Animal spirits stir: Economic indicators hint at slow recovery for India

 Business activity in India picked up slightly in July as a gradual improvement in services and exports showed the economy possibly moved past its worst-showing in the previous quarter.

Five of the eight high-frequency indicators compiled by Bloomberg News gained last month, while two were unchanged and one deteriorated. That helped move the needle on a dial measuring so-called animal spirits to the right after remaining stuck at a lower speed for two months.

The pickup in the gauge, which uses the three-month weighted average to smooth out volatility in the single-month readings, holds out hope for a gradual recovery in the economy. The world’s biggest lockdown to contain the coronavirus pandemic brought activity to a virtual halt last quarter, with data due Aug. 31. likely to show gross domestic product declined 19.2% from a year ago.

Any rebound will be slow though, with economists in a Bloomberg survey predicting a milder contraction of 5.3% in the quarter to September.

Business Activity
Services activity recorded a marginal improvement in July with the main index for the sector standing at 34.2. While a reading under 50 indicates contraction in activity, last month’s index was better than June’s 33.7 and continues the recovery from the record low of 5.4 in April.

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Manufacturing also continued to contract, with the purchasing managers index dipping to 46.0 from 47.2 in June, as domestic orders and output took a hit. As a result, the Markit India Composite PMI for July slipped to 37.2 from 37.8 a month earlier.

Exports
While exports fell 10.2% in July from a year ago, shipments gained 7.9% from a month earlier. Non-oil exports have almost recovered to last year’s levels, while farm shipments expanded at a robust pace of 20%, according to economists at Kotak Mahindra Bank Ltd. Overseas demand for engineering goods, drugs and pharmaceuticals along with iron ore shipments also picked up.

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Consumer Activity
Consumers -- the bedrock of the economy -- remained glum with many grappling with joblessness and falling wages. A survey by the central bank showed that their confidence slumped to a record low in July, although households were cautiously optimistic about the coming year.

Car sales, another indicator of consumer demand, were down 12% in July from a year ago, having dropped nearly 50% in June, data from the Society of Indian Automobile Manufacturers showed.

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Bank credit growth slowed to 5.5% year-on-year at the end of July from 6.2% in June and around 12% a year ago, while outstanding bank credit picked-up slightly to 102.7 trillion rupees in July. Liquidity conditions tightened during the month, boding ill for borrowers.

Industrial Activity
The index of Industrial Production fell 16.6% in June from a year earlier, although the decline was shallower in May when it contracted 33.9%. Higher demand for drugs and pharmaceutical exports meant production across these sectors picked up, although other segments such as textiles and transport equipment along with mining activity remained sluggish.

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Meanwhile, output at infrastructure industries shrank 15% in June from a year ago and was slightly better than the 21.98% decline in May. The sector, which makes up 40% of the industrial production index, had contracted by a record 37% in April. Both data are published with a one-month lag.

Reliance Jio offering JioFiber free for 30 days, announces tariff plan

 Reliance Jio on Monday announced tariff plans for its JioFiber internet broadband service. The Mukesh Ambani-owned company said it was offering its fibre-to-the-home (FTTH) broadband service free of cost for a 30-day trial. Called ‘NAYE INDIA KA NAYA JOSH’, the broadband plans start at Rs 399 for a month with unlimited data and symmetric internet speed. Moreover, JioFiber has partnered with several over-the-top platforms and it is offering free subscription for up to 12 such OTT apps.

“JioFiber is already the largest Fiber provider in the country with over a million connected homes, but our vision for India and Indians is much larger.

We want to take Fiber to each and every home and empower every member of the family. After making India the largest and the fastest growing country in mobile connectivity with Jio, JioFiber will propel India into global broadband leadership, thereby providing broadband to over 1,600 cities and towns. I urge everyone to Join the JioFiber movement to make India the broadband leader of the world,” Jio Director Akash Ambani said in a statement.

ALSO READ: Facebook, Jio tie-up will bring 25 million SMEs online: Ajit Mohan
Here are JioFiber tariff plan details:
Rs 399 – 30Mbps speed, unlimited voice calls

Rs 699 – 100Mbps speed, unlimited voice calls

Rs 999 – 150Mbps speed, unlimited voice calls, 11 OTT apps subscription worth Rs 1,000 for free

Rs 1,499 – 300Mbps speed, unlimited voice calls, 12 OTT apps subscription worth Rs 1,500 for free

JioFiber no-condition 30-day free trial details:
150 Mbps truly unlimited internet
4K set top box with access to top 10 paid OTT apps at no extra cost
Free voice calling
If you don’t like the service, we will take it back, no questions asked.
The 30-day free trial is applicable for all new customers
Services you get with JioFiber:
Internet: Symmetrical speed for equal upload and download experience

OTT subscription: Access to the 12 PAID OTT apps such as Netflix, Amazon, Disney+ Hotstar, etc. at no extra cost. From YouTube on TV to binge

Unlimited calls: Free voice and video calls

JioMeet: Free access to JioMeet app for video conferencing

JioGames: For online gaming

Dates to remember:
Free trail is valid only for new JioFiber customers activating from September 1

To reward loyalty, existing JioFiber users are to be given the following special benefits:

Plans of all existing JioFiber customers will be upgraded to match the benefits of the new tariff plans
Any JioFiber customer onboarded between 15th and 31st August will also get the
30-day free trial benefit as a voucher in MyJio app.

RBL Bank declines 4% as MD sells shares worth over Rs 38.5 crore

 Shares of RBL Bank slipped as much as 4.29 per cent to Rs 201.55 on the BSE on Monday after the private sector lender said its managing director and CEO Vishwavir Ahuja had sold shares worth over Rs 38.5 crore in the bank.

"We have received an intimation from Vishwavir Ahuja, Managing Director and CEO of the bank, mentioning that he has sold 18,92,900 shares of RBL Bank on 27th and 28th of August, 2020 for approximately Rs 38.52 crore," RBL Bank said in a regulatory filing, on Friday. READ THE FILING HERE

The sale has been driven primarily with the need to extinguish personal debt obligations and related servicing burden, undertaken over the last few years mainly to exercise and purchase vested ESOPs (and pay associated tax), as well as to take care of some pressing family commitments, the bank said.

The sale represents approximately 18 per cent of his/family's total holdings and Ahuja continues to retain 80,10,000 shares (approximately 1.6 per cent holding) of RBL Bank post the sale of these shares, it added.

"While I have sold a small part of my shareholding in the bank, I strongly believe that RBL Bank has a robust balance sheet and business franchise, is well capitalised and fortified to deal with the economic impact of the prevailing pandemic situation confronting the nation, and extremely well positioned to exploit market opportunities in the short as well as long term," Ahuja said in his intimation addressed to the compliance officer..

At 11:15 AM, the stock was trading 4.04 per cent lower at 202.10 as compared to 0.12 per cent gain in the S&P BSE Sensex. Around 2 crore shares have changed hands on the NSE and BSE so far, combined.

The private sector lender reported a 47 per cent decline in June quarter net profit at Rs 141 crore, owing to excess provisions of Rs 460 crore. The bank said it set aside Rs 240 crore for Covid-19 related provisions, taking the total money set aside due to possible reverses because of the pandemic to Rs 350 crore.

The gross non-performing assets ratio improved to 3.45 per cent as against 3.62 per cent in March, but was higher than 1.38 per cent in the year-ago period.

