Q2FY20 investment growth at 19-quarter low despite govt's stimulus measures

Growth in gross fixed capital formation, a proxy for investment, fell to a 19-quarter low in the July-Septemberperiod of the fiscal year 2019-20 (Q2FY20), despite the government announcing stimulus measures in the quarter.
The gross fixed capital formation (GFCF) grew by 1 per cent in Q2FY20, compared to a 4.04 per cent growth in the previous quarter, showed data released by the Central Statistics Office on Friday.
The share of GFCF in overall gross domestic product (GDP) shrank to 27.8 per cent during the quarter, against 29.7 per cent in the previous quarter — the lowest since Q4FY17.
It was the government spending that held up growth in the quarter, while private spending also sprung a surprise of sorts. The government final consumption expenditure grew by 15.3 per cent during Q2, a six-quarter high.
“A large part of growth impulse has come from government push, both on the output and expenditure side… Growth in the second half of the year could remain evasive unless government pumps in more stimulus and continues to heavy lift growth push through the fiscal year,” said Rajni Thakur, economist, RBL Bank.
Contrary to the glaring evidence of worsening consumption demand across sectors in the economy, growth in private final consumption expenditure (PFCE), a proxy of demand, improved in the period, compared to the previous quarter.
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PFCE grew by 5.1 per cent in Q2FY20, despite demand deceleration across categories including automobile, electricity, sugar, real estate, biscuits and others.
“The sequential uptick in growth of private consumption expenditure in Q2FY20 is somewhat at odds with the evidence from various sectors regarding subdued consumption sentiment in rural as well as urban areas,” said Aditi Nayar, principal economist, ICRA.
Ranen Banerjee, leader of public finance and economics at PwC India, said: “The effects of rural demand uptick on Q3 numbers will be crucial to avert a sub-5 per cent annual growth rate.”

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Finance minister Nirmala Sitharaman had announced a slew of measures to boost investment and demand in the economy including a cut in the corporation tax rates and a Rs 20,000-crore fund to provide last-mile funding for affordable and middle income housing, etc.
“To address the current issue, the government is expected to take further measures,” said Arun Singh, chief economist at Dun and Bradstreet India.
“To set the ball rolling, both the Centre and the state governments should gear up to execute the infrastructure projects in the pipeline. This would provide employment opportunities.
Further, they should work towards ensuring that auditing norms become more stringent. Reinforcing confidence of stakeholders in the ecosystem will be one of the biggest challenges for the government to tackle,” he added.

How India's millennial credit card boom is running into Ambani's ambitions

For every 100 people in India, there are only three credit cards. A comparable penetration figure for the US is 320.
Statisticslike these suggest that India’s first initial public offering of a credit card issuer is either an opportunity with boundless prospects — or a victim of arrested development. Which is it?

The upcoming sale of shares in SBI Cards and Payment Services Ltd. will give investors a chance to find out. Between them, the controlling shareholder, State Bank of India, and its 26 per cent partner, Carlyle Group, plan to sell up to 130.5 million shares. Throw in a simultaneous offer of new shares, and it could be a 96 billion rupee ($1.3 billion) IPO, India’s biggest in the current financial year, according to local media reports.
Business is booming at the country’s second-largest card issuer. After Carlyle arrived in 2017 to replace GE Capital in the two-decade-old venture, earnings were 7.4 rupees a share in the year through March 2018. The most recent six-monthly profit topped that figure. Younger millennials and Generation Z — those born after 2000 — are driving this growth. In India’s fiscal year ended in March 2016, barely 2 per cent of credit card transactions were originated by people below 25 years of age. That number has jumped to 10 per cent. Add the 26-30 age group, and the youth share of plastic is 35 per cent, beating people over 40 by as much as eight percentage points.
Yet only about 5 per cent of Indians’ consumption per capita takes place through credit cards. After growing 12 per cent annually over four years, average spending per card is stalling.
While a slowdown is only to be expected given a sharp decline in economic momentum, the reason has more to do with the merchant than the spender.
E-commerce, which is increasingly the most obvious use of a credit card, will account for barely 7 per cent of India’s $1.2 trillion-a-year retail industry by 2021, according to Deloitte Consulting. Another 18 per cent will go to malls, department stores and other forms of organized retail. But three-quarters of the market will remain with mom-and-pop stores. An average shop can hope to receive $775 in monthly business from cardholders. Card issuers would garner revenue of $11 of that, but the bank that acquired the merchant and fitted it up would receive just $1.50 a month. It’s simply not worth anyone’s while to expand the business into smaller towns dominated by small shops.
Increasingly ubiquitous smartphones are far more suitable for payment authentication in a low-middle-income country than credit cards. Google Pay and Walmart’s PhonePe are leading people-to-people mobile payments in India, using the so-called unified payments interface, a system linking India’s banks. The same system will also drive people-to-merchant payments. Credit will just be an added layer. Banks will compete for whoever can bring them a lot of customers.
India’s richest man, Mukesh Ambani, has 355 million customers for his 4G mobile network, Jio. Unsurprisingly, the oil-to-telecom tycoon wants to connect 30 million small retailers with common inventory-management, billing and tax platforms as well as low-cost payment terminals. He won’t be alone. Even in Indian e-commerce, Walmart Inc.’s Flipkart Online Services Pvt is promoting “cardless” credit, where the financing comes from banks and nonbank lenders. During the recent local holiday sale season, three out of four Amazon.com Inc. customers who availed themselves of credit to make purchases came from Tier 2 and 3 cities, where card penetration is low; every second buyer who borrowed to buy something did so for the first time.
The parent State Bank’s opportunity in unsecured retail loans will be far larger than that of its IPO-bound cards unit. India’s largest commercial bank will make its low-cost deposits available to Ambani, Walmart and other digital commerce hopefuls who might be looking to sweeten their proposition to customers with a dollop of credit. That should still leave plenty of headroom for SBI Cards to grow. Its 18 per cent market share means the company will remain a sought-after choice for co-branded partnerships, such as with Indian Railways and ride-hailing app Ola.
Carlyle’s partial exit would value the US buyout firm’s 26 per cent stake at about seven times what it paid in 2017, according to Reuters. That’s a neat pile to make from plastic in such a short time, and in a country where it hasn’t really taken off. IPO investors will be content with a lot less.

Will Zurich's bid for Jewar airport challenge IGIA's monopoly?

Flughafen Zurichwinning the bid for the proposed Jewar airport in Uttar Pradesh is likely to bring a paradigm change to India’s airport sector, threatening monopolies for the first time, said sector experts.
If the project is completed on time, Jewar airport — projected as the second such facility for the National Capital Region — will compete with GMR-owned Indira Gandhi International Airport (IGIA) from 2023 to attract air traffic. This could be a threat to IGIA’s monopoly on air traffic in north India, which has made it the crown jewel in GMR Infrastructure’s airport portfolio.

Zurich Airport offered a revenue share of Rs 400.97 per passenger. GMR, which had the right of first refusal (RoFR), offered Rs 351 per passenger. It would have had the chance to match the highest bid only if its offer was within 10 per cent of it.
“GMR’s bid was aggressive and rightly so, as they were desperate to win it because of a lot of synergy it offers with IGIA. That Zurich was able to outbid GMR, which had a RoFR, is something extraordinary. It doesn’t happen every day,” said an executive of a financial institution which invests in infrastructure projects.
Jewar is about 80 km from IGIA.
A six-year-long moratorium over concession fees to be paid to the government may give a buffer to Zurich. But, in the long term, completion of the project on time will determine its ability to compete with Delhi, said experts.
“The winning bid marks the re-entry of Zurich Airport in India. What is defining is the entry of an experienced player in a market that has GMR, GVK, Fairfax, and Adani. Their bidding number underscores their understanding of the Indian market and how important they think it is,” said Sidharath Kapur, former executive director at GMR Airports.
Capacity crunch in Delhi and Zurich’s ability to offer better services may make Jewar airport popular among India’s airlines that are frantically expanding their fleets but facing infrastructure crunch at major airports.
Delhi Airport is currently undergoing a Rs 9,000-crore upgrade to increase its capacity from 70 million fliers per annum to 100 million by 2022.
“After 2022, when Delhi finishes its fourth runway and terminal expansion, it has limited capability to expand capacity. Naturally, airlines and customers will have no other option,” said an airline executive.
He added, “For an airline, peak-hour slots are crucial. There is little Delhi will be able to offer to airlines as all of them have been grabbed. So, for an airline like IndiGo, which expands rapidly, it will make sense to grab slots offered at Jewar.”
The executive added that airlines will not quit IGIA but will plan future growth keeping Jewar in mind. A lot will also depend on the Uttar Pradesh government’s ability to complete high-speed rail and road networks before operations commence at Jewar. This will determine the airport’s profitability.
GMR’s boardroom is seeking comfort from the fact that centrality of IGIA will always keep it more attractive than Jewar.
“Jewar is on the highway from Noida to Agra, 60 km away. IGIA is almost in the heart of the city,” said Saurabh Chawla, executive director (finance) at GMR Group.
He said, “Also, if you look at the income profile of Jewar’s catchment area, you will see it is slightly inferior to Delhi’s catchment area.”
Will Zurich's bid for Jewar airport challenge IGIA's monopoly?
The catchment area will play a major part in Jewar’s success, said experts.
“In the initial stages, the challenge to profitability and attractiveness of a greenfield secondary airport, where the primary airport is owned by a competing entity, primarily depends on its ability to connect with the catchment area,” said Debayan Sen, head of India practice for aviation consulting firm Landrum & Brown.
Sen added, “The UP government’s ability to complete the high-speed rail and road network is going to be a significant determinant of profitability for Jewar.”
Government-owned engineering consultancy firm RITES has suggested the options of road, rapid rail, and metro to connect Jewar airport with Delhi. It has identified two roadways, two rapid rail routes, and one metro route.
Apart from this, the firm has also suggested widening of roads to connect Aligarh and Bharatpur, a distance of about 103 km.
“Traffic shifts from primary to secondary airports are tough and time consuming, leading to prolonged losses. Connectivity is more important than catchment. Further Delhi, has headroom for growth over the next 6-10 years depending on traffic growth further accentuating the challenge,” said Kapur.
A study conducted by consultancy firm PwC said if proper connectivity is made the preference of customers and airlines may change in favour of Jewar. For instance, fliers going from Ghaziabad may take 1.9 hours to Jewar compared to 1.7 hours for Delhi Airport.
However, once the Eastern Peripheral Expressway is operational, the travel time may go down significantly. Similarly, development of the Palwal Khurja expressway may also divert passenger movement from Faridabad to Jewar.
However, Zurich’s trump card to profitability can be international traffic.
“I think Zurich, while bidding so high, factored in that international travel from India will expand significantly. An international passenger may not mind traveling for an hour to catch their connecting flight if services are better. And, Zurich’s connection and services with international airlines will help them to attract those airlines,” said an executive of a private company, who did not want to be named.
Advantages for Jewar
Limited space for Delhi Airport to expand beyond 2022
Better facilities, lower airport charges
Disadvantages for Jewar
Connectivity issues with Delhi and major cities in western UP
|Weaker income profile of prospective flyers in the region

Day after GDP data, PM defends govt's record and hints at more measures

A day after India’s economic growth hit its lowest level in more than six years, Prime Minister Narendra Modisaid the first six months of the National Democratic Alliance government since its re-election were “phenomenal for the rise of a new India” and that “historic steps” were taken from the end of Article 370 to economic reforms and productive Parliament sessions to a decisive foreign policy.
Pointing out that more measures would be taken for development, a series of tweets and posters published by Modi’s account said numerous decisions had been taken to push the country’s development. The list includes the Code on Industrial Relations, a sharp reduction in corporation tax rates, mega mergers involving 10 public sector banks, and strategic disinvestment of the government shareholding in five public sector enterprises along with management control. The tweets and messages were, however, silent on the weak economic growth numbers released on Friday.

