Newsletter: 22nd – 28th January, 2017

INDIAN ECONOMY

Currency-to-GDP ratio to reach 9 per cent by March end: Nomura 

Money in circulation is rising again in India post demonetisation and at the current rate, currency-to-GDP ratio will reach about 9 per cent by March — sufficient to stabilise economic activity, says a report. According to Japanese financial services major Nomura, from 11.8 per cent of GDP on November 4, 2016, currency in circulation dropped to all-time low of 5.9% on January 6; since then, it has risen for two straight weeks to 6.5% as of January 20.

UID debuts on BHIM, Aadhaar Pay to be launched soon 

The government has enabled the Bharat Interface for Mobile (BHIM) app with Aadhaar and plans to launch the biometric based Aadhaar Pay payment module in the coming weeks, minister for electronics and IT, Ravi Shankar Prasad said. Aadhaar Pay service will enable people to make and receive payments using their Aadhaar number and biometrics.

India Innovation Index to measure performance of Indian states 

The World Economic Forum, NITI Aayog, the World Intellectual Property Organization and the Cornell University will work together to develop an India Innovation Index that will provide impetus to Indian states to drive the innovative spirit. The first ranking is expected to be released at the India Economic Summit in New Delhi on October 4-6, 2017.

Germany to finance strategic infrastructure projects in India 

Germany is set to finance long-term strategic projects in India particularly in the railway, infrastructure and smart cities sectors as part of efforts to support India’s “growth story”, a top German official has said. In a meeting with the CII delegation, German Federal Finance Minister Wolfgang Schauble said that Germany is committed to working with India for mutual benefit.

RBI prohibits investments in ‘non-cooperative countries’ 

Reserve Bank today prohibited Indian entities from making direct investments in any entity located in ‘non co-operative countries and territories’, as identified by the inter-governmental body FATF. The Financial Action Task Force (FATF) currently comprises two regional organisations and 35 member jurisdictions, including India, US, UK, China and the European Commission.

IndiaPost becomes 3rd entity to receive licence to start payment bank operations 

IndiaPost has become the third entity to receive a final license last week from the Central Bank to start its payment bank operations. Country’s largest telcom service provider Bharti Airtel and digital payments firm Paytm are the other two to have received the license while only Airtel has started operations so far.

BUSINESS

NTPC’s euro notes oversubscribed 4.5 times 

NTPC successfully issued its first Euro denominated bond worth EUR 500 million. The 10 year bond has been issued at a coupon of 2.75% with a yield of 2.814% and was oversubscribed 4.5 times and saw participation from more than 125 accounts globally. This is the first ever 10 year Euro denominated bond issued by an Asian utility and also first ever 10 year Euro transaction by an Indian Issuer. The bonds will be listed at Frankfurt & Singapore stock exchanges.

Barclays names Jaideep Khanna, Reid Marsh co-CEOs for Asia Pacific 

Barclays has appointed Jaideep Khanna and Reid Marsh as co-chief executive officers for Asia Pacific, replacing Andy Jones who will return to Britain, according to an internal memo. Khanna will continue to oversee Barclays’ business in India, while Marsh will continue to lead its banking operations in the region.

Moody’s downgrades Reliance Communications ratings to B2 from B1 

Moody’s Investors Service has downgraded Reliance Communications (RCom) corporate family rating and senior secured bond rating to B2 from B1 on fears that its debt levels and consequent leverage will remain high for the next six to nine months amid continuing financial pressures.

BSE IPO sees bids 51 times shares on offer 

An initial public offering from BSE Ltd, the country’s second-biggest stock exchange, was well oversubscribed on the last day of the sale, helped by attractive valuations and expectations of robust growth for stocks in the coming years. The strongest demand came from high net-worth individuals, who bid for 159 times the shares on offer, followed by institutional investors who bid for 48.6 times the shares allotted to them.

Sebi to bar Vijay Mallya from securities market 

India’s capital market regulator has barred Vijay Mallya and six former senior officials of United Spirits Ltd (USL) from buying, selling or dealing in securities either directly or indirectly for allegedly indulging in fraudulent activities. SEBI, in an interim order, has also restrained Mallya and Ashok Capoor, former managing director of United Spirits from holding position as directors or key managerial persons of a listed company.

Kotak Mahindra Bank reports 39% jump in Q3 net profit at Rs 880 crore YoY 

Private sector lender Kotak Mahindra Bank reported a standalone net profit of Rs 880 crore for the quarter ended December 31, 2016, which was higher than Rs 818 crore that was predicted by analysts. The net profit for the quarter jumped by 38.58 per cent, as the company had posted a profit of Rs 635 crore in the year-ago period.

Sebi allows Delhi Stock Exchange to exit stock bourse biz 

SEBI allowed Delhi Stock Exchange (DSE) to exit the stock bourse business following a request from the exchange. DSE made a request to Securities and Exchange Board of India (Sebi) in May 2014 for exiting the stock exchange business. The regulator in November 2014 withdrew the recognition granted to DSE citing “serious irregularities” in the functioning of the bourse.

Bharti Airtel considering exits, stake sales at some Africa operations 

Bharti Airtel Ltd., India’s largest mobile-phone operator, is considering mergers or stake sales at some of its Africa operations as it looks to cut debt and make its biggest overseas acquisition profitable. The moves would pare the size of operations in the continent and could be completed within a year, Chairman Sunil Bharti Mittal said in an interview.