The bank's core net interest income grew 27 per cent to Rs 1,041 as margins remained strong at 4.85 per cent, while non-interest income declined 33 per cent to Rs 334 crore because of the pandemic. The overall capital adequacy stood at 16.35 per cent, with core tier-I ratio at 15.16 per cent.

In a post-results report dated July 28, Emkay Global Financial Services recommended 'Hold' rating on the stock with the target price of Rs 195.

"Loan growth remains subdued due to Covid-19-led disruptions and continued de-bulking of the corporate book. However, the bank has recovered from the deposit scare in Q4, with 7 per cent QoQ growth and CASA touching 30 per cent for the first time. The overall moratorium rate fell to 13.7 per cent from 33 per cent in value terms, but remains sticky for Cards at 22 per cent. Cumulative contingent provisions now stand at Rs 350 crore (up Rs 240 crore during Q1), 60bps of loans, which we believe need to be further accelerated," the brokerage said.

"With the deposit scare largely behind, we believe that the stock will now largely track the asset quality performance, with risk on its retail book likely to remain higher," it said.

HDFC Securities, on the other hand, said the near-term pain was inevitable for the bank, and, as such, the brokerage had a 'REDUCE' rating on the stock. The target price of Rs 148, however, remained unchanged.

"Significant treasury gains and strong NIMs buoyed RBK’s Q1 earnings. While QoQ deposit growth was healthy, deposit granularity remains an area of concern. Moratorium trends in the credit card and micro-credit portfolios, where LGDs are high, are concerning. These segments could contribute disproportionately to slippages and LLPs. Provisions are likely to remain elevated in the near term, denting return ratios. This underpins our REDUCE rating," it said.

Traffic, power generation and others weekly economic indicator insights

 The June quarter gross domestic product (GDP) numbers released on Monday are expected show record contraction with some experts pointing to a number as high as 25 per cent.

Weekly economic indicators tracked by Business Standard show what may have happened since 2019. The latest numbers show more people may be stepping out as the government continues its gradual unlocking program, but the overall trend points to a stuttering recovery.

Although numbers are better than June, traffic growth is now stagnating in major cities and electricity generation is slipping even as pollution in the capital showed signs of falling again. Business Standard tracks these and other data on a weekly basis to get a sense of how the economy is doing ahead of the release of more comprehensive macroeconomic data like GDP which are often released with a lag. Google data appears later, but all other indicators are as of Sunday, August 30th.

New Delhi traffic was down 17 per cent from 2019 levels. The gap has widened since last week. Mumbai’s traffic congestion has been lower than New Delhi’s. It showed a 42 per cent gap over the same period in 2019, according to data from location technology firm TomTom International (see chart 1). Both cities saw traffic congestion increase after June, but gains seemed to be plateauing last week.

Business Standard tracks levels of nitrogen dioxide. The pollutant is the result of industrial activity and vehicular emissions. Mumbai nitrogen dioxide numbers are little over 10 per cent of 2019 levels based on Bandra locality data. Delhi is closer to 70 per cent (see chart 2).

This would suggest more economic activity in Delhi than in Mumbai. This may point to a more pronounced recovery in Delhi than in Mumbai after June.

Power generation levels had recovered to pre-Covid levels after June. It was up in July and through much of August. It is now showing a declining trend. It is down around five per cent for the seven days ending August 30th (see chart 3).

The Indian Railways had carried 7.4 per cent lower goods by quantity towards the end of June, and earned around 15.4 per cent less from freight compared to 2019. There has been recovery since, with the quantity of goods carried up 1.31 per cent for the weekend of August 22-23. Earnings from the transport of the goods was down less than three per cent. This shows signs of reversal. Both figures are worse for the weekend of August 29-30 (see chart 4).

Search engine Google tracks visits to various categories of places using anonymised location data. More people seem to have stepped out of home, shows the latest data as of August 25. Shopping for essentials like groceries and medicines have risen, going by the number of visits to such stores. Workplace visits are lower than the previous week (see chart 5).

Core sector output shrinks for fifth straight month in July, down 9.6%

 The fall in the output of the eight core sectors of the economy further slowed in July as the economy reopened, but the year-on-year decline was still 9.6 per cent as industry battled demand slump, an acute liquidity crisis and labour shortages in the aftermath of the nationwide lockdown. In June, the core sector output had plunged 12.9 per cent.

Pace of contraction had reduced during the previous three months after crashing by 36 per cent in April. However, the updated figures released by the Commerce and Industry Ministry on Monday showed seven of the eight core sectors continued to contract in July, the third straight month of such a development.

The infrastructure segment continued to see the worst production shocks. The already volatile sectors of steel and cement have been badly affected by the Covid-19 pandemic as social distancing norms meant that construction remained largely suspended across the country. Steel remained the worst-performing sector for the third month in a row, shrinking 16.4 per cent. This was, however, a good show for the sector as production had tumbled 25.4 per cent in June.

On the other hand, contraction in cement production again widened in July. The sector saw a fall of 13.5 per cent after it had managed to cut contraction to just 6.8 per cent. Latest updated estimates show steel and cement production had caved in by 82.8 and 85.2 per cent in April respectively.

ALSO READ: Once fastest-growing large economy, India faces steepest quarterly slump

In June, production of refinery products also saw bigger output fall, as imports of crude oil wilted. The sector had remained volatile throughout FY20, but senior officials had said solid recovery in production was underway as key refining units pushed out more. The sudden drop in global demand, as the pandemic stifled economic activity everywhere, led to a contraction in the sector, experts said. Final production dwindled to 13.9 per cent, after falling by 8.9 per cent in June. Refinery production has the biggest weight among the 8-core sectors and experts expect it to drag down total production figures in the coming months.

In tandem, crude oil production continued its downward spiral for the 22nd month in a row. The output reduced 4.9 per cent in July, after contracting six per cent in the previous month. Natural gas production, too, contracted for the 15th straight month, reducing 10.2 per cent after a 12 per cent fall in June. Coal production saw relatively better performance in July with output reducing 5.7 per cent, down from 15.5 per cent in June, partly reflecting the impact of subdued coal offtake levels.

By extension, electricity generation also contracted albeit at a slower pace. The pace of Year-on-Year contraction in electricity generation declined to 2.3 per cent, down from June's 11 per cent fall.

Fertilisers stood out as the sole sector that continued to grow. Fertiliser output rose 6.9 per cent in July, after a 4.2 per cent rise in June. "Clearly the industry was less affected by the shutdown and production continued as demand from agriculture was high. This demand along with replacement of stocks in advance for the rabi sowing later in October-November has partly contributed to this increase in production," said Madan Sabnavis, chief economist at CARE Ratings.

Given the relationship between core sector growth and the Index of Industrial Production (IIP) growth, the latter may be expected to contract by 12-14 per cent, added Sabnavis. IIP growth had contracted by 16.6 per cent in June compared to 33.8 per cent in May and a record 57.6 per cent slide in April. This is likely to pull down first-quarter gross domestic product of 2020-21, the data for which would be released later today.

Sensex tumbles 839 pts on broad-based sell-off; Nifty Bank declines over 3%

 The domestic stock market fell sharply on Monday amid a broad-based sell-off after the government said the Chinese troops 'carried out provocative military movements in Eastern Ladakh to change the status quo' but they were blocked by Indian soldiers. The incidents took place in between August 29-30 night.