Finance Minister Nirmala Sitharaman also joined in and defended the Centre’s economic record in the last six months. “Several significant steps in structural reforms have been taken in these months. Responses and interventions addressing the needs of the economy will continue,” Sitharaman said, hinting that more steps could be in the offing before the 2020-21 Budget.
According to officials, additional measures could be aimed at non-banking financial companies (NBFCs) and micro, small and medium enterprises (MSMEs).
On Friday, the official data showed that gross domestic product (GDP) rose 4.5 per cent for the July-September quarter (Q2). This was a 26-quarter low and even worse than the 5 per cent for the April-June quarter.
Sitharaman laid out steps that had already been taken on the supply side in the real estate sector, banks, NBFCs, MSMEs, auto industry, and others.
Most of these measures were announced in August and September, and a top official told Business Standard on Saturday that had it not been for some of these measures, the growth figures could have been worse.
The data on Friday had showed that for ‘public administration, defence and other services, the gross value added, at the 2011-12 base year, for the July-September 2019 quarter grew by a staggering 11.6 per cent compared to growth of 8.6 per cent for the same period last year.
The key indicator of this sector, namely, the Union government’s revenue expenditure net of interest payments excluding subsidies, grew by 33.9 per cent compared to 22.2 per cent for the same period last year.
Soumya Kanti Ghosh, chief economic advisor at State Bank of India, had said after the GDP data that excluding defence, public administration, and other services, the GVA growth would have been merely 2.8 per cent, instead of 4.3 per cent.
The official said that not just in revenue expenditure, but even for capital expenditure, there was a push from the government. “Ministries and state-owned companies were told to clear pending dues and spend whatever was allocated in terms of capex,” said the official.
Among her many announcements, Sitharaman had said that PSUs and government departments had been told to clear Rs 60,000 crore worth of pending payments to goods and service suppliers, and that departments and PSUs would not let up on capex plans.
Officials said the steps taken, including the corporate tax cut and outreach programmes by banks, were aimed at increasing liquidity in a system starved of it due to the NBFC crisis, and to boost investments again. These will enable a recovery in the second half of the year, they said, an assessment some analysts disagreed with.

Maruti Suzuki India sales down 1.9% in November at 150,630 units

The country's largest carmaker MarutiSuzuki India (MSI) on Sunday reported a 1.9 per cent decline in sales at 150,630 units in November.
The company had sold 153,539 units in November last year, MSI said in a statement. Domestic sales declined by 1.6 per cent at 143,686 units last month as against 1,46,018 units in November 2018, it added.

Sales of mini cars comprising Alto and WagonR stood at 26,306 units as compared to 29,954 units in the same month last year, down 12.2 per cent.
Sales of compact segment, including models such as Swift, Celerio, Ignis, Baleno and Dzire, rose 7.6 per cent at 78,013 units as against 72,533 cars in November last year.
Mid-sized sedan Ciaz sold 1,448 units as compared to 3,838 units earlier. Similarly, sales of utility vehicles, including Vitara Brezza, S-Cross and Ertiga, declined by 1.3 per cent at 23,204 units as compared to 23,512 in the year-ago month, MSI said.
Exports in November were down by 7.7 per cent at 6,944 units as against 7,521 units in the corresponding month last year, the company said.

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India's deepening economic slowdown opens the door for more rate cuts

India’sdeepening economic slowdown is likely to throw open the door to more monetary policy easing this week.
The Reserve Bank of India will meet days after a report showed growth collapsed to 4.5 per cent in the July-September quarter, the first time it’s been below 5 per cent since 2013.

Led by Governor Shaktikanta Das, the RBI already has cut interest rates by 135 basis points in five moves this year, the most by any Asian central bank. Policy makers have had their focus squarely on reviving Asia’s third-largest economy, and last week’s weak data gives them added reason to continue pushing for growth.
“The weak numbers emphatically underscore the need of policy focus on growth,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “We are expecting the RBI to execute another rate cut of 25 basis points at its next meeting.”
Last quarter’s growth slump showed a contraction in manufacturing and subdued investments. It was only government spending that bolstered the economy, with private consumption still fairly low key.
A slew of high-frequency indicators suggest the slowdown extended into October. The central bank may be pushed to lower its growth forecast for the fiscal year through March 2020 from 6.1 per cent, with economists in a Bloomberg survey already predicting expansion of just 5.6 per cent.
“We expect the central bank to take note of the downward surprises in the data versus forecasts and acknowledge a deeper-than-expected slowdown in economic activity,” said Rahul Bajoria, a senior economist at Barclays Bank Plc. in Mumbai. He expects the central bank to cut the repurchase rate by 40 basis points over the remainder of the fiscal year.
In the interest-rate swap market, investors are betting the repurchase rate -- which is currently at 5.15 per cent -- will be 5 per cent in the next 12 months, while economists are forecasting it at 4.75 per cent by the end of March as growth remains subdued in coming months.
Despite the monetary stimulus and a slew of government measures to boost the economy -- including a $20 billion tax bonanza to companies -- a recovery looks uncertain.
Businesses have cut back on investments, preferring to repay loans instead, while consumers have curbed spending, fearing more job losses. The rural economy remains weak and borrowing is hamstrung by debt-laden banks and a crisis-ridden shadow lending sector.
Banks also haven’t passed on all of the 135 basis points of RBI’s rate cuts to borrowers, leaving policy makers frustrated.
Monetary policy space is slowly closing as inflation starts to accelerate. Consumer prices rose 4.62 per cent in October from a year earlier, the first reading above 4 per cent -- the RBI’s medium-term target -- since July 2018, and the highest since June last year.
The spike was driven by a surge in onion prices, although core inflation -- which strips out volatile food and fuel prices -- had slowed to 3.4 per cent.
“For the RBI, it presents a tough policy dilemma of overshooting inflation, undershooting growth and a fragile fiscal state,” said Madhavi Arora, an economist at Edelweiss Securities in Mumbai. “Nonetheless, the weak quarterly GDP print will validate our call for further easing by the RBI by at least another 50 basis points in this cycle, despite an uptick in inflation beyond the 4 per cent comfort zone.”

London knife attack suspect served prison term for terrorism charge in 2012

A man suspected of stabbing two people to death in a terror attack on LondonBridge was a former prisoner convicted in 2012 for terrorism offences, police said on Saturday.
Police identified the man, who was shot dead by officers after the Friday attack, as 28-year-old Usman Khan, saying they were not actively seeking any other suspects in relation to the incident.

"This individual was known to authorities, having been convicted in 2012 for terrorism offences. He was released from prison in December 2018 on licence," Assistant Commissioner Neil Basu said in a statement.

Facebook corrects user's post after Singapore invokes fake news law

Facebooksaid on Saturday it had issued a correction notice on a user's post at the request of the Singapore government, but called for a measured approach to the implementation of a new "fake news" law in the city-state.
"Facebook is legally required to tell you that the Singapore government says this post has false information," said the notice, which is visible only to Singapore users.

The correction label was embedded at the bottom of the original post without any alterations to the text.
The Singapore government said on Friday it had instructed Facebook "to publish a correction notice" on a Nov. 23 post which contained accusations about the arrest of a supposed whistleblower and election rigging.
Singapore, which is expected to call a general elections within months, said the allegations were "false" and "scurrilous" and initially ordered user Alex Tan, who runs the States Times Review blog, to issue the correction notice on the post.
Tan, who does not live in Singapore and says he is an Australian citizen, refused and authorities said he is now under investigation. Reuters could not immediately reach Tan for comment.
"As required by Singapore law, Facebook applied a label to these posts, which were determined by the Singapore government to contain false information," a spokesman for Facebook said in an emailed statement.
"As it is early days of the law coming into effect, we hope the Singapore government's assurances that it will not impact free expression will lead to a measured and transparent approach to implementation."
Some Singapore users however said that they could not see the correction notice. Facebook could not immediately explain why the notice was unavailable to some users.
Facebook often blocks content that governments allege violate local laws, with nearly 18,000 cases globally in the year to June, according to the company's "transparency report." Two years in the making and implemented only last month, Singapore's law is the first to demand that Facebook publish corrections when directed to do so by the government.
The Asia Internet Coalition, an association of internet and technology companies, called the law the "most far-reaching legislation of its kind to date", while rights groups have said it could undermine internet freedoms, not just in Singapore, but elsewhere in Southeast Asia.
In the only other case under the law, which covers statements that are communicated in the country even if they originate elsewhere, opposition political figure Brad Bowyer swiftly complied with a correction request.

Oppn slams govt over slowdown, Manmohan says 'precarious state of economy'

Former prime minister ManmohanSingh on Friday said the fundamental reason for the “precarious state of” the Indian economy was the “even more worrisome” state of India’s society.
Speaking at an ‘economic conclave’ organised by think tanks associated with the Congress, Singh urged Prime Minister Narendra Modi to “set aside his deep rooted suspicion” of India’s society and “nurse” it back to a “harmonious, confident and mutually trustworthy society that can revive the animal spirits and help our economy soar.”

