1. No Stimulus on Horizon, Stocks Sink to 6-Month Low
Benchmark stock indices ended at a six-month low and the rupee closed at its lowest since December 2018 as the government’s chief economic adviser ruled out a stimulus, dashing investors’ hope of a quick revival in demand. The capital markets regulator’s efforts to simplify procedures for overseas funds did little to assuage sentiment with foreign portfolio investors (FPIs) pulling out Rs 903 crore from stocks, a day after the announcement.
Ending down for the third day in a row, the Sensex dropped 587.44 points, or 1.6%, to close at 36,472.93 — its lowest since 5 March. The Nifty sank 180.95 points, or 1.7%, to close at 10,737.75 — the lowest since 21 February. The BSE Mid-Cap index declined 1.3% and the SmallCap index fell 2.2%. Thursday’s selloff eroded Rs 2.1 lakh crore of investor wealth on the BSE.
(Source: Economic Times)
2. Niti Aayog’s Rajiv Kumar Says Measures Under Consideration to Deal With Financial Stress
The government is considering a number of measures which will be taken at an appropriate time to deal with financial stress and unleash animal spirit in the economy, Niti Aayog Vice Chairman Rajiv Kumar said on Thursday. Both the government and the RBI have taken a series of measures to deal with stress in the financial sector triggered by default in the group companies of IL&FS.
In a bid to improve liquidity, Kumar said the central bank has taken various steps in the past few months as a result of which the cash position in the system has stabilised. He further said public sector banks have provided liquidity to non-banking finance companies (NBFCs). He said the RBI has reduced repo rate four consecutive times this year and also directed the banks to pass rate cut benefits to borrowers. Kumar further said that the government has taken a series of measures to improve the financial health of the NBFC sector.
(Source: Financial Express)
3. DHFL’s Debt May Get Untenable Tag
Lenders to Dewan Housing Finance Corp Ltd (DHFL) are set to declare 65% of loans outstanding to the stressed mortgage lender as unsustainable, as part of a debt settlement plan, two people aware of the development said.
Of the total Rs 24,700 crore of unsustainable debt, or the portion of loans that DHFL can’t service through its cash flows, Rs 760 crore will be converted into equity at Rs 54 per share, while Rs 8,740 crore will be recast into unsecured debt that won’t generate any interest payments, one of the two people cited above said on condition of anonymity.
(Source: LiveMint)
4. Investors Jittery About Yes Bank’s High Holding of Pledged Shares
Yes Bank Ltd’s surging stock of pledged promoter shares has left investors anxious, as defaults and frauds at some of its largest borrowers have driven the lender’s shares to multi-year lows.
On Thursday, Yes Bank shares plunged 13.91% lower at Rs 56.30, a five-year low.
The culprit, yet again, is the large promoter pledge of CG Power and Industrial Solutions Ltd shares which, after invoking, have saddled Yes Bank with a nearly 13% ownership in the power equipment maker. Since the news surfaced on Tuesday about suspect transactions at CG Power, the lender’s shares have shed 26.6%.
(Source: LiveMint)
5. Prasad Dials FM for Telecom Relief
Telecom minister Ravi Shankar Prasad has sought urgent relief from finance minister Nirmala Sitharaman for the stressed sector, seeking a cut in levies such as licence fees and goods and services tax (GST), as part of a four-part agenda. Prasad has also urged that the Rs 36,000 crore that’s accumulated as input tax credit due to the telecom companies be adjusted against future GST levies.
“I have met with the chief executive officers of the telecom service providers to discuss the steps to be undertaken for sustainability and growth of the telecom sector,” Prasad said in his 22 August letter to Sitharaman.
(Source: Economic Times)
6.Amazon Gets Coupons to Invest in Future Retail
Amazon has agreed to acquire an indirect minority stake in Future Retail, the operator of Big Bazaar and EasyDay chains, ahead of an option to buy all or part of the promoters’ holding in the company after three years.
The Seattle-based retail giant will buy a 49% stake in Future Coupons, a promoter group company of Future Retail, the Kishore Biyani-controlled firm said in a stock market filing on Thursday. Amazon can exercise its option to buy the promoters’ shareholding in Future Retail between the third and 10th years.
(Source: Economic Times)
7. Biscuits to Soaps, Slowdown Pain for FMCG Companies Comes in Small Packs
Some of India Inc’s biggest names point to a deeper malaise in the fast-moving consumer goods (FMCG) sector, led by a sustained slowdown in consumption. In the absence of triggers to boost confidence, they say, consumers are dramatically cutting back on spends, hitting sales of entry-level packs.
According to the Nielsen data sourced from the industry, the volume growth of categories where the contribution of small packs (Rs 5 and Rs 10 each) is high, such as foods, soaps and toothpastes, has declined year to date compared with the same period last year.
(Source: Business Standard)
8. IMF Raises Doubts About India's Tax Revenue Estimates, GDP Growth Target
The International Monetary Fund (IMF) has posed questions for policymakers in India over steep tax revenue collection estimates for 2019-20 and the bottlenecks in the goods and services tax (GST) regime.
Working on the country’s annual economic surveillance or assessment report, the Washington-based multilateral institution has asked India to explain how it is confident of meeting its revenue estimates for the year, given the current state of economic growth and historical buoyancy.
(Source: Business Standard)
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