Further, nervousness around Q1 GDP numbers, which is slated to be released later in the day, and new margin norms for brokers, too, dragged the market lower.

The S&P BSE Sensex declined 839 points or 2.13 per cent to settle at 38,628 levels. Of 30 constituents, 28 declined and just 2 advanced. Reliance Industries (RIL) was the biggest contributor to the index's loss, followed by ICICI Bank, and HDFC.

NSE's Nifty settled at 11,387.50, down 260 points or 2.23 per cent. India VIX jumped over 24 per cent to 22.84 levels.

Global markets

World stocks hovered near record highs on Monday and were set to end August with five consecutive months of gains, as investors bet on central banks keeping up the policy punchbowl for years to come.

An upbeat reading on China’s service sector added to the positive mood, with MSCI’s broadest index of Asia-Pacific shares outside Japan touching its highest since March 2018.

London was closed for a public holiday, while U.S. stock futures pointed to a positive open for Wall Street ESc1 1YMc1.

In commodities, oil rose with Brent touching the highest in five months, underpinned by a 30 per cent cut in Abu Dhabi crude supplies and encouraging Chinese data even as global demand struggles to return to pre-COVID levels in a well-supplied market.

(With inputs from Reuters)

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The S&P BSE Sensex tanked 839 points or over 2 per cent to settle at 38,628.29 while NSE's Nifty lost 260 points or 2.23 per cent to end at 11,387.50.
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MARKET CHECK

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Geopolitical tension, profit booking: 5 reasons why markets corrected today
India-China geopolitical tension: Rising political tension between India and China punctured the morning momentum on Monday. According to reports, the situation in Eastern Ladakh flared again on the intervening night of August 29/30 when troops of China's People's Liberation Army (PLA) violated the "previous consensus" arrived at during military and diplomatic engagements. Following the development, the Srinagar-Leh highway has been closed for civilians, reports suggest. READ MORE HERE

02:53 PM
Aug Auto Sales Expectations :: Nirmal Bang Institutional Equities

02:50 PM
Aug Auto Sales Expectations :: Motilal Oswal Finacial Services

02:45 PM
MARKET UPDATE:: India VIX surges 26%

02:41 PM
MARKET CHECK :: Sensex tanks nearly 1000 pts

02:35 PM
NEWS ALERT :: July eight core industries' growth comes in at -9.6% vs -12.9% MoM

Wockhardt freezes at 5% lower circuit post weak operating performance in Q1

 Shares of Wockhardt were locked in the 5 per cent lower circuit band at Rs 312.55 on the BSE on Monday despite turning profitable in the June quarter of FY21. The pharmaceutical company posted consolidated net profit of Rs 760 crore, as against net loss of Rs 36.88 crore in the year-ago quarter. The was mainly on account of exceptional items in connection with the transfer of a business comprising 62 products and Baddi facility to Dr Reddy's Laboratories, it said in a statement. In comparison, the S&P BSE Sensex was down 0.7 per cent at 12:04 pm.

The earnings, however, were weak on the operational front. Total income stood at Rs 606.22 crore in the quarter under review. It was Rs 733.66 crore in the year-ago period, the filing added. Revenue from India Business declined by 52.5 per cent to Rs 116 crores in Q1FY21 and revenue from USA business is down by 38.7 pe cent to Rs 114 crores in Q1FY21. Company reported negative EBITDA for the quarter at Rs 49 crores as against positive EBITDA of Rs 56 crores in Q1FY20.

Wockhardt launched new chemical entity (NCE) during the quarter in the Indian pharma market. Products have been launched under the tablet and injection category under the brand name 'Emrock O and Emrock', the filing said.

It said that divestment of business undertaking to Dr Reddy's Laboratories was accomplished during the quarter and Rs 1,483 crore has been received towards the same.

"Rs 43 crore out of Rs 67 crore deposited by the purchaser in an escrow account, towards adjustments for, inter alia, net working capital, employee liabilities and certain other contractual and statutory liabilities etc has since been settled and received," it added.

The stock hit a 52-week high of Rs 411.6 per share on the BSE on February 11, 2020, while its 52-week low was Rs 147 hit on March 24.

So far in the financial year 2020-21, the stock has surged 90 per cent on the BSE, as against 34 per cent rally in the S&P BSE Sensex, BSE data show.

NMDC stock declines 10%; ICICI Securities downgrades it to "Reduce"

 Shares of NMDC cracked as much as 10 per cent on the BSE on Monday. The company on Friday announced that its board had approved a proposal to demerge NMDC Iron & Steel Plant (NISP).

The three-million-tonne (mt) steel plant is the only greenfield project slated for commissioning in the near term. Sources familiar with the matter said that the plant would have been commissioned by now had it not been for the Covid-19 pandemic.

In a separate development, Minister of Coal, Mines & Parliamentary Affairs, Pralhad Joshi, highlighted the arrangement that the Centre has reached with Karnataka regarding the restarting of NMDC’s Donimalai mines.

The two facets of the arrangement are: A committee under the chairmanship of mines secretary has been formed to look into how much premium, a state or central public sector unit (PSU) should pay on renewal of the mines – the decision is expected in three months (earlier it was zero under MMDR).
The second facet is that till the time the decision is reached, based on the request of CM of Karnataka, to avoid losses to the state, an additional premium of 22.5 per cent has been imposed on renewal of all mines (state and central PSUs). Thus, NMDC can restart Donimalai mines by starting to pay 22.5 per cent additional premium, notes ICICI Securities.

"The implications of this measure more than negates whatever value upside could have come from steel plant demerger, as it impacts our FY22E EBITDA by nearly Rs 21 billion or nearly 35 per cent," the brokerage said in a note issued on August 30.

It has downgraded the stock to "REDUCE" with a revised target price of Rs 94/share.

For the quarter ended June 2020, NMDC reported a 55 per cent slump in its net profit at Rs 533 crore as both production and sales were impacted due to the Covid-19 lockdown. The company had posted Rs 1,179 crore PAT in the corresponding quarter in 2019-20. READ MORE

NMDC's turnover during the first quarter was Rs.1,938 crore compared to Rs 3,264 crore during the corresponding quarter last fiscal, the company said.

At 01:07 pm, NMDC was trading nearly 9 per cent lower at Rs 98.05 on the BSE. The stock hit a low of Rs 97.45 during the session. Other mining stocks, too, were trading in the negative territory. MOIL was trading over 3 per cet lower at Rs 148.50 while Sandur Manganese & Iron Ore was trading over 6 per cent lower at Rs 714.95.

Chinese troops violate agreement in Pangong Tso, Indian Army pre-empts move

 Months after the deadly border clash, the situation in Eastern Ladakh flared last night when troops of China's People's Liberation Army (PLA) violated the "previous consensus" arrived at during military and diplomatic engagements.

"PLA carried out provocative military movements to change the status quo," said Colonel Aman Anand in a statement and added that a Brigade Commander level Flag Meeting is in progress at Chushul to resolve the issues.
It is to be learned that Indian troops pre-empted the Chinese activity on the Southern Bank of Pangong Tso Lake, undertook measures to strengthen India's positions, and thwarted the intentions to unilaterally change facts on the ground.
"The Indian Army is committed to maintaining peace and tranquility through dialogue, but is also equally determined to protect its territorial integrity," Army said in its statement.
ALSO READ: Situation in Ladakh the 'most serious' after 1962 conflict, says Jaishankar
Meanwhile, the Srinagar-Leh highway has been closed for the civilians in view of the fresh "provocative" military move by China, India Today reported.
External Affairs Minister S Jaishankar had earlier said that a solution to the border row with China must be predicated on honouring all agreements and understandings without attempting to alter the status quo unilaterally. Jaishankar called the situation in Ladakh the "most serious" after the 1962 conflict, adding the quantum of forces currently deployed by both sides at the Line of Actual Control(LAC) is also "unprecedented".