Singh said, the GDP figures released earlier today point the growth rate of our economy in the second quarter of current fiscal year, is as low as 4.5 per cent. This is clearly unacceptable and the aspirations of our people want that this country should grow at 8-9 per cent per annum and therefore the sharp decline in growth rate from 5 per cent in the first quarter to 4.5 per cent in the second quarter is indeed worrisome. It is my belief that mere changes in economic policy will not help revive the economy. We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again at 8 per cent per annum.
The former PM delivered his speech barely an hour after the government released the latest economic data of the last quarter, which leaders of opposition parties pointed to as evidence of the Modi government having abdicated its responsibility towards ensuring economic growth to indulge in diversionary politics.
“Lowest GDP growth in 26 quarters! No answers from the Finance Minister. No wonder full opposition walked out of the Rajya Sabha 40 minutes into the FM’s speech this week. And ministers dozed off in their seats,” Trinamool Congress Rajya Sabha leader Derek O’Brien tweeted, alluding the discussion in the Rajya Sabha on Wednesday.
“Sixth consecutive quarter of falling GDP growth. Lowest quarterly GDP growth since Jan-Mar 2013. Manufacturing sector has contracted! What will it take for our government to acknowledge this crisis? The slowdown is real and deep. Wait for new distractions to be conjured up by the duo,” Congress leader Jairam Ramesh said.
Both O’Brien and Ramesh had participated in the Rajya Sabha discussion. “4.5% (GDP)! Some people who made a career by mocking Dr Manmohan Singh ji are now struggling to oversee the economy,” Congress leader Ahmed Patel said.
Singh said India was now a $3 trillion global economic powerhouse driven largely by private enterprise. “It is not a tiny command and control economy that can be bullied and directed at will. Nor can it be managed through colourful headlines and noisy media commentary,” he said.
Bemoaning the discrediting of government data, Singh said that “shooting down messengers of bad news or shutting off economic reports and data is juvenile and does not behoove a rising global economic powerhouse.”
“No amount of subterfuge can hide the performance and analysis of a $3 trillion market economy of 1.2 billion people. Economic participants respond to social and economic incentives, not diktats or coercions or public relations,” he said.
The former PM said the Modi government “with an absolute majority in the Lok Sabha and low global oil prices” has a “once-in-a-generation economic opportunity to catapult India to the next phase of economic development and create new jobs for hundreds of millions of our youth.”
Possibly alluding to student protests, Singh reminisced about his days as a student of economics at Cambridge University in the 1950s. He said universities foster an environment that encourages students to pursue the intellectual truth, to be intellectually fearless and honest, lucid in expressing our opinion, being open to argument and dissent. He said universities were a place to meet people of various beliefs and ideas and not be confined in an echo chamber.
Singh said his teachers taught him how economic growth and development are shaped by the societies in which they operate. “One cannot separate society from the economy in any nation,” he said. The former PM said, “There is no one today that can deny the sharp slowdown in India’s economy and its disastrous consequences, particularly for farmers, youth and the poor.”
He said it was his belief that mere changes in economic policy alone will not help revive the economy. “We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again,” he said.
Singh said India’s social fabric of trust and confidence is now torn and ruptured. “There is a palpable climate of fear in our society today,” he said. The former PM said many industrialists have told him that they live in fear of harassment by government authorities.
He said there is profound fear and distrust among India’s various economic participants. “This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society is stifling economic activity and hence economic growth,” Singh said.
“The root cause of this is the government’s policy doctrine that seems suspect every industrialist, banker, policy maker, regulator, entrepreneur and citizen. This has halted economic development with bankers unable to lend, industrialists unable to invest and policymakers unable to act.”
“The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust through which, every policy of previous governments was considered of bad intent, every loan sanctioned was undeserving, every new industrial project was crony in nature and so on,” he said.
Singh said the government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation, that have proved to be disastrous. “For economic growth to revive, it is very important that the government enthuses trust and confidence,” he said.
Singh said this was possible only if the government sheds its current doctrine and begin to trust India’s farmers, India’s entrepreneurs and India’s citizens at large.

With growth this bad, India will need more than rate cuts to help economy

With India's growth tumbling to 4.5% from 8.1% in little more than a year, you’d be surprised to know that ShaktikantaDas has one of the easiest jobs in central banking. He just has to keep doing what he's been doing since becoming governor of the Reserve Bank of India last December: cut interest rates. Fortunately, political will is on his side.
That’s an enviable state of affairs for a central banker these days. Just look at Federal Reserve Chairman Jerome Powell, who has become a constant target of President Donald Trump’s Twitter tirades. It’s also face-saving for Das that politics and economics are pointing in the same direction. He took up this post under a cloud of question marks about the RBI’s independence. Das’s immediate predecessor, Urjit Patel, quit abruptly almost a year ago, just as the government was ratcheting up pressure for the institution to hand over some of its reserves to free up fiscal spending.
ALSO READ: Q2FY20 investment growth at 19-quarter low despite govt's stimulus measures
The troubling state of Asia's third-largest economy makes Das's task uncomplicated. The pace of growth is slowing dramatically; government numbers Friday showed India’s expansion slipped in the third quarter to its weakest clip since 2013. Many big economies have been stalling, but it’s hard to think of another where growth has come down to earth this quickly. Expectations have diminished so radically that even a slowdown of this magnitude was in line with economists’ projections.
Falling toward earth
For Das to even contemplate taking his foot off the monetary pedal now would be a mistake. He should look past the recent uptick in inflation last month, largely attributed to vegetables such as onions, a staple of Indian cooking. Those price gains helped push the measure beyond the RBI's 4% medium-term target. More important is the slide in core inflation, which strips out volatile commodity prices. This points to a demand problem in the economy, as my Bloomberg Opinion colleague Andy Mukherjee wrote here.

Chart
Das says policymakers will keep cutting rates until growth revives. The five reductions he’s overseen haven’t given the economy back its groove; so the mission is clear going into next week’s meeting, when the central bank is expected to cut again. His global peers may have done well to adopt the same approach. It's clear from the Fed’s retreat that the hikes in 2018 went too far in the face of anemic inflation. The European Central Bank had barely curtailed quantitative easing before it had to start all over again.
Lest Das be tempted to sail through, there's the iceberg of India’s banking industry to consider, which is saddled with one of the world's most dangerous loads of bad debt. The trouble is, about 60% of the financial system is controlled by state-run banks that report to the government, so Das’s ability to influence them is constrained. At some point he may well have to challenge entrenched political interests.
ALSO READ: Oppn slams govt over slowdown, Manmohan says 'precarious state of economy'
The other hurdle is that India’s broken financial system hinders the ability of rate cuts to flow through the economy. Shadow banking, a big source of weakness, was also a major source of lending. That spigot appears to have largely dried up.
I wrote in February that Das was lucky: Economic need trumped the political circumstances surrounding his first rate cut. But luck doesn’t last forever. It wasn’t too long ago that economic aspirations for India echoed China’s. Now this young country of 1.4 billion people is looking more like Indonesia, Malaysia or the Philippines — that is, just another middling emerging market. At this rate, Das will need more than rate cuts and a good reputation to fix things.
(Updates to include latest GDP figures.)

Slowdown clouds darken: Core sector output contracts 5.8% in October

The output of the eight core sectors of the economy fell for the second month in October, contracting by a record 5.8 per cent as a broad-based decline gripped almost all industries. Output had contracted by 5.2 per cent in the previous month — September — after rising just 0.1 per cent in August.
Cumulative growth of the core sectors till October in the current fiscal year (FY19) stood at only 0.2 per cent, down from 5.4 per cent in the previous year.
Economists said the latest figures portend a deepening of the ongoing industrial slowdown. “Such low growth in core sector industries has not been witnessed so far on either the 2011-12 or 2004-05 base. This indicates the severity of industrial slowdown,” said Sunil Kumar Sinha, principal economist at India Ratings.
Data released by the Commerce and Industry Ministry on Friday showed the decline in production across sectors such as coal, crude oil, natural gas, steel, cement, and electricity intensified further in October.
chart
However, the engulfing industrial slowdown seems to have bypassed fertiliser production which rose by 11.8 per cent in October, constituting the highest growth in more than a year.
Coal production contracted by 17.5 per cent in the month. This was, however, lower than the steepest fall of 20.5 per cent seen in September. Contraction in the sector continued to become entrenched since July, when a 24-month growth period ended. The latest figures come amid reports of low electricity demand countrywide.
Electricity generation shrank by 12.4 per cent, contraction shooting up from the 2.4 per cent fall reported in September.
“Heavy rainfall reduced demand for power from the agricultural and household sectors, and demand from the manufacturing sector was limited, given the holidays during the festive period,” said Aditi Nayar, principal economist at ICRA.
“With healthy reservoir levels, hydroelectricity generation would remain robust in FY20. This, in conjunction with an increasing share of other renewable generation sources (mainly wind and solar), would thereby squeeze thermal electricity generation in the next few quarters,” she said.

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Elsewhere in the energy space, crude oil production continued its downward spiral, having completed a continuous chain of contraction for the past 13 months. Production reduced by 5.1 per cent, slightly lower than the 5.4 per cent contraction in September. Natural gas extraction also continued to fall for the seventh straight month, reducing by a higher margin of 5.7 per cent in October.
As a result of these trends, refinery products managed to grow by a marginal 0.4 per cent, after contracting by 6.6 per cent in the previous month. The sector has remained volatile in FY20. However, senior officials continue to claim that a recovery in production is underway as key refining units, which were closed earlier, go live. Importers continue to deal with changes in the oil import value chain because of the government reducing its exposure to Iranian crude oil.
The latest data also casts a shadow over infrastructure growth in the country as both steel and cement production tanked. Cement output contracted by 7.7 per cent in October, down from the 2.1 per cent reduction in September. Steel output also reduced by 1.6 per cent, remaining negative for the second month following an 11-month growth streak. Experts blamed heavy rainfall in major parts of the country for a slowdown in construction activities.
The eight core sectors make up over 40 per cent of the Index of Industrial Production (IIP) which had earlier showed that overall industrial production shrank by 4.3 per cent in September — an eight-year low.
Slow growth has been on account of volatile changes in refinery production, which commands almost 30 per cent of the index by weighting. Production went down by 6.7 per cent in September.

Manufacturing contracts for first time in 2 yrs, pulls down GDP to 6-yr low

The manufacturing sector contracted for the first time in over two years, showed official data released on Friday.
The sector contracted by 1 per cent in the second quarter (July-September period) of this fiscal year, compared to a slow growth of 0.6 per cent in the previous quarter. Growth in the manufacturing sector stood at 6.9 per cent in the same quarter of the previous fiscal year. Manufacturing was the only sector which witnessed a decline in output during this quarter.

It was the manufacturing sector which pulled down the gross domestic product (GDP) growth to over six-year low of 4.5 per cent in the second quarter.
In the first half of this fiscal year, the output in the manufacturing sector fell by 0.2 per cent, compared to a robust growth of 9.4 per cent during the same period last year.
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This is the second contraction in the sector on a quarterly basis in the past eight years — since the new GDP series started in 2012-13.
Some analysts blamed poor consumer demand for the slump. “We saw the weakest performance in the manufacturing sector which is a result of a persistent demand slowdown that has resulted in low capacity utilisation for the last 2-3 years,” said D K Srivastava, chief policy advisor at EY.
“Without capacity utilisation, there was no investment demand. As a result of weak demand for consumer products, the manufacturing sector contracted as it has excess capacity but no corresponding demand.”
Experts do not see green shoots in the sector going ahead as the output of eight core industries also fell in October. The core sectors contracted by 5.8 per cent in October, compared to a fall of 5.2 per cent in September, according to the data.
The GDP manufacturing numbers were in tandem with the index of industrial production data. The output in manufacturing had contracted by a sharp 3.9 per cent in September against 1.6 per cent in August.
In fact, of the 23 sub-sectors within manufacturing, 17 had recorded year-on-year contractions in September, up from 15 in the previous month.

