QBiz: Moody’s India Outlook Negative; Forex Reserves Up $3.5 Bn
1. India Gets Moody’s Jolt, Outlook Cut to Negative
A day after Prime Minister Narendra Modi claimed that the fundamentals of the economy remain strong, rating agency Moody’s Investor Service on Friday, 8 November, changed its outlook for India’s sovereign rating (Baa2) from stable to negative, saying that the domestic economic downturn could be structural.
The agency’s action does not amount to a rating downgrade, but comes as a caution against policy inaction. Moody’s credit rating of Baa2, the second-lowest investment grade score, is better than those of other agencies, such as S&P and Fitch, who have assigned the lowest investment grade to India with a stable outlook.
2. Forex Reserves Soar $3.5 Bn to New Lifetime High of $446.09 Bn
The country’s foreign exchange reserves rose by USD 3.515 billion to touch a fresh lifetime high of USD 446.098 billion in the week to 1 November, helped by increase in foreign currency assets, RBI data showed on Friday.
In the previous week, the reserves had increased by USD 1.832 billion to USD 442.583 billion. The increase in reserves in the reporting week was mainly on account of a jump in foreign currency assets (FCA), a major component of the overall reserves.
FCA increased by USD 3.201 billion to USD 413.654 billion in the week ended on 1 November, the RBI said.
Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and the yen held in the foreign exchange reserves.
During the week, gold reserves increased by USD 301 million to USD 27.353 billion.
3. NSE CEO Says Investment in ETFS Rose 50% in Past Year
The National Stock Exchange (NSE) said that investments in exchange traded funds have risen 62 percent over September 2018 to September 2019, taking the assets under management by passive funds to around Rs 1.5 trillion. Vikram Limaye, MD and CEO of NSE, said, “To encourage direct retail participation, products like ETFs need to be promoted. ETFs embody many characteristics that the investors may find desirable.”
The share of equity ETFs in the passive funds stands at 95 percent. The growth in investments has mainly been driven by Employee Provident Fund Organisation along with some exempted trusts followed by retail investors. “Currently, the EPFO invests 15 percent of its investable amount in a year into equities through ETFs,” Limaye added.
(Source: Financial Express)
4. Check Infosys Numbers With God, We Are Doing Own Probe, Says Sebi Chairman
People wishing to check Infosys Ltd’s financial figures should “ask God”, Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi said on Friday, 8 November, two days after Infosys Chairman Nandan Nilekani cited God to defend the sanctity of the company’s numbers.
Meanwhile, the regulator’s probe into the whistleblower complaint against Infosys is still on, Tyagi said. “The investors, if they want, can take comfort from Infosys statement, but our probe is still on. This is all I can tell you," said Tyagi on the sidelines of a financial markets summit organised by the Confederation of Indian Industry.
“You have to ask him (Nilekani about Infosys numbers) or you can actually ask God,” Tyagi added.
5. RBI Tells Banks Not to Charge Transaction Fees for NEFT From Jan 2020
Banks will not be able to charge their savings account customers for online transactions done via the National Electronic Funds Transfer (NEFT) system from next year. Mandate banks not to charge savings bank account customers for online transactions in the NEFT system with effect from January 2020, the Reserve Bank of India (RBI) said in a release on Friday, 8 November.
NEFT can be done by bank customers either online or offline through bank branches. While several major banks, including State Bank of India (SBI), ICICI Bank, Axis Bank, HDFC Bank, and YES Bank, do not charge for online NEFT transactions, Bank of Baroda and Union Bank of India charge Rs 2.25, excluding the goods and services tax (GST), for such transfers up to Rs 10,000.
(Source: Business Standard)
6. Nomura Slashes India’s FY20 GDP Forecast to 4.9% From 5.7% Earlier
Japanese brokerage Nomura on Friday, 8 November, massively cut its GDP forecast to a low 4.9 percent for the year from 5.7 percent earlier, saying the economy is going through a "deeper trough" and even a sub-par recovery is at least a year away.
While there have been a rash of growth estimate cuts, including a 0.70 percentage points reduction by the RBI last month to 6.1 percent, the Japanese brokerage's estimate is so far the lowest.
The negative forecast came on a day when the international rating agency Moody's has revised down the outlook on the sovereign rating to negative from positive citing the many gathering storms around the economy, which is topped by the falling growth rate.
7. Bank of Baroda Q2 Net Profit Rises Five Times on Higher Other Income
Public sector lender Bank of Baroda (BoB) on Friday reported a net profit of Rs 737 crore for the three months to September, almost five times higher than the same period last year on the back of higher other income.
The bank's profit was higher than Rs 165.4 crore estimated by a Bloomberg poll of 19 analysts.
BoB's other income was buoyed by trading gains of Rs 942 crore in the quarter, compared to Rs 138 crore in the same period last year.
Its net interest income, or the difference between the interest earned on loans and paid on deposits, increased 10.09 percent to Rs 7,028 crore in Q2 FY20. The bank's net interest margin (NIM), a measure of profitability, stood at 2.81 percent, up 19 basis points (bps) on a sequential basis.
8. Uday Kotak Says Passive Funds Biggest Risk to Expensive Mutual Funds
Kotak Mahindra Bank managing director and CEO Uday Kotak on Friday, 8 November, said passive funds are the biggest risk to expensive mutual funds. Speaking at the CII Financial Markets Summit in Mumbai, Kotak said, “If the performance of discretionary funds for a long period of time is below the performance of ETFs, as it has happened globally, we run the risk of money. There is a period where literacy is behind the curve, but sooner or later it picks up.”
On the goal of India becoming a USD 5-trillion economy by 2024, Kotak said the country has moved a long way from the traditional banking model of “saver and borrower” to the market model of “issuer and investor”. The transition and the two models co-exist today and there is a need to have a holistic view in policy making to ensure challenges are effectively met.
(Source: Financial Express)
9. Google Pay Notices 2 Out of 3 Transactions Happening From Small Cities
Google has said approximately two out of three transactions on Google Pay come from beyond India’s seven largest cities, from over 300,000 villages, towns and cities. Google Pay achieved 3 times user growth in 12 months, from 22 million monthly activate users (MAUs) in September 2018 to 67 million in September 2019.
Speaking to mediapersons, Sajith Sivanandan, MD and business head, Google Pay and NBU initiatives, said India is transacting at USD 110 billion per year on Google Pay and UPI transaction volumes have grown 60 times since the launch of Google Pay.
Explaining about the Google Pay for Business offering, Sivanandan said India’s SMBs are a core pillar of the Indian economy and with Google Pay for Business, the company aims to ease their path to going digital and tapping the massive consumer opportunity with digital payments, created on the back of the massive growth of UPI in the country.
(Source: Financial Express)
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