At the same time, he noted that all border situations were resolved through diplomacy.
Prime Minister Narendra Modi had accused China of harbouring expansionist ambitions and reminded Beijing that the “era of expansionism is over" as he paid a surprise visit to a military base in the Ladakh sector where 20 Indian soldiers were killed in a violent border clash with the Chinese army.
Prime Minister Narendra Modi visits a forward position at Nimmoo in Leh.Prime Minister Narendra Modi visited a forward position at Nimmoo in Leh.

India and China are engaged in a standoff since April-May over the transgressions by the Chinese Army in multiple areas including Finger area, Galwan valley, Hot springs and Kongrung Nala.

The talks between the two sides have been going on for the last three months including five Lieutenant General-level talks but have failed to yield any results, so far. The Chinese Army has refused to withdraw or disengage completely from the Finger area and seems to be buying time to delay its disengagement from there.

While efforts are underway to resolve the ongoing border dispute, India has rejected the Chinese suggestion to disengage equidistantly from the Finger area in Eastern Ladakh.

Adani Group acquires 74 per cent stake in Mumbai International Airport

 Gautam Adani-ledAdani Group has acquired 74 per cent stake in Mumbai International Airport Limited (MIAL) that operates India’s second largest airport in Mumbai.

Under the transaction Adani Group will acquire 50.5 per cent stake of GVK group. Additionally, Adani will also acquire 23.5 per cent stake of minority partners Airport Company of South Africa (ACSA) and Bidvest. ACSA and Bidvest hold 10 and 13.5 per cent stake respectively in MIAL.

GVK had moved court to block the attempts of sale citing they have a right to first refusal. However, the company hasn’t been able to garner funds.

With six airports already in kitty, this will make the group second largest private airport operator after GMR group which operates Delhi and Hyderabad airports.

GVK Group and Adanis have agreed that Adani will offer a stand-still to GVK, in addition, to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it.

ALSO READ: Stalled Navi Mumbai airport to take off with fresh fund infusion by Adani

"Adani Airport Holdings Limited intends to infuse funds into MIAL to ensure that MIAL receives much needed liquidity and also achieves financial closure for Navi Mumbai Airport," the company said in a statement.

The deal has been finalised even though a consortium of foreign investors which had earlier signed a binding agreement with GVK group for buying the asset has legally challenged it.

The consortium led by UAE’s sovereign fund Abu Dhabi Investment Authority (ADIA), India’s sovereign fund NIIF and Canada’s Public Sector Pension (PSP) Investments have served a legal notice to the GVK group and lenders saying that selling stake in Mumbai International Airport Limited (MIAL) to Adani group will be a breach of the agreement they had entered in October 2019.

The acquisition will also give Adanis ownership of the upcoming Navi Mumbai airport in which MIAL holds 74 per cent stake.

“There was immense pressure from the lenders on GVK group as there were upcoming debt payment schedules of MIAL. The banks were particularly concerned as they felt that parent firm's poor liquidity position worsened by the effect of coronavirus on airport business will make it difficult to stick to repayment. The transaction is positive for everyone,” said a banker involved in the process. He said that GVK’s entire stake in MIAL is pledged with HDFC bank and YES Bank.

According to the agreement, Adani Group will acquire GVK's debt from lenders.

Adani Group has publicly disclosed plans of becoming ‘India’s leading airport operator’, something it also stated in its annual report for FY20. It also stated in the annual report that growing domestic passenger traffic is providing immense opportunity to expand and scale up its business.

Female fund managers beat men at stock picks: Goldman Sachs Group

 Female managers remain woefully under-represented in the fund industry, but they’re doing a better job picking stocks than their male counterparts, at least this year. Among some 500 large-cap US mutual funds, those with at least one-third of manager positions held by women have beaten those with no women by 1 percentage point in 2020, data compiled by Goldman Sachs Group Inc. show. That’s a slight departure from the previous three years, when the gender difference had little impact on fund performance.

Female-managed funds are benefiting from a preference for technology stocks, an industry that has dominated gains. Male managers lean toward financial shares, the second-worst performer in the S&P 500. Also helping widen the gap is Tesla Inc., which is more widely owned by female managers.

Shares of the electric automaker have soared by more than 400% this year, compared with a gain of less than 10% in the S&P 500.

“Even after adjusting for risk, female-managed funds have outperformed their counterparts amid the pandemic-related market swings,” Goldman strategists led by David Kostin wrote in a note to clients.

The tech sector “is the largest source of disagreement between female-managed and all other large-cap mutual funds,” they wrote.

Women are still a small minority in the industry. Only 3% of the mutual funds tracked by Goldman have an all-female fund manager team, collectively managing just 2% of total assets. In contrast, 77% are managed by an all-male team, with these funds accounting for 57% of assets.

What to expect from Q1 GDP data today? Here's what key indicators suggest

 Months after the coronavirus induced lockdown and the follow up unlock, GDP data likely to be released later today will paint the extent of damage to the economy and give an idea of the critical course correction required. High labour migration, job losses, and poor investment atmosphere is likely to push the already slowed economy into a tight corner.

Economists project the GDP may decline by 19.2 per cent in the April to June quarter from a year ago, the sharpest contraction since the nation started publishing quarterly figures in 1996. India's FY20 GDP had declined to 4.2 per cent from 6.1 per cent in FY19, the slowest in the last 11 years.

Here are some of the contributing factors that triggered the fall

Rising retail inflation

Retail inflation spiked to 6.93 per cent in July this year on account of higher food prices, the data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed. The inflation had grown beyond the RBI's upper ceiling of 6 per cent due to a rise in pulses and products prices that saw a 15.92 per cent on-year rise in July, the meat and fish segment saw a rise of 18.81 per cent, while that of oils and fats rose 12.41 per cent.

ALSO READ: Here's how Covid-19 has made predicting India's GDP growth even harder

The retail inflation which is measured by the Consumer Price Index (CPI) for the month of June was also revised to 6.23 per cent from 6.09 per cent, the data revealed. The government had in April revised the CPI data for the month of March to 5.84 per cent from 5.91 per cent. Meanwhile, the Consumer Food Price Index (CFPI) surged to 9.62 per cent in the month of July.