Swiss firm Zurich Airport outbids Adani, DIAL to win Jewar airport project

ZurichAirport International, which operates eight airports across the world including one in Zurich, has won the bid to build Jewar airport. Set to become the largest airport of the country, it will be located some 80 km away from Delhi’s Indira Gandhi International Airport (IGIA).
Zurich Airport offered to pay Rs 400.97 per passenger, beating two of India’s top infrastructure firms Adani Enterprises and GMR Infra, which bid Rs 360 and Rs 351 per passenger, respectively. The other participant — Prem Watsa-owned Fairfax—bid Rs 205. The revenue has to be paid to the Yamuna Expressway Industrial Development Authority (YEIDA) — the nodal agency building the airport.

“India is a focus market for the company. The new airport will be fundamental to accommodate the expected flight traffic growth in the National Capital Region (NCR),’’ said a spokesperson of Flughafen Zurich, confirming the outcome of the bid. With this award, the company will participate in the expected growth of India’s aviation market and will implement best practices developed in Switzerland while maintaining Indian values, the spokesperson added.
This is not the first time that Zurich Airport is entering India. A consortium in which Zurich held a 17 per cent stake had won the bid to build and maintain Bangalore Airport in 2008. About 10 years later, it made a complete exit from the project. It had also tied up with Essel Infraprojects to bid for the second airport at Goa and with the Hiranandani Group to bid for Navi Mumbai airport.
Jewar airport at its full capacity is projected to cater for over 70 million passengers per annum with six runways and will be a competitor to GMR- owned Delhi International Airport (DIAL).
Swiss firm Zurich Airport outbids Adani, DIAL to win Jewar airport project
By virtue of operating Delhi Airport, GMR had a first right of refusal for Jewar Airport, according to the agreement signed between the Airport Authority of India (AAI) and GMR Infra while privatising Delhi Airport in 2006. The GMR Group has the right of first refusal (RoFR) for any airport that is built within 150 km of the existing airport in Delhi. But according to the norms, GMR would have been asked to match the highest bid only if its bid was equal to or less than 10 per cent of the bid offered by the highest bidder.
Zurich’s bid at Rs 400.97 was the highest and Rs 10 higher after factoring in the 10 per cent of the GMR bid. ‘’Hence, the RoFR cannot be exercised,” said Shailendra Bhatia, officer on special duty, YEIDA. Jagannarayan Padmanabhan, director, CRISIL Infrastructure Advisory, said an international developer winning the project was a positive development for the sector. But it’s important to clear the hurdles at the earliest and give an unencumbered site for development, he said.
The concession agreement allows the bidder a moratorium over the payment for six years since the start of the operations, according to an industry source. “This, along with the potential that it may become Delhi’s primary airport in the long run, must have helped Zurich Airport decide on the bid. They are also paying a premium to enter the market,” he said.
The airport has been pending for long. In 2001, Rajnath Singh, then UP chief minister, first proposed an airport at Jewar. Mayawati, too, pursued the project after she became chief minister in 2007, but failed to make any headway.
A study by the Ministry of Civil Aviation that the existing airport in Delhi will get saturated in the next decade prompted the authorities to work towards an airport in Jewar.
The airport in Delhi, catering to 66 million passengers as of 2018-19, is the seventh largest in Asia. ‘’It will see a significant growth when its fourth runway and fourth terminal are commissioned in three to four years,” said a forecast report prepared by the Ministry of Civil Aviation.

YES Bank expands equity offer to $2 billion; board to meet on December 10

Private sector lender YES Bank has increased the size of its equity capital offer to $2 billion from the earlier guidance of $1.2 billion on “strong interest” shown by NRI investors, including a $1.2 billion offer by Erwin Singh Braich and SPGP Holdings, and $500 million by Citax Holdings and Citax Investment Group, according to the bank.
Other prominent suitors are the Aditya Birla Family Office ($25 million), GMR Group and Associates ($50 million), and Rekha Jhunjhunwala ($25 million). Besides, a top-tier US fund house has evinced Interest to invest $120 million. Its name will be disclosed early next week. Discovery Capital will take $50 million and Ward Ferry will take $30 million.

Meanwhile, the bank has extended the deadline for the binding term sheet for Erwin Singh Braich and SPGP Holdings to December 31 from November 30.
The bank’s board of directors on Friday held a marathon meeting, which lasted over eight hours. The bank in a late night communication to the stock exchanges said investors had individually expressed their willingness to subscribe to the equity shares of the bank for an aggregate amount of $2 billion. These shares will be issued on a preferential allotment basis.
None of the Investors will be allotted equity shares such that their holding exceeds 25 per cent of the share capital of the bank.
The board of directors shall reconvene on December 10 to finalise and approve the details of the preferential allotment. It will also convene an extraordinary general meeting subsequently to obtain the approval of the shareholders.
Such preferential allotment shall be subject to receipt of all regulatory and statutory approvals, as may be applicable, the bank said. YES Bank’s regulatory capital adequacy ratio (Basel III) stood at 16.3 per cent (CET-I of 8.7 per cent and Tier I of 11.5 per cent) as on September 30, 2019. The stock closed 2.5 per cent lower at 68.3 on the BSE.
Banking on the deal
None of the investors will be allotted equity shares such that their holding exceeds 25% of the share capital of the bank
RBI approval is required for stake purchases in Indian banks of more than 5%
Any non-financial entity can buy up to 10% of a lender, and for a financial entity the cap is 15%
There’s a provision to allow a single investor to pick up 40% or more under special circumstances
YES Bank’s core equity capital is 8.70%, barely above the regulatory minimum of about 8%

Paying cash in FASTag lanes won't invite penalty till December 15

The central government has extended the date from which it will start penalising those who pay by cash in FASTaglanes to December 15. The previous date was December 1.
It has been found that many citizens have still not enabled their vehicles with FASTag due to various reasons, an official statement said. "Accordingly to provide some more time to citizens to buy and put FASTag on their vehicles, it has now been decided that charging of double user fee from vehicles which enter FASTag lane without FASTag will start from 15th of December 2019 instead of 1st of December 2019."

NHAI has equipped all toll plazas with Electronic Toll Collection System. For ease in availability of FASTag, NHAI has launched MyFASTag app whereby all information regarding FASTag can be obtained along with location of POSs and charging/ linking with NHAI/other wallets or bank accounts, the statement said.
In order to save fuel, time and pollution and to ensure seamless movement of traffic, Ministry of Road Transport & Highways has launched National Electronic Toll Collection program (NETC) which provide for collection of user fee through FASTag based on RFID technology.

Jharkhand Assembly elections: Polling for 13 seats in first phase underway

The first of the five-phase polling began in 13 assembly constituencies in Jharkhandon Saturday.
The voting commenced at 7 a.m. and will end at 3 p.m., Election Commission officials said.

A total of 37,83,055 electorate, including 18,01,356 women and five third-gender voters are eligible to exercise their franchise in the first phase across six districts.
The fate of 189 candidates, including 15 women nominees, will be decided in the first phase of the polling in Chatra, Gumla, Bishunpur, Lohardaga, Manika, Latehar, Panki, Daltonganj, Bishrampur, Chhatarpur, Hussainabad, Garhwa and Bhawanathpur.
Key candidates in the fray are Bharatiya Janata Party (BJP) nominee and state Health Minister Ramchandra Chandravanshi from Bishrampur and state Congress president Rameshwar Oraon from Lohardaga seat.
Oraon is taking on the former state Congress chief Sukhdeo Bhagat after the latter joined the BJP recently.
Former BJP chief whip Radhakrishna Kishore, who was denied ticket from Chhatarpur, is contesting on an All Jharkhand Students Union (AJSU) party ticket from the same seat.
The BJP, which is seeking a second straight win under the leadership of Chief Minister Raghubar Das, is contesting in 12 seats in the first phase while it is supporting Independent candidate Vinod Singh from Hussainabad.
The AJSU party is contesting on its own.
Challenging the BJP is the opposition alliance of the Jharkhand Mukti Morcha (JMM), the Congress and the Rashtriya Janata Dal.
While the Congress is contesting in six seats in the first phase, the JMM is fighting in four and the RJD in three constituencies in the first phase.
The other parties contesting the elections are Babulal Marandi's Jharkhand Vikas Morcha (Prajatantrik), Janata Dal (United) and the Left parties.
Jharkhand Chief Electoral Officer Vinay Kumar Choubey said a total of 4,892 polling stations have been set up, out of which 1,262 would have webcasting facilities.' Additional Director General of Police and state police Nodal Officer Murari Lal Meena said a total of 1,097 polling stations in Naxal-affected areas were marked as hypersensitive and 461 polling stations as sensitive.
The rest of the four phases for the 81-member assembly will be held on December 7, 12, 16 and 20.
Counting is scheduled on December 23.

Q2 GDP, core sector data may push RBI to cut rates in December: economists

Economicdata release post market hours on Friday hints that the slowdown has manifested deeper into the system. Economic growth slowed further in the second quarter of this fiscal to hit a 26-month low of 4.5 per cent – a far cry from the 7.1 per cent reported in the corresponding period of the last financial year.
Meanwhile, the output of eight core infrastructure industries contracted by 5.8 per cent in October, according to the government data released on Friday. As many as six of eight core industries saw a contraction in output in October. The eight core sectors had expanded by 4.8 per cent in October 2018.