Idea Cellular likely to report a Rs 448 crore Q3 loss for the first time since listing 

Idea Cellular is likely to report a net loss of Rs 448 crore for the first time since its listing, weighed down largely by demonetisation and the impact of tariff war triggered by Reliance Jio. Even though the subscriber base could increase by 1.4 per cent sequentially, lower Ebitda (earnings before interest, tax, depreciation and amortisation) and higher amortisation and interest costs are likely to lead to Rs 448 crore loss.

Colgate-Palmolive Q3 net drops 22.5% to Rs 128 crore 

FMCG major Colgate-Palmolive India Ltd (CPIL) posted a 22.58 per cent fall in standalone net profit at Rs 127.82 crore for the quarter ended December 31, hit by liquidity crunch post demonetisation. The company had a net profit of Rs 165.11 crore in the corresponding quarter a year ago.

Airtel Africa Q3 net loss widens to $93 million 

Bharti Airtel’s Africa net loss widened to $93 million in the fiscal third quarter to December from $74 million a year ago, dragged down by a mix of finance costs, taxes, depreciation & amortisation (D&A) charges and devaluation of the Nigerian currency, although underlying revenue was the highest in the last nine quarters.

Essar Group mulls selling stake in The Mobile Store to strategic investor 

Essar is evaluating options to sell a stake in The Mobile Store to a strategic investor, as funds dry up for the cellphone retail chain due to the group’s debt crisis and as online competition takes a toll on sales. The Mobile Store has shut 400-odd stores in the past 18 months and several brands have stopped supplies to it due to outstanding payments, with inventory levels at the stores dwindling and the retailer moving to an asset-light business model by focussing online

Microsoft’s market value tops $500 billion again after 17 years 

Microsoft Corp’s market capitalization topped $500 billion for the first time since 2000, after the technology giant’s stock rose following another quarter of results that beat Wall Street’s expectations. Shares of the world’s biggest software company rose as much as 2.1 percent to $65.64, an all-time high, in early trading, valuing the company at $510.37 billion.

L&T posts 39% rise in net profit at Rs 972.47 crore 

Larsen & Toubro on Saturday reported 38.86 per cent rise in consolidated net profit at Rs 972.47 crore for the quarter ended December 31, 2016 against Rs 700.34 crore reported in the corresponding quarter last year. Consolidated gross sales of the company advanced 1.66 per cent to Rs 26,018.15 crore for the quarter under review.

Sanjiv Puri to Replace YC Deveshwar as ITC CEO 

ITC named Sanjiv Puri its chief executive with effect February 5, when chairman YC Deveshwar will move to a non-executive role. ITC had earlier announced that Deveshwar will step down into a non-executive role from February 5, and that he will mentor the successor. Puri was subsequently appointed as the firm’s chief operating officer.

WORLD

Donald Trump meets Theresa May in first summit with foreign leader 

US President Donald Trump met British Prime Minister Theresa May in his first summit with a foreign leader since inauguration, hours after she called on the US and the UK to again “lead together”. Ahead of the meeting with Trump, May, while speaking at the Republican Retreat in Philadelphia, said with the emergence of non-state actors, it is time that the countries like the US and Britain assert their leadership role.

Mexico President Enrique Pena Nieto cancels US visit after Donald Trump comments about wall 

Mexican President Enrique Pena Nieto said he had scrapped plans to meet Donald Trump next week after the U.S. president tweeted Mexico should cancel the meeting if it was not prepared to pay for his proposed border wall.

More than half Chinese cities plagued by air pollution 

More than 330 Chinese cities monitored by the government, especially capital Beijing and in northern China, reported air pollution despite claims by officials to cut down use of coal and regulating polluting factories. Nearly 58 per cent of Chinese cities monitored, including Beijing, reported varying degrees of air pollution, China’s Ministry of Environmental Protection said.

US economic growth slowed to 1.9 per cent rate in Q4 

The US economy lost momentum in the final three months of 2016, closing out a year in which growth turned in the weakest performance in five years. The Commerce Department says the gross domestic product grew at an annual rate of just 1.9 percent in the October-December period, a slowdown from 3.5 percent growth in the third quarter. GDP, the broadest measure of economic health, was held back by a jump in the trade deficit.

India to become the fastest oil consumer by 2035 

Having pipped Japan to become world’s third largest oil consumer, India’s oil consumption growth will be the fastest among all major economies by 2035, BP Statistical Review of World Energy said. India, Asia’s second-biggest energy consumer since 2008, had in 2015 overtaken Japan as the world’s third-largest oil consuming country behind US and China.

Trump win pushes recession back five months, says Deutsche Bank 

According to Deutsche Bank AG Chief International Economist Torsten Slok, at least one important measure shows the election of Donald Trump pushed the odds of a recession back an additional five months, to more than two years from now. This measure is crucial, since interest rates should continue to climb as long as expansion continues. Once things cool off, that’s when the market would expect the Fed to start loosening policy again.

Donald Trump suspends US refugee program, suspends entry from seven countries 

President Donald Trump on Friday put a four-month hold on allowing refugees into the United States and temporarily barred visitors from Syria and six other Muslim-majority countries, saying the moves would help protect Americans from terrorist attacks. The order limiting entry on visitors from Syria and six other Muslim-majority countries is for 90 days. The six other countries are: Iran, Iraq, Libya, Somalia, Sudan and Yemen.

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