Contracting services, PMI

India’s dominant services industry, a key driver of economic growth, shrank for a fifth straight month in July as lockdown hit industries struggled to resume operations. The Nikkei/IHS Services Purchasing Managers’ Index increased to 34.2 in July from 33.7 in June, however, it was still well below the 50-mark separating growth from contraction. July was the fifth straight month the index was sub-50, the longest such stretch since a 10-month run to April 2014. A composite PMI, which includes manufacturing and services, indicated an ongoing deep contraction in the economy, falling to 37.2 from June’s 37.8. However, firms remain pessimistic about the next 12 months and cut jobs at the fastest pace on record.
RBI's outlook

The Monetary Policy Committee (MPC) rapidly changed its monetary stance from calibrated tightening to neutral to accommodative as the pandemic continues to batter the economy. The RBI in its annual report raised the prospect of deep negative growth in GDP for the Jun-20 quarter and the Sep-20 quarter. India was also impacted by low levels of per capita income, dependence on urban India for jobs, and the lack of social security. This could impact medium-term demand. The central bank in its report maintained that the $6.5 trillion liquidity boost has created a big problem of asset inflation. It noted that consumer confidence had fallen to an all-time low. Urban consumption has dropped by a third.
Narendra Modi, EUIndia’s dominant services industry, a key driver of economic growth, shrank for a fifth straight month in July as lockdown hit industries.
GST shortfall: States under pressure

Finance Minister Nirmala Sitharaman, stating that the “Act of God” may result in contraction of economy, said the GST shortfall in FY21 may be around Rs 2.35 trillion and gave two options to states for compensation. The first option presented to the GST Council was on providing a special window to states, in consultation with RBI, for borrowing Rs 97,000 crore at a reasonable interest rate. The second option before the states is to borrow the entire Rs 2.35 trillion shortfall under the special window. Compensation payments to states are pending for the four months of this financial year — April, May, June, and July amounting to Rs 1.5 trillion. Compensation payments to states started getting delayed since October last year as GST revenues started to slow down. The Covid-19 pandemic has widened the gap, with GST revenues declining 41 per cent in the April-June quarter.

Break in the supply chain

The Covid-19 lockdown opened India's eyes to the need for a domestic supply chain as the break in the cycle resulted in critical industries facing raw material shortfall even as the government claimed of smooth machinery. With the lockdown hitting core sectors, India is now advocating developing a domestic supply chain as part of Atmanirbhar Bharat.

US election provides New Delhi narrow window for trade deal with Washington

 America’s elections provide a narrow window of opportunity for its trading partners. Across the world, negotiators will have seen a man from Maine given a prime spot at the Republican National Convention: Lobsterman Jason Joyce spoke about how President Donald Trump had “brokered a deal to end European Union tariffs of 8% on Maine live lobsters and up to 20% on Maine lobster products.” It is no coincidence that, in 2016, Trump won only one of Maine’s four electoral college seats.

Trump, behind in the polls, is desperately trying to moderate the effects of his poorly considered trade war on crucial voters. The world’s trade bureaucrats should have had pen in hand on the second day of the RNC: Miners, fishermen and farmers from states that Trump considers electorally important took turns in the spotlight. Figure out what they want, give the U.S. president something he imagines he can sell to them and you have an opportunity to get a quick deal through. That’s clearly what the EU had in mind when it signed a “mini trade deal” that, in return for a concession on lobsters, got the U.S. to commit to slashing a range of tariffs in half.

Here in New Delhi, time to strike a similarly advantageous deal is running out. The U.S.-India trade relationship in the Trump era has been dismal — partly because Indian trade officials have been slower than their counterparts in Europe or even China to figure out how to use America’s electoral divisions to their advantage. India’s commerce minister insists that we are “almost there” on a “quick trade deal”; writing in the current issue of Foreign Affairs, however, U.S. Trade Representative Robert Lighthizer complains that India is “at times, a troublesome trading partner for the United States.”

Agricultural imports are the sticking point. What Indian negotiators have offered Washington is apparently a “step-by-step reduction in import duties” on high-value products. And they’ve tacked on a ton of other concessions, including a discussion on reducing tariffs on technology products. A better strategy, though, might be to focus on an immediate, targeted package that could be struck before the U.S. vote. In that case, minimal concessions could result in a big payoff.

An obvious target would be the dairy sector. (Hello, Wisconsin!) One report suggests Lighthizer wants India to promise to buy $6 billion worth of U.S. agricultural and dairy goods. While that would put a sizeable dent in the trade deficit the U.S. runs with India, it’s the kind of pledge that’s difficult for a market economy to make. Even the Chinese are struggling to fulfill their promise, made in January, to buy $36.5 billion worth of U.S. agricultural goods.

Yet, if India at least promised to drop the real irritants — non-tariff barriers that prevent the import of most American dairy products — the two countries might get somewhere. The problem is, unsurprisingly, electoral politics on the Indian side: Given that Indian election campaigns can revolve around “cow protection,” the Indians want the U.S. to agree that no dairy imports will come from cows fed on animal protein. Everyone knows what the compromise will have to be: some form of labelling. If, after that, Indians still don’t consume U.S. dairy products, that’s just how the market works.

Once that issue is resolved, a lot of other options would open up. India’s exporters, for example, want to be included once again under the Generalized System of Preferences, which allows some developing countries preferential access to the U.S. market. The Trump administration expelled India last year citing the country’s “failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.” Only if there’s a chance of winning other concessions would any administration, not just Trump’s, restore India’s access.

Indian negotiators should remember, too, that whichever way the U.S. elections go, it’s vital for India in particular to build momentum toward easing trade tensions. India, locked into an increasingly grim economic and military confrontation with China that it knows it cannot sustain on its own, needs as many friends as possible. Indian politicians understand their own electoral constraints intimately. Now, they need to understand America’s.

Great human who had no parallels: Shah on Arun Jaitley's death anniversary

 Union Ministers including Home Minister Amit Shah on Monday paid tribute to former Cabinet Minister and BJP stalwart Arun Jaitley on his death anniversary.

Shah called him an "outstanding politician" and said he was someone who had "no parallels in Indian polity".

"Remembering Arun Jaitley ji, an outstanding politician, prolific orator and a great human being who had no parallels in Indian polity. He was multifaceted and a friend of friends, who will always be remembered for his towering legacy, transformative vision and devotion to nation," Shah tweeted.

In a tweet today, Union Minister of State (Independent Charge) Development of North Eastern Region (DoNER), Dr Jitendra Singh said that Jaitley's demise "left a void which is difficult to fill".

"What #ArunJaitley meant to me, is an enigma even for me. For several years, he was virtually a part of my daily routine. It has never been the same after 24th August 2019. Friend, guide, mentor... all in one. He left a void, difficult to fill... atleast in our lifetime," he tweeted.

Union Minister for Minority Affairs Mukhtar Abbas Naqvi said that the former Union Minister played a pivotal role in the "inclusive development" of the country.

"My tributes to able administrator, effective organiser Late Arun Jaitley Ji on his death anniversary. Arun Ji played a pivotal role in "Inclusive Development" of the country. #ArunJaitley ji," Naqvi's tweet read.

The former finance minister died on August 24, 2019. He was 66.

Jaitley first became a Cabinet minister in the government of former Prime Minister Atal Bihari Vajpayee in 2000. He then went on to serve as the Leader of the Opposition in the Rajya Sabha from June 2009.

He was appointed the finance minister in the first term of the Prime Minister Narendra Modi government in 2014. He opted out of the 2019 Lok Sabha elections citing health reasons.

Sushant Singh Rajput case: CBI's record doesn't inspire confidence in probe

 Whenever there is a need for an impartial probe, be it criminal or corruption, there are demands to hand it over to the Central Bureau of Investigation (CBI). This is because not just people and the government, even the judiciary fear that state investigative agencies may work in the interest of politicians or could botch-up cases due to sheer incompetence. A similar demand was recently made in Sushant Singh Rajput’s (SSR) death case.

Investigations by CBI, a central agency, which is supposedly free from interference of states and their politicians, are expected to be fair, fast and thorough. That is why the Supreme Court ordered the agency to probe Sushant Singh Rajput's death case. However, question remains whether the agency has lived up to expectations.