Here’s how leading economists and market watchers have interpreted the numbers released today:
Aditi Nayar, principal economist, ICRA
Based on the unfavourable performance of the core sector, the contraction in the IIP appears set to deepen in October 2019, even as other indicators of demand such as petrol and ATF consumption have recorded an improved performance in that month.
Rainfall related bottlenecks to construction activities contributed to the YoY decline in output of cement and steel in October 2019. Focus on expediting infrastructure projects, measures to aid real estate developers and proposals to address the stress in the NBFC sector may support a pickup in construction activities in the coming months. This should support an improvement in growth of core items such as steel and cement in the remainder of FY20.
Dr. Joseph Thomas, head of research, Emkay Wealth Management
Q2 GDP at 4.50 per cent indicates a slump in economic activity and it has become quite pronounced after a slip to 5 per cent in Q1. This leads up to an annual growth rate close to 5 per cent. Stronger fiscal stimulus is required to stem this fall. Failing this would growth could slip lower as we move into the next financial year.
Rajni Thakur, economist, RBL Bank
At 6.1 per cent, nominal GDP growth is the lowest we have seen in last few years, except for quarter ending March 2009. It not only confirms the growth fears in the markets but also lowers the outlook for the full year further.
Growth in the second half of the year could remain evasive unless government pumps in more stimulus and continues to heavy lift growth push through the fiscal year. The grind up is going to be slow and heavily dependent on fiscal support to come out of current growth recession.”
Deepthi Mary Mathew, economist, Geojit Financial Services
The GDP growth rate for Q2FY20 was in line with the market expectation at 4.5 per cent. All indicators ranging from IIP, electricity consumption to core inflation rate were pointing towards the fact that the economy has not entered the revival path. The slowdown in consumption is indeed worrying, as its revival is important for investment to pick up. The Private Final Consumption Expenditure (PFCE) declined to 5 per cent YoY compared to 9.7 per cent. With the growth slipping to 4.5 per cent, it is expected that the Reserve Bank of India (RBI) will go for the next round of rate cut in December.
Sreejith Balasubramanian, economist - fund management, IDFC AMC
Q2 FY20 real GDP of 4.5 per cent y/y was broadly in line with expectations, but nominal GDP growth was much slower at 6.1 per cent (below 8 per cent in Q1 FY20 and 12 per cent in Q2 FY19). Manufacturing growth contracted, while both private consumption and investment stayed weak.
With the just-released index of eight core industries falling 5.8 per cent y/y in October, bottoming-out of growth could be further down the road and recovery is unlikely to be V-shaped as consumer demand, credit supply and risk appetite remain lacklustre. This and the falling core-CPI should allow the RBI focus more on growth, while a major fiscal stimulus is hindered by the lack of available household financial savings.
Amar Ambani, senior president and head of research for institutional equities, YES Securities
The GDP growth figure is as per our estimate for Q2 FY20. The stock market has been trending lower in the last couple of trading sessions, in anticipation of poor numbers. While there may be a mild negative reaction on Monday, it will not change the medium term trajectory for equities.
For the fiscal year FY20, our real GDP forecast stands at to 5.2 per cent, with risks to further downside. After 135 basis rate cut delivered by the RBI since February 2019, we expect the RBI to cut rates by an additional 25 bps in December, taking the repo rate to 4.90 per cent. Going forward, we believe fiscal policy will need to play a dominant role in supporting overall growth. The government may choose to mildly deviate from its fiscal deficit target for this year as well as next fiscal.

GDP growth slows to 4.5% in Q2 as manufacturing, services disappoint

The economy posted its weakest growth in more than six years as manufacturing activity contracted by 1 per cent in the September quarter. Gross domestic product (GDP) rose 4.5 per cent from a year ago, down from 5 per cent in the previous quarter, the data released by the National Statistical Office on Friday showed.
Two successive quarters of below 5 per cent growth have cast a shadow on the economy’s performance in the fiscal year, analysts said.
Worse, nominal GDP growth slipped to 6.1 per cent, the lowest in nearly two decades. Growth in government revenues and middle-class salaries is largely in line with nominal GDP growth.
Growth in investment (gross fixed capital formation), at a mere 1 per cent, was the slowest since the December 2014 quarter. Though tax cuts for companies would help in reviving investment, the investment rate in Q2 stood at 27.6 per cent, the lowest in 11 quarters.
GDP growth slows to 4.5% in Q2 as manufacturing, services disappointFormer prime minister Manmohan Singh expressed concern over the economic situation. “This is clearly unexpected and the aspirations of the people are that the country grows at 8-9 per cent per annum,” he said at an event here.
Agriculture grew at 2.1 per cent, refusing to go up much despite monsoon recovery in September. But nominal growth in the farm sector stayed above 7 per cent. This gives a grim picture of sectors other than agriculture, said Pronab Sen, former chief statistician of India.
“While farm prices were inflationary, non-farm sectors suffered a severe setback in terms of price realisation. The real cost of borrowing has gone up, while the debt-servicing ability has declined across sectors,” he told Business Standard.
Nominal GDP growth is now below the rate at which the government borrows to finance its deficit, at 6.5 per cent. This is quite a serious blow to the economy, experts said.

GDP growth slows to 4.5% in Q2 as manufacturing, services disappoint
“This would mean that the government’s debt-to-GDP ratio will rise now. More importantly, the economy growing slower than the borrowing rate would act as a disincentive to potential investors,” Arjun Jayadev, professor of economics at Azim Premji University, told Business Standard.
Even as the services sector propped up the growth number, its growth at 6.7 per cent was the lowest since March 2014 (excluding construction).
But spending by the government, facilitated by the rollout of funds after the Union Budget was presented on July 5, helped growth. Government consumption expenditure grew by 15.6 per cent.
Private consumer spending (by households and businesses) grew 5 per cent year-on-year, improving slightly from the previous quarter.
Experts said though a rate cut in the upcoming monetary policy meeting seemed a certainty now, green shoots were hard to find, and they worry further growth spiralling down could not be ruled out unless there is a boost from the fiscal side.
“The slowdown has deepened and is now expected to remain more extended than previously anticipated. Optimism levels of businesses and consumers have fallen,” said Arun Singh, lead economist at Dun and Bradstreet India.
Several economists echoed this view.
“The data shows that the economy is passing through a declining growth momentum and there is no easy way out. The current domestic and global macro environment and the government will have to do some heavy lifting to support growth,” said Sunil Kumar Sinha, India Ratings.
While corporate tax cuts would dent government revenues, enhanced divestment and dividends from state-owned enterprises could help the government — to some extent — to boost public spending.
Construction too failed to pick up pace, growing just 3.3 per cent in Q2.

Chanda Kochhar takes ICICI Bank to Bombay HC; hearing on December 2

Chanda Kochhar, ICICIBank’s former managing director and chief executive officer, has moved the Bombay High Court, challenging the decision of the bank’s board earlier this year to terminate her employment and claw back the bonuses and stock options she received between April 2009 and March 2018.
A division Bench of the high court comprising Justice Ranjit More and Justice Makarand Karnik will hear Kochhar’s plea on December 2. With this, the stage is set for an intense legal battle between the bank and its former CEO.

Last year, after media reports raised questions over Kochhar’s dealings with the Videocon group, the bank’s board had initially defended her and rejected any external enquiry, but later changed its stance after the Central Bureau of Investigation (CBI) started its probe into the matter. On June 6, 2018, the bank appointed retired Supreme Court judge B N Srikrishna to enquire into all the allegations.
Chanda Kochhar takes ICICI Bank to Bombay HC; hearing on December 2
In a meeting held on January 30, 2019, the ICICI Bank board announced that it would treat the separation of Kochhar as a ‘termination for cause’ in accordance with the bank’s internal policies and code of conduct. The termination revoked all her entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested but unexercised stock options, and medical benefits, apart from the clawback of all bonuses paid between April 2009 and March 2018.
The board’s decision to remove Kochhar came after the detailed investigation report from Justice Srikrishna, who investigated the allegation that Videocon Industries was granted loans by ICICI Bank and, in quid pro quo, Videocon invested in Chanda Kochhar’s husband Deepak Kochhar’s company, Nupower Renewables. Nupower, Videocon, and Kochhar have denied these allegations.
An email sent to ICICI Bank did not elicit any reply. Kochhar did not reply to text messages.
The allegations against Kochhar were first made by whistle-blower Arvind Gupta, who wrote to the Prime Minister’s Office in 2016 alleging irregularities in ICICI Bank's loan disbursements to corporates under Kochhar’s watch.
The scandal exploded when in March 2018, the media reported that the CBI had filed a preliminary enquiry against Kochhar. In January 2019, the CBI filed an FIR against the Kochhars and Videocon. The Enforcement Directorate is also investigating Videocon and the Kochhars.
Videocon is now facing bankruptcy proceedings after defaulting on bank loans worth Rs 40,000 crore. ICICI Bank has made a claim of Rs 3,318 crore against Videocon in the ongoing insolvency proceedings.
The allegations against Kochhar were first made by whistle-blower Arvind Gupta, who wrote to the Prime Minister’s Office in 2016 alleging irregularities in ICICI Bank's loan disbursements to corporates under Kochhar’s watch. The scandal exploded when in March 2018, the media reported that the CBI had filed a preliminary enquiry against Kochhar. In January 2019, the CBI filed an FIR against the Kochhars and Videocon. The Enforcement Directorate is also investigating Videocon and the Kochhars.

RBI begins bankruptcy proceedings against DHFL, sends stressed NBFC to NCLT

The Reserve Bank of India has filed an application to begin bankruptcy proceedings against shadow lender Dewan Housing Finance Corporation Ltd (DHFL), it said Friday.
DHFL, once one of India's top shadow lenders, owes its creditors - which include mutual funds, banks, pension funds, insurance firms and retail investors - close to Rs 1 trillion ($13.93 billion).

The country's shadow banking sector, a key source of credit to millions, has been plagued by a credit crunch triggered by the collapse of lending major IL&FS last year.
India's central bank said earlier this month it would begin bankruptcy proceedings against DHFL, and superseded the company's board, while appointing an administrator.

Bank recapitalisation should be done through cash, not bonds: Rangarajan

Former RBIgovernor C Rangarajan on Friday suggested that recapitalisation of banks should be done through by infusing cash rather than issuing Bonds, as he cautioned that Boards of public sector undertakings, including banks, should maintain "arms length" from the Government.
Rangarajan comments assume significance as Finance minister Nirmala Sitharaman, in August, announced upfront capital infusion of Rs 70,000 crore into public sector banks, a move aimed at boosting lending and improving liquidity situation.
At the inaugural session of the seminar 'Non-Performing Assets (NPA) and its Resolution in Indian Banks' at ICFAI Foundation for Higher Education,he, however, said the centre has infused Rs two lakh crore as capital into various banks during the past three years and it would be difficult for any dispensation to pump in so much as capital in cash form.
"I also have a point that one of the answers to the problems faced by the banking system is to ensure that the capitalisation of the banks is done properly."
According to him, the mode of recapitalisation that is being done now is through the issue of bonds.
"What the banks really gain is only the interest income through the bonds. This also needs a relook...I plead guilty because we initiated thisin the early 1990s. But that was a different situation.
The fiscal was undergoing a great deal of problems as part of the reforms (then). But should we continue with this system?" he said.
The economist said though the majority of the stakes in banks is owned by the government, it is necessary to ensure that the lenders run business in the national interest and it is not necessary for the government to interfere with commercial decisions of banks.
"The credit decisions must be left to the Boards (of directors of banks). There is a large literature on the relationship between the government not only banks but also other public sector units.
And the people talk about the arms length between the board and the government..There is still much that needs to be done in terms of appropriate mechanism for appointing the Boards, for appointing the chief executives of the banks," he said.
Later talking to reporters, he said though there is decline in the country's growth numbers the situation does not amount to "recession."

