth is likely to gradually recover towards longer-term trend rates over the next 2-3 years.
- But India’s fiscal position remains precarious with elevated fiscal deficit and net government indebtedness, the ratings agency said.
- Fiscal deficits have exceeded the government’s target, S&P said, adding it expects limited consolidation over next few years.
- “S&P Global Ratings affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable,” according to a statement.
S&P’s India ratings reflect the country’s above-average real GDP growth rate.
3. Exploring A New Mechanism To Fund Defence And Security
The 15th Finance Commission has set up a panel to examine if India needs a separate mechanism to fund defence and internal security.
The panel, the government said in a statement, will be chaired by NK Singh, who is also the commission’s chairman, and will comprise the following members:
- AN Jha, member of the 15th Finance Commission
- Secretary of Ministry of Home Affairs
- Secretary of Ministry of Defence
- Expenditure Secretary
The Finance Commission, in its report for 2020-21, had said there’s merit in ensuring a predictable and stable flow of funds for defence and internal security, adding that “this will receive appropriate consideration in our final report”.
The commission has also decided to form a panel to address issues of debt and fiscal deficit of states and centre.
4. Narayana Murthy’s Son-In-Law Is Now U.K. Chancellor Of Exchequer
Rishi Sunak, a former Goldman Sachs banker and the son in law of Infosys co-founder Narayana Murthy, was appointed as the U.K. Chancellor of the Exchequer after Sajid Javid quit following a row with Prime Minister Boris Johnson.
- 39-year-old Sunak and has been viewed as a rising star in the Conservative Party, with the Conservative Home website anointing him “the next prime minister” earlier in the year.
- In July he was made chief secretary to the Treasury — the second most important job in the finance ministry.
Johnson earlier fired a clutch of senior ministers in a major cabinet reshuffle.
The unexpected resignation of Javid shocked the markets as the pound rallied and gilts fell. U.S. equities declined on Thursday alongside European stocks as officials in China deployed a revised methodology to diagnose the coronavirus, sending the number of confirmed cases soaring.
- The S&P 500 Index decreased 0.4 percent to 3,367.37 as of 9:32 a.m. New York time.
- The U.K.’s FTSE 100 Index sank 1.4 percent to 7,429.01, the lowest in more than a week on the largest tumble in more than two weeks.
- The British pound increased 0.5 percent to $1.3023, the strongest in more than a week on the largest climb in almost two weeks.
Get your fix of global markets update here.
5. Sensex, Nifty Halt Two-Day Gaining Streak
Indian equities halted their two-day gaining streak, led by the declines in ICICI Bank Ltd., HDFC Ltd. and HDFC Bank Ltd.
- The S&P BSE Sensex fell 0.26 percent to end at 41,459.79.
- The NSE Nifty 50 fell 0.22 percent to close at 12,174.65.
- The broader markets represented by the NSE Nifty 500 Index fell 0.19 percent.
- Six out of 11 sectoral gauges compiled by NSE ended lower.
- Yes Bank shares spiked 5.68 percent after the private lender delayed its Q3 results and said it is reviewing non-binding expressions of interest from four investors.
- Shares of IRCTC also closed 11.4 percent higher after its net profit rose close to three-fold due to higher revenue from convenience fees and pilgrimage trains.
Follow the day’s trading action here.
6. Another Loss, Another Warning From Vodafone Idea
Vodafone Idea Ltd. reported a greater-than-expected loss in the quarter ended December amid concerns about the telecom operator’s ability to remain in business.
- The telecom operator’s net loss stood at Rs 6,438.8 crore.
- A consensus of analyst estimates compiled by BloombergQuint had pegged the loss at Rs 4,620 crore.
- The existing material uncertainty on account of pending liabilities casts a significant doubt on its ability to “continue as a going concern”, Vodafone Idea said in a media statement.
- Revenue rose 2.3 percent sequentially to Rs 11,089.40 crore as the operator hiked tariffs.
ARPU, too, rose to its highest in at least six quarters.
7. Expanding With A Little Help From China
Indian speciality chemical makers are expanding on the back of rising domestic demand, China’s crackdown on polluting units and the government’s thrust on Make in India initiative.
- The companies that make chemicals used in the manufacture of items like dyes, pigments, and agro- and construction chemicals registered strong earnings growth over the past five years, according to Bloomberg data.
- And rising demand for these companies has led to a corresponding increase in their utilisation levels. Fine Organic Industries Ltd., India’s largest manufacturer of oleochemical based additives, for instance, said its utilisation rose to nearly 95 percent in the quarter ended December.
- The companies also said in their recent earnings calls that they anticipate strong growth in the next few years and are investing to ramp up their capacities.
Here’s why chemical makers are expanding.
8. Why Is RBI Setting Stage For A Challenger To NPCI?
The National Payments Corporation of India, which enables the country’s digital payment and settlement systems, is set to get a competitor after operating as a monopoly for the last eleven years of its existence. What more? The competitor will have the blessings of the Reserve Bank of India, which created NPCI as well.
In a set of draft guidelines issued on Feb.10, the banking regulator said it would seek applications for a ‘New Umbrella Entity’, focusing on retail payment systems. This can be a for-profit company, the RBI said, suggesting that private promoters can apply to set this up after due clearance.
Yet, the regulator’s proposal has raised a number of questions. Among them:
- Has NPCI become too big to fail and are the regulator’s concerns about the concentration of risk justified?
- How will any new player co-exist with NPCI?
- And will there be a level playing field between the incumbent and any new entrant?
BloombergQuint tries to stitch together the answers to these questions.
9. The Cases India Forgot
Every Supreme Court in the world has relied on Robert Jackson’s validation of apex court power. The U.S. Supreme Court Justice once said, “We are not final because we are infallible, but we are infallible only because we are final.”
- But in India, the Supreme Court has often not only been fallible, or wrong, it has also not always been final, argues Chintan Chandrachud in his new book—The Cases That India Forgot.
- Chandrachud emphasises, in the preface itself, that the Indian Supreme Court and High Courts have often remained silent and failed to prevent the misadventures of Parliament and government.
- And, on some occasions the courts have in fact created, catalysed or contributed to these misadventures.
Watch Chintan Chandrachud in conversation with Menaka Doshi where they discuss the Supreme Court in the 21st century.
10. Coronavirus Update: One In Kerala Discharged, Two New Cases Suspected In Kolkata
A Keralite student from Wuhan University, who tested positive for the novel coronavirus thereby becoming the country’s second such case, was on Thursday discharged from the isolation ward of the Alappuzha Medical College hospital. Meanwhile, two passengers, who arrived at Kolkata international airport from Bangkok, have been placed in isolation for suspected novel coronavirus, officials said on Thursday.
- New cases in China jumped by almost 15,000 after Hubei province, the epicenter of the coronavirus outbreak, revised its method for counting infections.
- Japan reported its first death from the illness. The European Commission singled out the outbreak as a “key downside risk,” and the International Energy Agency warned global oil demand will drop this quarter for the first time in more than a decade.
- China’s death toll is now at 1,367, higher by 254 while the number of cases rose to 59,804.
Here’s your complete tracker for all coronavirus related updates.