According to data, at least 65 per cent of the cases which have been probed by the federal agency between 2015 and 2018 are still awaiting closure. And in cases where the prosecution complaints (popularly known as chargesheets) were filed, questions were raised about the credibility of the accusations.

The INX Media case involving former Finance Minister P Chidambaram was the latest such case. Arrested on August 21, 2019, the former FM had spent more than two months in judicial custody and was granted bail by the Supreme Court in December 2019. The chargesheet produced in the matter was said to have done more harm than good.

ALSO READ: Sushant Singh Rajput's case politicised to malign Mumbai Police: Shiv Sena

It accused Chidamabaram and his son Karti of having received a payment of Rs 9.96 lakh as a bribe in 2008, in an exchange for a favour to INX Media, founded by Peter Mukherjea and Indrani Mukherjea. This was in contrast to the original accusations made by the CBI in its first information report (FIR) in the case where it alleged that as FM, Chidambaram had received Rs 305 crore in 2007.

"Interestingly, when CBI and Enforcement Directorate ( two premier agencies) stepped up the heat in August last year, and got custody of Chidambaram after 90 minutes of drama in Lutyens Delhi at his residence, the people anticipated explosive findings and several offences running to hundreds of crores of funds if not thousands involving several foreign entities," said an industry expert.

This wasn't the first or the only infamous case where the agency was left red-faced in the court. There have been many other instances where questions have ben raised about its investiations. Whether it was the 2G spectrum allocation case or the Arushi Talwar murder case, the CBI has faced widespread criticism at all judicial forums.

This was especially true in the 2G case, which rocked the UPA government, but the 10,000 page report filed by the CBI failed to prove the charges against former telecom minister A Raja and 17 others. They were all acquitted by the court in the case.

In the coal scam, the CBI was time and again caught on the wrong foot by the apex court and the special trial court over its investigation.

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The CBI's probe in another sensitive Bofors payoff case was also unable to withstand judicial scrutiny. In May 2005, the Delhi High Court quashed all the charges against the Hinduja brothers (Srichand, Gopichand and Prakashchand) along with Bofors company.

CBI chargesheet against former Karnataka chief minister B S Yeddyurappa and others in connection with alleged illegal mining in Bellary also fell flat as all the accused were acquitted by the court.

Unconfirmed data of 2019 suggests that about 7,000 cases related to economic offences are pending for prosecution by the CBI of which about 1500 cases are pending for more than 10 years.

A senior retired CBI officer said, the journey of the CBI has always been rough. It faces many roadblocks and challenges and its legitimacy often comes under scanner. But, in crucial cases, the closure is not easy as it requires scrutiny of thousands of documents and examination and cross examination of testimonies. While cases, where foreign entities involved get further delayed as Letters Rogatory, seeking judicial assistance from foreign counterparts have to be executed, which is a cumbersome job, he said.

20 workers fall ill after gas leak in private agro products unit in AP

 At least 20 workers, majority of them women, fell sick after a leak of ammonium gas late on Thursday night in a dairy belonging to a private agro products firm in Putalapattu constituency in Andhra Pradesh.

While three of the victims were shifted to Ruia Hospital in temple town of Tirupati, five were admitted to the CMC hospital in Vellore in neighbouring Tamil Nadu.

The others were undergoing treatment in the government hospital in Chittoor, police said.

Chittoor district Collector Narayana Bharat Gupta and Superintendent of Police Senthil Kumar visited the dairy unit and supervised the rescue operation.

According to the Collector, the gas leak occurred while some welding work was being carried out in the unit.

"We have ordered an inquiry and the exact cause of the mishap will be revealed only later. The possible human negligence angle will also be probed," Gupta said.

He said the condition of the workers undergoing treatment was stable.

Indian PSBs face fresh capital shortages as coronavirus bites: Moody's

 With already weak capital buffers, public sector banks in India will need external capital injection of Rs 1.9-2.1 trillion over next two years to restore loss absorption capacity, according to Moody’s.

The most likely source of capital to plug these capital shortfalls is the government, despite its completion of a large recapitalisation just a few months ago.
Uncertainty surrounding India's economic recovery and the ongoing clean-up of balance sheets are making it difficult for banks to raise equity capital from markets, rating agency said in a statement.

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Alka Anbarasu, Vice President and Senior Credit Officer, Moody’s, said PSBs dominate India's banking system, meaning any failure could jeopardise financial stability.
The sharp slowdown in India's economic growth, exacerbated by the coronavirus outbreak, will hurt public sector banks' (PSBs) asset quality and drive up credit costs. The Non-Performing Loans (NPLs) ratio will rise to 14.5 per cent by March 2022 from 11 per cent as of March 2020.

ALSO READ: Centre may empower public sector banks to induct non-executive directors

Moody's expects retail and micro, small and medium-sized enterprises (MSMEs) will lead a rise in NPLs, delaying the ongoing clean-up of legacy corporate NPLs.
The banks will require approximately Rs one trillion to build loan-loss provisions to about 70 per cent of NPLs, and a similar amount to grow loans 8-10 per cent annually – faster than the four per cent recorded in fiscal 2020 and supporting economic expansion.

ALSO READ: The way forward for public sector banks
Moody's base case assumes a sharp contraction in the Indian economy in fiscal 2021, before returning to modest growth in fiscal 2021. Even before the coronavirus outbreak, the economy had already been growing at its slowest pace in six years, it added.

Sebi proposes to increase minimum free float for firms post-insolvency

 The Securities and Exchange Board of India (Sebi) has proposed to increase the minimum free float for companies relisting after undergoing the corporate insolvency resolution process (CIRP). The capital markets regulator has also called for greater disclosures to ensure better price discovery and transparency.

The move is triggered by the extreme movement in the Ruchi Soya Industries' stock. The company's shares had surged more than 450 times after it got relisted following the acquisition by Pantanjali Ayurved under the CIRP. The sharp rise on the ultra-low free float of less than a per cent had sparked a debate whether Sebi and the stock exchanges should revisit rules to ensure fair price discovery.

In a discussion paper issued on Wednesday, Sebi sought the market's feedback on whether the threshold for minimum public shareholding (MPS) at the time of relisting should be set at 5 per cent or whether companies should be allowed to relist with any float on the condition that they will increase it to 10 per cent within six months.

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At present, companies that get listed following their initial public offer (IPO) need to have at least 10 per cent public shareholding, and the same needs to be increased to 25 per cent within three years. However, companies listing after undergoing the insolvency resoulution process are not required to have any minimum free float. Ruchi Soya, for instance, had less than 1 per cent free float when trading resumed in the counter after relisting in January.

chart
“Low public shareholding raises multiple concerns like failure of fair discovery of price of the scrip, need for increased surveillance measures, etc, and may therefore pose as a red flag for future cases. Low float also prohibits healthy participation in trading of such companies majorly due to issues related to demand and supply gap of shares,” Sebi has said in the discussion paper.

Currently, Sebi provides up to 18 months for companies listing under the CIRP to hike their MPS to 10 per cent and another 18 months to take it to 25 per cent.

Also, the regulations mandate one-year lock-in on incoming promoter shares. This rule prevents companies from increasing public float. Sebi, however, has proposed to relax this rule.

“Achieving MPS compliance through means involving off-loading of shares by the incoming investor or promoter within one year is not possible. Therefore, it may be permitted to free such shares from lock-in so as to help achieve MPS (only to the extent to enable MPS compliance),” the regulator has proposed.