"There is a slowdown..there is no doubt about the fact that there is slowdown, but the slowdown is in growth rate," Rangarajan said.
Hoping that the growth may pick up next year onwards, the former Chairman of the Prime Minister's Economic Advisory Council said it would take another eight years for India to become $5 trillion economy as opposed to Prime Minister Narendra Modi's target of 2025, due to the muted growth now.
"The growth may pick up next year. Growth may not be substantial, but it may pick up next year..it takes 2-3 years to get back the growth of higher than 7 per cent," he said.
Advising that bankers should neither be "lazy bankers" nor "hasty bankers", Rangarajan said recent history shows that the appraisal systems for credit and working capital should be improved.

Did full thrust revving of engines lead to grounding of Indigo's Airbuses?

IndiGoand Go Airlines India Ltd. use the same type of engine made by Pratt & Whitney that’s susceptible to mid-flight shutdowns. Yet IndiGo, one of Airbus SE’s biggest customers, is the only one to encounter turbine failures this year, drawing heavy scrutiny from the aviation regulator.
The reason could be linked to how the budget airline flies. India’s Directorate General of Civil Aviation told IndiGo’s operator, InterGlobe Aviation Ltd., that its practice of revving A320neo jets at full thrust right after takeoff could wear down the engines, people familiar with the matter said. By contrast, Go Air — India’s fourth-largest carrier by market share — typically uses a so-called alt-climb approach that applies less thrust, the people said, asking not to be identified discussing a private matter.

Climbing at full thrust can help planes burn less fuel, two of the people said. IndiGo has suffered 13 engine shutdowns related to low-pressure turbines during climbs this year, according to one of the people who was directly involved in an investigation where the DGCA ran a comparative analysis on how both airlines operate.
The issue has been costly. The DGCA this week said every time a new plane joins IndiGo’s fleet, it must ground one A320neo that hasn’t had its engines modified. That essentially prevents Asia’s biggest budget airline by market value from adding new flights until the issue is fixed. IndiGo has 730 of the latest model on order — making it the world’s top A320neo customer — and wants to expand its network beyond cities such as Istanbul to destinations including London. InterGlobe’s shares rose 1 per cent Friday.
Pratt, a unit of United Technologies Corp., invested $10 billion to develop its fuel-efficient geared-turbofan engine for single-aisle jets like the A320neo, but it’s suffered repeated setbacks since its commercial introduction in 2016, including a cooling problem, durability issues and delivery delays. IndiGo shifted away from the engines in June with a $20 billion order from CFM International Inc., a joint venture between General Electric Co. and France’s Safran SA, although those deliveries have yet to take place.
graphgraph
An IndiGo spokeswoman said the matter is “strictly between the airline and the concerned authorities.” The US Federal Aviation Administration hasn’t established any connection between the climb procedure and engine problems, she wrote in a text message, adding that the safety of passengers, crew and aircraft remains the utmost priority.
An Airbus spokesman said the planes are designed to handle full thrust, but it is “established best practice” for pilots to lower the thrust while climbing to reduce stress on the engine.
Pratt declined to comment on whether the climbing procedure can impact engines. A representative for the aviation ministry, which oversees the DGCA, referred queries to the regulator, saying it was a “technical” question. A Go Air spokesman didn’t immediately comment.
India originally asked IndiGo to replace all its faulty engines by Jan. 31, but the DGCA said Monday that the airline’s efforts to meet the deadline didn’t “instill enough confidence.” In a meeting with the regulator Monday, IndiGo offered to replace all unmodified engines by January 2021, but the request was denied, one of the people said, adding that the initial deadline remains.
IndiGo still needs to replace 110 engines out of 196 that were affected, Civil Aviation Minister Hardeep Singh Puri said Wednesday. He said Go Air hasn’t had the problems IndiGo encountered on its A320neo jets, without providing a reason. After the DGCA informed IndiGo of its findings, the company started taking steps to employ a climbing procedure similar to Go Air, the people said.
Given the number of replacements required and Airbus delivery delays, IndiGo may not able to update all the engines by the fiscal year ending in March, according to Motilal Oswal Financial Services Ltd. In a note Tuesday, the brokerage cut its capacity growth estimate for IndiGo to 14 per cent from 25 per cent this year, and to 6 per cent from 10 per cent for next year.

Patanjali secures Rs 3,200 cr loan from SBI, other banks to buy Ruchi Soya

Baba Ramdev-led PatanjaliAyurved on Friday said it has already tied up loan worth Rs 3,200 crore from a consortium of lenders led by State Bank of India to fund its acquisition of Ruchi Soya through insolvency process.
In September, the National Company Law Tribunal (NCLT) approved the resolution plan of Patanjali Ayurved to acquire debt-laden Ruchi Soya.

"The company has already secured required total debt from a consortium of banks led by State Bank of India," Patanjali Ayurved Managing Director Acharya Balkrishna said in a statement.
Patanjali also said it has got loans of Rs 1,200 crore from SBI, Rs 700 crore from Punjab National Bank, Rs 600 crore from Union Bank of India, Rs 400 crore from Syndicate Bank and Rs 300 crore from Allahabad Bank.
Ruchi Soya went into the insolvency in December 2017.
NCLT had admitted the insolvency plea filed by two lead financial creditors Standard Chartered Bank and DBS Bank. However, later, Singapore-based DBS Bank became dissenting creditor and approached the National Company Law Appellate Tribunal challenging the distribution of proceeds from the bid submitted by Baba Ramdev-led Patanjali Ayurveda.
Ruchi Soya told the NCLT that resolution applicant Patanjali group will infuse Rs 204.75 crore as equity and Rs 3,233.36 crore as debt.
The amounts will be infused into a special purpose vehicle (SPV), Patanjali Consortium Adhigrahan Pvt Ltd, which will be later amalgamated with Ruchi Soya.
Another Rs 900 crore will be infused by the Patanjali group through subscription of non-convertible debentures and preference shares in the SPV. It will also provide a credit guarantee of nearly Rs 12 crore.
On April 30 this year, a committee of creditors had approved Patanjali group's Rs 4,350 crore resolution plan to take over Ruchi Soya. Lenders will have to take a haircut of around 60 per cent.
Shailendra Ajmera of EY was appointed as resolution professional to manage the company's affairs and conduct insolvency proceedings.

Swiss firm Zurich Airport beats Adani, DIAL bids to build Jewar airport

The ZurichAirport International AG was on Friday selected as the concessionaire for developing the Jewar airport, billed to be the biggest airport in India upon completion, officials said.
The Switzerland-headquartered company made the highest per passenger bid for the airport, outbidding competitors like Delhi International Airport Limited, Adani Enterprises, and Anchorage Infrastructure Investments Holdings Limited, the officials said.

Jewar Airport or the Noida International Greenfield Airport will come up in 5,000 hectare area when fully constructed and is estimated to cost Rs 29,560 crore, Nodal Officer for the Project, Shailendra Bhatia said.
"Zurich Airport International AG has made the highest bid for developing the Jewar airport and has been selected as the concessionaire for the airport," Bhatia said.
A global tender was floated to hire a developer for the proposed airport on May 30 by the NIAL, an agency floated by the Uttar Pradesh government for managing the mega project in Gautam Buddh Nagar district.
The airport, the third in the national capital region after Delhi's Indira Gandhi International airport and Ghaziabad's Hindon airport, is touted to have six to eight runways, the most in India, when fully built, according to officials.
The first phase of the airport would be spread over 1,334 hectare and cost Rs 4,588 crore as it is expected to be completed by 2023, the officials said.

Fiscal deficit for April-Oct touches Rs 7.2 trillion, exceeds FY20 target

The Centre’s fiscal deficit for the April-Octoberperiod had touched Rs 7.2 trillion, exceeding the 2019-20 (FY20) budgeted target of Rs 7.04 trillion, official data showed on Friday. This was 102.4 per cent of the full-year target, compared with 103.9 per cent for the same period last year (2018-19 or FY19).
A boost in non-tax revenue, keeping revenue and capital expenditure at the same level as last year, had helped control the deficit.

Also, with the July-September gross domestic product data released on Friday, it can now be calculated that for the first half of 2019-20 (April-September), fiscal deficit as a percentage of nominal gross domestic product (GDP) was 6.6 per cent. This compares to the budgeted target of 3.3 per cent of GDP, which Finance Minister Nirmala Sitharaman stated in her maiden Budget speech on July 5.
The boost in non-tax revenue for April-October was primarily a reflection of the surplus passed on by the Reserve Bank of India after the recommendations of the Bimal Jalan panel on the central bank’s capital reserves. Data showed that dividends and profits, which includes dividends from state-owned banks and companies was Rs 1.58 trillion, or 97 per cent of the full-year target, compared with just 46 per cent for the same period last year.
“April-October non-tax revenue growth, mainly because of higher payout by the RBI to the central government has helped the government to limit fiscal deficit,” said Devendra Kumar Pant, chief economist of India Ratings.
For April-October, total expenditure stood at Rs 16.55 trillion, or 59.4 per cent of the full-year Budget Estimates, compared to 59.6 per cent for the same period last year. Capital expenditure for the seven months ending October was 59.5 per cent of the full-year target, compared to 59 per cent for April-October 2018, while revenue expenditure was 59.4 per cent compared to 59.7 per cent.
“The government has increased the expenditure towards asset creation while the revenue expenditure has marginally declined during the first seven months of 2019-20,” said Madan Sabnavis, chief economist with CARE Ratings.
Total revenue for the April-September period stood at Rs 9.3 trillion, or 44.9 per cent of the full-year target compared with 44.4 per cent for the same period last year. Given the economic slowdown, tax revenues came in at 41.4 per cent of the full-year target compared with 44.7 per cent last year.
It was the non-tax revenues and non-debt capital receipts which saved the numbers a little. Non-tax revenue was 71.6 per cent of the full-year target compared with 52.1 per cent for the same period last year, while non-debt capital receipts were 22.4 per cent compared with 20.8 per cent.
“In order to meet FY20 Budget Estimate of Rs .5 trillion, tax revenues in last five months has to grow by 47.3 per cent. To achieve the Budget target of Rs 6.63 trillion, the GST (goods and services tax) in past five months has to grow by 23.6 per cent. Economic growth in FY20 is likely to be 5.6 per cent and this does not instill confidence in achievement of 3.3 per cent fiscal deficit target unless there is steep expenditure reduction, which in the present scenario looks unlikely,” said Pant.

Slowdown impact? Core sector output shrinks 5.8% in October

Output of eight core infrastructure industries contracted by 5.8 per cent in October, indicating the severity of economic slowdown, according to the government data released on Friday.
As many as six of eight core industries saw a contraction in output in October.