Also, investors are often in the dark with regard to the business prospects of a company once it comes out of insolvency. This leads to irrational pricing of the stock. To tackle this issue, the regulator has prescribed a slew of disclosures. Some of them are: Pre and post net-worth of the company, detailed shareholding pattern, details of funds infused, creditors paid off, disclosure of financial ratios such as P/E, return on net-worth, names of the new promoters, key managerial persons, and brief description of business strategy.

National Payments Corp to take UPI, Rupay global through new subsidiary

 National Payments Corporation of India (NPCI) is taking its business beyond Indian shores through its subsidiary NPCI International Payments Limited (NIPL).

It wants to take its products UPI and RuPay Card global and assist other countries in establishing a ‘real time payment system’ or a ‘domestic card scheme’.
The primary focus of the subsidiary would be the internationalisation of RuPay and UPI, along with a some other NPCI offerings. Several nations have displayed an inclination towards establishing a ‘real time payment system’ or ‘domestic card scheme’ inspired by the exemplary innovations by NPCI in the country, the NPCI said in a statement.

ALSO READ: Corp affairs ministry allows companies to extend AGMs for up to 3 months

The growth and evolution of NIPL will result in a huge acceptance network for RuPay and UPI which in turn will empower Indian travelers to use homegrown payment channels.
Several countries such as Asia, Africa and the Middle East have showed interest in replicating our model in their own nations.

Meanwhile, it has appointed Ritesh Shukla as the chief executive officer of NIPL. His primary responsibilities would involve the formulation of a business strategy, leading business development and driving profitability by deploying NPCI’s pre-existing technology and solutions in international markets.
Prior to joining NPCI, Shukla was a part of Mastercard’s business in Middle East and North Africa (MENA).
Shukla would be supported with Anubhav Sharma, Head International Business – Partnership, Business Development & Marketing and Rina Penkar, Head International Business - Product Development, as part of NIPL’s core team.

New umbrella entity for retail payments can be 'for-profit': RBI

The Reserve Bank of India (RBI) on Tuesday released the framework for establishment of a new umbrella entity for retail payments. This entity will be tasked with setting up, managing, and operating new payment systems in the retail space. It may operate as a ‘for-profit’ organisation, the RBI said.

“The entity formed shall be a company incorporated in India under the Companies Act, 2013, and may be a ‘for-profit’ or a Section 8 Company as may be decided by it,” the RBI said.

According to the RBI guidelines, the entity will have minimum paid-up capital of Rs 500 crore, with no single promoter group holding over 40 per cent investment in the capital. Initially, the promoter should have a minimum of Rs 50 crore at the time of submitting the application.

“The promoter/promoter group shareholding may be diluted to a minimum of 25 per cent after 5 years of commencement of business of the umbrella entity, and a minimum net worth of Rs 300 crore be maintained at all times,” the RBI added.

Earlier, the central bank had released draft guidelines and invited industry comments. It has now called for applications from interested parties till February 26, 2021.

Based on the framework, payments system operators, as well as payments and technology service providers with three years of experience, are eligible to apply.

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The new entity will have to abide by corporate governance norms and the ‘fit and proper’ criteria for persons to be appointed on the board. The RBI may nominate a member to the board too, and has the right to approve of the appointment of directors.

This new entity will be tasked with operating payment systems such as ATMs, white-label PoS, Aadhaar-based payments, and remittance services.

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Further, it will manage clearing and settlement systems for participating banks and non-banks, and also monitor developments in the retail payment system and related issues, both in India and abroad, in order to avoid shocks.

“It is expected that the umbrella entity shall offer innovative payment systems to include hitherto excluded cross-sections of the society, and which enhance access, customer convenience, and safety, and the same shall be distinct yet interoperable,” the RBI said.

Reducing the dominance of the National Payments Corporation of India (NPCI) — which offers and manages a slew of platforms such as Unified Payment Interface (UPI), Bharat Bill Payment Systems (BBPS), Aadhaar-Enabled Payment Systems (AePS) — is the RBI’s objective. NPCI was set up by the RBI in 2008. Prior to its formation, the central bank had set up the National Electronic Funds Transfer System and Electronic Clearing Service.

In a 2019 policy paper, the RBI had said it was concerned with a few entities in the payments space having become too big, which had led to higher concentration risk. In the paper, the RBI noted that the NPCI had become pivotal to operations of many retail payment systems. There is ‘concentration’ of many complicated systems and tasks under its ambit, which creates conditions for monopolistic behaviour in terms of quality of service, or access to and charges on services.

Trump elevated ties with India in ways not seen before: White House

 US President Donald Trump has elevated America's ties with India and solidified the growing partnership between the two countries in ways not seen in any previous administrations, the White House has said.

The US president will continue to build this critical partnership in the years to come, it asserted.

"President Trump has prioritised US-India relationship and worked to expand all facets of the partnership over the last three-and-a-half years," a senior administration official from the National Security Council of the White House told PTI on Monday.

"Given the two countries' democratic foundations and their mutual interests in rebuilding the global economy following Covid-19, diversifying global supply chains, and ensuring the Indo-Pacific region remains free and open, President Trump will continue to build this critical partnership in the years to come," the official said.

"The Trump Administration has elevated the US relationship with India and solidified our growing partnership in ways not seen in any other US administration," the official said, noting that the president has enabled India to become the first non-treaty ally to be offered an armed MQ-9 Unmanned Aerial System.

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"During President Trump's historic visit to India February 24-26, he and Prime Minister Narendra Modi elevated the relationship to a Comprehensive Global Strategic Partnership. Prime Minister Modi was also one of the first foreign leaders to visit the White House after President Trump took office on June 26, 2017," the official said.

The senior official noted the two leaders have also spoken side-by-side at two major events "Howdy, Modi" in September 2019 in Houston, Texas, before a crowd of over 55,000 and again at "Namaste, Trump" in February 2020 in Ahmedabad, Gujarat, to address a crowd of 110,000 people.
Trump ModiU.S. President Donald Trump and Prime Minister Narendra Modi hug at Sardar Patel Stadium in Ahmedabad. AP
"These gatherings boosted our people-to-people ties and highlighted the warm personal relationship between the two leaders," the official said.

Trump's Indo-Pacific strategy prioritises closer cooperation between the United States and India to secure a free, open, inclusive, peaceful and prosperous Indo-Pacific region, said the official.

"We have boosted quadrilateral consultations among the United States, India, Australia and Japan, with the four foreign ministers meeting for the first time in September 2019," the official said.

"President Trump has strengthened all aspects of US-India security and defence cooperation to build a comprehensive, enduring, and mutually beneficial defense partnership," the official said.

Under the Trump Administration, the United States has become the second-largest arms supplier to India, growing from virtually no arms sales a decade ago to more than USD20 billion today, the official said, adding that earlier this year, the US and India concluded USD3 billion in defence sales, including MH-60R naval helicopters and additional AH-64 Apache attack helicopters.

"To bolster India's role as a net provider of security in the Indo-Pacific, the Trump administration has lifted restrictions on the provision of sensitive defence technology, enabling India to become the first non-treaty ally offered an armed MQ-9 Unmanned Aerial System," the official said.

"As global leaders with vibrant democracies, the United States and India have cooperated to respond to the COVID-19 pandemic. US and Indian pharmaceutical companies have collaborated to expand global supplies of critical medicines and are cooperating on vaccine development," the official added.