Coal production fell steeply by 17.6 per cent, crude oil by 5.1 per cent, and natural gas by 5.7 per cent.
Production of cement (- 7.7 per cent), steel (- 1.6 per cent), and electricity (- 12.4 per cent) also declined during the month.
The only sector that posted growth in October was fertilizers where production increased by 11.8 per cent year-on-year.
Growth in output of refinery products slowed down to 0.4 per cent in October as against 1.3 per cent in the same period last year.
The eight core sectors had expanded by 4.8 per cent in October 2018.
During the April-October period, the growth of core industries fell to 0.2 per cent against 5.4 per cent in the year-ago period.
Output of eight core infrastructure industries had contracted by 5.1 per cent in September, the lowest in the decade.

4.5% GDP growth rate unacceptable, worrisome: Former PM Manmohan Singh

Former prime minister ManmohanSingh said on Friday the GDP growth rate of 4.5 per cent was unacceptable and worrisome, and urged his successor Narendra Modi to set aside "deep-rooted suspicion" of society and nurse India back to harmonious, mutually trustworthy society that can help the economy soar.
Delivering his valedictory address at a national conclave on economy, Singh said mutual trust is the bedrock of societal transactions fostering economic growth, but "our social fabric of trust, confidence is now torn and ruptured".

He said the "toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society" is stifling economic activity and growth.

India's Q2 GDP growth dips to over 6-yr low of 4.5%; manufacturing weighs

India's GDPgrowth hit an over six-year low of 4.5 per cent in July-September 2019, dragged mainly by deceleration in manufacturing output and subdued farm sector activity, according to official data released on Friday.
The Gross Domestic Product (GDP) growth was recorded at 7 per cent in the corresponding quarter of FY 2018-19. In the previous quarter of the ongoing fiscal, the economic growth was 5 per cent.

This GDP growth data for the September 2019 quarter is the lowest since January-March of 2012-13, when it was registered at 4.3 per cent.
According to the data released by National Statistical Office (NSO), the gross value added (GVA) growth in the manufacturing sector contracted by 1 per cent in the second quarter of this fiscal from 6.9 per cent expansion a year ago.
Similarly, farm sector GVA growth remained subdued at 2.1 per cent, down from 4.9 per cent in the corresponding period of the previous fiscal.
Construction sector GVA growth too slowed to 3.3 per cent from 8.5 per cent earlier. Mining sector growth was recorded at 0.1 per cent as against 2.2 per cent contraction a year ago.
Electricity, gas, water supply and other utility services growth also slowed to 3.6 per cent from 8.7 per cent a year ago. Similarly, trade, hotel, transport, communication and services related to broadcasting growth was also down to 4.8 per cent in the second quarter from 6.9 per cent a year ago.
Financial, real estate and professional services growth slowed to 5.8 per cent in the Q2 FY2019-20 from 7 per cent a year ago.
On the other hand, public administration, defence and other services reported improvement with an 11.6 per cent rise during the quarter under review from 8.6 per cent a year earlier.
On a half-yearly basis (April-September 2019), GDP growth came in at 4.8 per cent as compared to 7.5 per cent in the same period a year ago.
"GDP at constant (2011-12) prices in Q2 of 2019-20 is estimated at Rs 35.99 lakh crore, as against Rs 34.43 lakh crore in Q2 of 2018-19, showing a growth rate of 4.5 percent," an NSO statement said.
Gross Fixed Capital Formation (GFCF), which is barometer of investment, at constant (2011-2012) prices, estimated at Rs 10.83 lakh crore in Q2 of 2019-20 as against Rs 11.16 lakh crore in Q2 of 2018-19.
In terms of GDP, the rates of GFCF at Current and Constant (2011-2012) prices during Q2 of 2019-20 are estimated at 27.3 per cent and 30.1 per cent, respectively, as against the corresponding rates of 29.2 per cent and 32.4 per cent, respectively in Q2 of 2018-19.
"Growth rates of GFCF at Current and Constant Prices are estimated at (-) 0.9 percent and (-) 3.0 percent during Q2 of 2019-20 as compared to 16.2 percent and 11.8 percent during Q2 of 2018-19," it added.
The Reserve Bank had lowered the GDP growth projection for 2019-20 to 6.1 per cent from earlier forecast of 6.9 per cent.
China's economic growth was 6 per cent in July-September 2019, which was the weakest expansion in over 27 years.
Earlier in the day, the government data showed that output of eight core infrastructure industries contracted by 5.8 per cent in October, indicating the severity of economic slowdown As many as six of eight core industries saw a contraction in output in October.

Fuel cost, forex rate variation led to Rs 4,685 cr loss for Air India: Govt

Increase in fuel costs and impact of foreign exchange rate variation were two major reasons for Air India's operating loss of Rs 4,685 crore in 2018-19, Civil Aviation Minister Hardeep Singh Puri said on Thursday.
"Aviation Turbine Fuel (ATF) costs increased from Rs 7,363 crore in 2017-18 to Rs 10,034 crore in 2018-19 i.e. an increase of almost 28.9 per cent in fuel rates over the previous year," Puri said in a written reply to a question in Lok Sabha.

"The impact of exchange rate variation led to an increase in expenses from Rs 31 crore in 2017-18 to Rs 772 crore in 2018-19," he added.

ONGC raises $300 mn via bond at 3.375%, lowest rate by any Indian issuer

State-owned Oil and Natural Gas Corp (ONGC) on Thursday said it has raised $300 million in overseas borrowing at a coupon rate of 3.375 per cent, the lowest by any Indian issuer.
The 10-year bond will mature in 2029, the company said in a statement.

"ONGC has priced its maiden offering of $bonds in the aggregate principal amount of $300 million for meeting capital expenditure in accordance with the External Commercial Borrowing guidelines issued by the Reserve Bank of India and successfully achieved its objective to set a fresh benchmark," it said.
At 3.375 per cent interest rate, this is the tightest coupon for 10-year or longer tenor offering from India ever achieved by any Indian corporate.
"The mix of investors is diverse, from across Singapore, HK, London, Taiwan, Japan and Middle East which includes 77 per cent bid from Asian investors and 23 per cent from EMEA investors. The Bankers to the deal were Citi, DBS Bank Ltd, MUFG, SBICAP and Standard Chartered," it said.
ONGC Chairman and Managing Director Shashi Shanker said the company funds its operations from internal accruals and it has capacity to do the same in future also.
"The offering of $bond however was important to set a benchmark for ONGC group which has become one of the most integrated energy major post acquisition of HPCL. It is anticipated that once the benchmark is set, it will facilitate group entities to raise funds at a competitive price," he said.
ONGC Director (Finance) Subhash Kumar added that the yield achieved in the exercise was one of the best, which further reinforces the credentials of ONGC as an integrated energy major.
"It is also expected that this issuance will enhance the group visibility in international market which will also pave way for upgraded corporate governance," he said.

HDFC Bank appoints 6-member search panel to find MD Aditya Puri's successor

In a move seen as part of a succession plan for Managing Director Aditya Puri, HDFCBank on Thursday appointed a search panel of six board members to look for a successor. The bank also promoted Chief Financial Officer Sashidhar Jagdishan and Country Head (Operations and Technology) Bhavesh Zaveri to the position of executive directors on its board.
Puri is expected to hang up his boots in October next year after having spent over two years at the helm of the bank’s affairs.

Jagdishan has been part of the bank’s finance function in a managerial role since 1996. He has also worked in business strategy and strategic initiatives of the bank. Zaveri, on the other hand, joined HDFC Bank in 1998 in the operations function.
In a statement sent to stock exchanges, the bank on Thursday said the appointments were “subject to the approval of the Reserve Bank of India, for a period of three years from November 28, 2019, or for such other period/from such date as may be approved by the Reserve Bank of India.” The bank will also seek shareholders’ approval for the move.
The search committee will comprise board members Shyamala Gopinath, Sanjiv Sachar, M D Ranganath, Sandeep Parekh, Srikanth Nadhamuni and Keki Mistry. Mistry will represent the housing finance entity Housing Development Finance Corporation Limited (HDFC).
Puri would act as an advisor to the search committee as it evaluates internal and external candidates over the next few months for a smooth transition.

Warburg Pincus to raise up to $1.5 bn for first India-focused fund: Reports

Private equity firm WarburgPincus LLC is looking to raise up to $1.5 billion for its first fund targeting deals in India, two people familiar with the matter told Reuters, betting on a surge in investment opportunities in Asia's third-largest economy.
Warburg plans to finish fundraising on its India-focussed fund, which will target industrial sectors such as financial, manufacturing and consumer, by the first half of next year, said one of the people.

Launches of India-focused private equity funds are rare, and big global buyout firms such as KKR & Co Inc, Bain Capital and Blackstone Group Inc typically invest in a country mainly from their regional funds.
Warburg declined to comment. The sources did not want to be identified as the firm's plans are not public yet.
Private equity investments are expected to pick up in India as some companies look to sell shares to fund growth, while some family-owned firms explore selling controlling stakes to pay off debt, bankers said.
Lower valuations, a rapidly growing middle class and reforms such as bankruptcy resolution rules are also enticing global private equity firms to invest in India.
Private equity-backed deals in India have risen to a record $16.8 billion so far this year, rising up from the previous high of $12.4 billion last year, according to data compiled by Refinitiv.
The news of Warburg's India fundraising plan comes as rival KKR is looking to raise a record $15 billion in 2020 for its latest Asia-focussed buyout fund, which will include India investments.
Warburg has not finalised the size or launch timing of the fund, which depend on market conditions, said one of the people.
Warburg has a 21-person investment team in Mumbai, according to its website. It was Indian telecom company Bharti Airtel's first marquee investor in the early 1990s and has recently invested in its digital TV and African arms.
The private equity firm also holds stakes in local insurer IndiaFirst, retail real estate platform Virgo Retail Ventures, and education financing provider Avanse Financial Services, according to its website.
In June, the U.S.-based firm closed a $4.25 billion private equity fund focusing on Chinese and Southeast Asian investments after launching the exercise in January with a target to raise $3.5 billion.
That fund, China-Southeast Asia II, will focus on investing across consumer and services, healthcare, real estate, financial services, and technology, media and telecommunications, Warburg had said in June.

F&O expiry: Sensex up 110 pts, banks gain; Indiabulls Housing Fin zooms 25%

Equitymarket ended in the positive territory on Thursday - the last day of the November series of futures and options (F&O) contracts, led by ICICI Bank, Reliance Industries (RIL), TCS, and IndusInd Bank.
The S&P BSE Sensex added 110 points or 0.27 per cent to close at 41,130 levels - its fresh closing high. IndusInd Bank (up over 2.50 per cent) was the biggest gainer on the index while HeroMotoCorp (down 2 per cent) emerged as the top loser. Reliance Industries (RIL) today became the first Indian company to hit Rs 10 trillion market capitalisation. The stock hit a new high of Rs 1,584 on the BSE.
On the NSE, the Nifty50 index closed at its fresh closing peak of 12,154 levels, up 54 points or 0.44 per cent. The Nifty Bank index ended at 32,124 levels, up 0.8 per cent.
In the broader market, both mid and smallcap stocks outperformed the market. The Nifty Midcap 100 index gained 1 per cent to end at 17,207 and the Nifty SmallCap 100 index settled at 5,759, up 0.6 per cent.
Sectorally, except auto stocks, all the indices on the NSE ended in the green. Nifty PSU Bank index surged 3.44 per cent to 2,716 levels, followed by Nifty Metal index, which gained nearly 2 per cent to 2,654 levels.
BUZZING STOCKS
Reliance Industries (RIL) on Thursday became the first Indian company to hit Rs 10 trillion market capitalisation (m-cap) after the stock price hit a new high of Rs 1,584 on the BSE. The oil-to-telecom conglomerate's m-cap zoomed to Rs 10,02,380 crore during the trade on the BSE. At close, the stock settled at Rs 1580, up over 0.65 per cent.
Shares of Granules India climbed 6 per cent to hit a fresh 52-week high of Rs 135.85 on the BSE on report that private equities (PE) are eyeing controlling stake in the pharmaceutical company. At the close, the stock stood at Rs 129 apiece on the BSE, up 0.4 per cent.
GLOBAL MARKETS
A four-day rally that had lifted world stocks to near-record highs stalled on Thursday as a US bill backing Hong Kong’s protesters became law, provoking China’s ire and threatening to derail an interim trade deal between Washington and Beijing. Besides, Japanese retail figures slumped the most since 2015 as a sales tax hike dragged on the economy, exacerbating a slowdown caused by slowing exports and manufacturing.
These developments took Asian shares excluding Japan down 0.2 per cent. Japan's Nikkei, Hong Kong's Hang Seng and Shanghai blue chips all closed weaker. A pan-European index opened 0.2 per cent lower, led by trade-sensitive sectors such as autos and tech.
In commodities, oil prices fell for a second day on Thursday after official data showed US crude and gasoline stocks rose. Fresh tensions between the US and China, too, weighed on it.
(With inputs from Reuters)

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03:52 PM
Sectoral gainers and losers on the NSE
03:50 PM
Top gainers and losers on the S&P BSE Sensex
03:36 PM
CLOSING BELL
The S&P BSE Sensex added 110 points or 0.27 per cent to end at 41,130 while NSE's Nifty50 index settled at 12,154, up 54 points or 0.44 per cent.
03:26 PM
Zee Entertainment extends fall on resignation of independent directors
The company, on Wednesday, said that independent directors Neharika Vohra and Sunil Sharma had stepped down on November 22 and November 24, respectively. Non-independent director Subodh Kumar had also resigned, Zee said, on the same day that Vohra stepped down. Zee said the disclosures were part of its corporate governance policy. READ MORE
03:10 PM
Market check
03:09 PM
Buzzing | Indiabulls group shares in demand
-- Indiabulls Housing Finance surges 22%, Indiabulls Real Estate, Indiabulls Venture locked in 5% upper circuit

03:07 PM
Market check | Sensex gains ahead of F&O expiry
02:59 PM
PE funds bet big on crisis-hit NBFCs even as other investors balk
Private equity funds are picking through the rubble of India’s crisis-stricken shadow banking sector, even as other investors balk.

The funds have invested about $2 billion this year in the country’s non-bank financing sector, which is worth some $40 billion. While that’s not enough to staunch the 16-month long cash crunch following the collapse of IL&FS Group, it is 50 per cent higher than the average over the last four years and comes after a strong 2018, according to data from research firm Venture Intelligence. READ MORE

02:51 PM
NEWS ALERT | Inspection report on Indiabulls Housing Fin, Ventures received: Min of Corporate Affairs
-- Violations pointed out in inspection report being examined
-- Yet to receive inspection report on Indiabulls Real Estate
-- Loans extended to DLF, ADAG, Amricorp have been repaid
-- No violation found w.r.t to allegations made in PIL for 5 loan cases
-- Loans extended to Vatika, Choridia have been classified as 'Standard a/c'

02:42 PM
Dabur trades near day's low, down 0.7%
02:35 PM
Top losers on BSE at this hour

02:21 PM
Edelweiss on metals and mining sector
Domestic HRC prices continue to rise for a fourth successive week buoyed by firming global prices and restocking. In the past one week, domestic HRC price was up across major regions, settling at an average of INR35,703/t, still at a 2.5% discount to the anti-dumping level. Indian HRC export prices too moved up, mirroring the increase in the Black Sea and Chinese prices.
We expect further price tailwinds as exports for January 2020 are being booked at higher levels while US-based producers have hiked the price by USD100/t on average in the past one month. We will keep close tabs on demand as sustainability of domestic prices is contingent on its revival. We continue to prefer JSPL (‘BUY’) in the ferrous space owing to its lower reliance on flats, maintain ‘HOLD’ on Tata Steel (TSL) and JSW Steel (JSTL), and retain ‘REDUCE’ on SAIL.
02:20 PM
ICICI Securities remains bullish on mid, small-caps
Our recommended investment strategy is based on the principle of swings in ‘risk spread’ for mid- and small-caps over large-caps. It moved from zero (peak of risk appetite in Jan’18) to the current environment where it has expanded significantly for micro-caps at 700 bps (probably the peak of risk aversion) and to some extent for small-caps at 220 bps. However, risk spread for mid-caps continue to be low at just 40 bps indicating lower ‘margin of safety’. Our top picks include Bajaj Consumer, J.B. Chemical, Newgen Software, Cyient, Techno electric, Parag Milk and Jubilant Life sciences
02:16 PM
MOSL on Lemon Tree Hotels (LEMONTRE)
The GST rate cut should aid in driving demand for the hotel industry, which in turn would inch up industry occupancy. Additionally, reduction in the effective corporate tax rate (from 34.94% to 25.17%) might increase travel spends of corporate customers, which should further push demand.
LEMONTRE is expected to post revenue/EBITDA CAGR of 41%/69% over FY19-21 backed by room addition and stabilization of recently commenced hotels. We have Buy rating on LEMONTRE with a target price of Rs 72 (one-year forward EV/EBITDA multiple of 18x).
02:14 PM
Antique Stock Broking on Nalco
Nalco's 2QFY20 results were impacted by the sharp increase in power and fuel costs as a result of lower coal supplies from Mahanadi coal fields. Improved coal availability, lower input costs (caustic soda, coal tar pitch and calcined petroleum coke) and recovery in alumina prices would drive a rebound in profits. We retain our positive stance on NALCO considering its integrated business model, high cash levels and attractive dividend yield.
02:11 PM
COMMENT :: Mustafa Nadeem, CEO, Epic Research on RIL's m-cap hitting Rs 10 trillion
We believe the stock can continue to go north. There was a recent consolidation and that was fairly utilized as a minor dip. These dips may be seen in the future and any correction in stock to 3-4% should rather be seen as an opportunity. We believe investors or traders should also put risk-reward into play while buying any stock and stock like reliance should be added but on any minor dips towards lower levels of Rs 1440 - Rs 1460.
02:11 PM
Mukesh Ambani in talks to sell news assets to Times Group: Report
Billionaire Mukesh Ambani is in talks to sell his news media assets to India’s Times Group, as Asia’s richest man plans to unload a business that’s been losing money, people familiar with the matter said.

Bennett Coleman & Co., the publisher of the Times of India, is looking to hire advisers for due diligence on the news properties of Ambani’s Network18 Media & Investments Ltd., the people said, asking not to be named as the discussions are private. READ MORE
02:01 PM
Market check | Sensex slips in the red
01:54 PM
JSW Steel up 4%
01:47 PM
Moody's sees India Inc struggling for credit in 2020 as slowdown weighs
Sluggish economic growth and lacklustre profitability will weaken credit conditions for most non-financial Indian companies in 2020, said rating agency Moody’s.

The credit profiles of rated firms are unlikely to improve significantly over FY21, due to elevated debt levels, weakening profitability and the continued economic slowdown. This puts pressure on both investment and consumption, said Kaustubh Chaubal, a Moody's Vice President and Senior Credit Officer. READ MORE
01:37 PM
PSU banks extend rally, SBI nears record high; Nifty PSU Bank index up 3%
Shares of public sector banks (PSBs) continued their northward movement with the Nifty PSU Bank index surging over 3 per cent on Wednesday, on expectation of improvement in operational performance with receding fears of non-performing loans (NPL). Oriental Bank of Commerce, Union Bank of India, Jammu & Kashmir Bank, Syndicate Bank, Indian Bank and Punjab National Bank (PNB) from the Nifty PSU Bank index rallied over 5 per cent today. READ MORE
State Bank of India
01:29 PM
HDFC dips over 1%
01:14 PM
Global Markets check
Asian share markets fell on Thursday as concerns that tensions over Hong Kong may stymie a US-China trade deal cast a pall over Thanksgiving cheer from positive US economic data.
US President Donald Trump on Wednesday signed into law legislation backing pro-democracy protesters in Hong Kong. China’s Foreign Ministry promptly warned of unspecified “firm counter measures” in response and summoned the US ambassador in Beijing.

That put a lid on steady gains this week for MSCI’s broadest index of Asia-Pacific shares outside Japan. The benchmark fell 0.2 per cent on Thursday. Japan's Nikkei, Hong Kong's Hang Seng and Shanghai blue chips flitted in and out of positive territory but turned negative by the afternoon.

E-Mini futures for the S&P 500 ESc1 fell 0.3 per cent, while EUROSTOXX 50 futures STXEc1 fell 0.2 per cent.
01:03 PM
NEWS ALERT | HDFC MF buys additional stake in PNC Infra: reports CNBC-TV18
- its stake in the co now stands at 7.22 per cent
01:03 PM
Nifty sectoral indices at this hour
12:44 PM
BUZZING STOCK:: Balkrishna Industries up 4%
12:33 PM
No specific scheme/proposal to provide financial assistance to loss-making private airlines: Civil Aviation Min to Lok Sabha
-- Management and finance is internal matter of civil aviation companies: Civil Aviation Min
(Courtsey: CNBC TV18)
12:32 PM
Chart check: US-China trade talks bring metal stocks back in focus
Metal stocks in Indian markets were in the limelight after US President Donald Trump last week said a trade deal with China is "potentially very close" and that he stands with both Hong Kong’s pro-democracy protesters and Chinese leader Xi Jinping. The American and Chinese leaders spoke about their desire to sign an initial trade deal to defuse a 16-month tariff war, boosting financial markets. READ MORE
India's core sector growth down to 19-month low of 1.8% in January
12:24 PM
Balaji Amines up 4%
12:07 PM
NEWS ALERT | Govt tables supplementary demand for grants in Parliament: CNBC TV18
-- Seek Parliament's nod to spend extra net Rs 18,995 cr and gross Rs 21,240 cr this FY