In a separate statement, Al Mason, co-chair for the Trump Victory Indian American Finance Committee, said Trump has elevated India's stature on the world stage, and asserted that credit also goes to Prime Minister Modi.

"Of course, due credit also goes to Prime Minister Narendra Modi for his skilled policy towards the US. The India-US relationship has been rock solid. Kudos to the brilliance of both Trump and Modi for cementing the bond between India and US," Mason told PTI.

Indian economy likely to contract by 16.5% in Q1FY21: SBI report

 The Indian economy may report a contraction of16.5 per cent in April-June quarter of FY21, as against previously expected contraction of 20 per cent, as degrowth in corporate GVA, courtesy better-than-expected results of some financial and non-financial companies, has been significantly better than revenue degrowth in Q1FY21, said economists at India's largest public sector bank State Bank of India (SBI).

"In May, we had indicated that the Q1FY21 GDP growth will exhibit a sharp decline at least in excess of 30 per cent. However, the current situation warrant us to revisit our GDP growth... In principle, revenue decline of listed companies has been far outstripped by cost rationalisation thereby not impacting margins. As per our estimates, Q1FY21 real GDP degrowth would be now around –16.5 per cent," Soumya Kanti Ghosh, chief economic advisor for SBI wrote in his latest report Ecowrap, dated August 17. The government is expected to release Q1FY21 GDP data on August 31.

Based on the composite leading indicator (CLI), which is a basket of 41 leading economic indicators, Ghosh deduces that the economic activity is showing early signs of turnaround. "Out of the 41 high frequency leading indicators, 11 reveal a significant decline in Q1FY21, except in domestic Tractor Sales, Bitumen Consumption and ASCBs bank deposits... Based on the leading indicators YoY performance, we are also expecting the gross value added (GVA) degrowth to be between –14.5 per cent and -16.5 per cent in Q1FY21," he says.

Data released by the government last week showed that India’s factory output contracted sharply for the fourth straight month in June, though at a slower pace than in May, signaling gradual process of normalisation of manufacturing activity. Data provided by the National Statistical Office showed the index of industrial production (IIP) contracted 16.6 per cent in June as against 34 per cent contraction in May. During the June quarter, IIP contracted 35.3 per cent, which may heavily weigh on GDP growth for that quarter.

"On a month-on-month basis, activity continued to pickup across all categories. Consumer non-durable production showed the sharpest pick-up and was the only category in positive territory – rising to 14 per cent YoY in June vs -11.1 per cent in May, mainly reflecting higher production in the essentials basket of pharmaceuticals (up 34.6 per cent YoY in June), food products (-2.6 per cent), but also tobacco products (4.5 per cent). Others components remained in a deep contractionary zone, but have also incrementally improved, with a faster sequential rebound in segments that were the worst hit in April. Of the 23 major manufacturing sub-segments, only three continued to contract in excess of -50 per cent YoYcompared with 15 in May, again reflecting the broad-based normalisation," wrote Sonal Varma, managing director and chief economist at Nomura, in a co-authored note with Aurodeep Nandi.

They expect the GDP growth to contract by 15.2 per cent YoY in Q2, and an average of -4.2 per cent in H22020, dragging overall growth by -5.0 per cent in 2020.

State-wise GDP

According to Ghosh, as the Covid-19 outbreak spread across the densely populated rural India, all the four quarters of FY21 are likely to exhibit negative real GDP growth while decline of full year growth could be in double digits.

Using the bottom-up approach, Ghosh estimated output loss in each state according to level of activity which are then added for the overall GDP loss. "We estimated that total GSDP loss due to Covid-19 for states stands at Rs 38.0 lakh crore, which is 16.9 per cent of total GSDP. State-wise analysis indicates that top 10 states accounted for 73.8 per cent of total GDP loss with Maharashtra contributing 14.2 per cent of total loss followed by Tamil Nadu (9.2 per cent) and Uttar Pradesh (8.2 per cent). These top-10 states have accounted for around 81 per cent of total confirmed Covid-19 cases in India... Subsequently, the per capita loss for all India is around Rs 27,000 with states like Tamil Nadu, Gujarat, Telangana, Delhi, Haryana, Goa, etc. exhibiting loss of more than Rs 40,000 per person in FY21," he says.

In the last 15 days, India has reported 10 lakh cases of Covid-19. India now accounts for 10.40 per cent of all active cases globally (one in every 10 active cases), and 6.50 per cent of all deaths (one in every 15). India has recorded 57,981 coronavirus cases in the past 24 hours, taking its total to 2,651,290, data provided by Health Ministry shows. With over 961 fatalities reported on Sunday, the country's death toll has surged to 51,079.

Residential property launches back on track as consumer sentiment improves

 In signs of green shoots in the real estate sector, several developers have lined up launches in the coming quarters, with consumer sentiment improving and construction activities getting back to normal.

Bengaluru-based Prestige Estates, which had put all its launches on hold after the Covid-19 outbreak, plans to start seven residential projects across south India during the second and third quarters. With these projects, the company is targeting to get back to the pre-Covid quarterly level of over Rs 1,000 crore of gross bookings and collections from the second quarter of 2020-21 onwards.
“Sales numbers in the second quarter will definitely be more than double of the previous quarter,” said Irfan Razack, chairman and managing director (MD) of Prestige Estates, during an investors’ call.

“The company’s focus on affordable/mid-income housing projects in south India and an expected recovery in the hotel business in FY22 will enable the company to get its growth story back on track,” according to an ICICI Securities estimate.
Another Bengaluru-based real estate player, Puravankara, has lined up 11 projects in FY21 with an investment of around Rs 3,000 crore. Of these, three were launched recently. “Our recent project launches garnered good traction not only in terms of enquiries, but also in bookings. While there is an uptick in demand, customers are now looking at projects that fulfil their post-Covid needs,” said Ashish R Puravankara, MD, Puravankara.
The new launches also mark the company’s re-entry into the Mumbai market.
Despite a 56 per cent fall in residential launches in the first half of the year compared to the second half of 2019, Anarock Property Consultants believes that consolidation in residential real estate is expected to gain ground, and that branded players may garner a market share of 75-80 per cent. Sales declined by 49 per cent during the period.

ALSO READ: Transporters mull surrendering vehicles as loan moratorium comes to an end

Brigade Group, which had deferred a couple of its residential projects, is also planning to launch them in the second and third quarters. Total investment in these projects, located in Hyderabad and Bengaluru, will be over Rs 1,000 crore.
“We believe that demand for residential projects by bigger brands like Brigade will continue to be there even in these difficult times. Therefore, we will continue to launch new projects after a proper market assessment,” said Rajendra Joshi, CEO, residential business at Brigade Group.
Some players, however, continue to be cautious. “We will launch new projects, but before that we are waiting and watching how this pandemic pans out. Demand is slowly coming to pre-Covid days,” said a Sobha spokesperson. The company’s upcoming residential projects are located across nine cities, with a total built-up area of 14.36 million square feet.

chartIn Mumbai, developers such as Oberoi Realty are banking on Diwali to launch projects. Godrej Properties, which has 15 million sq ft of launches planned in FY21, is waiting for approvals. "As long as regulatory approvals are received in time, we will go ahead with our planned launches. We will, of course, have to be agile and tweak our strategy if needed after gauging the market environment,” said Pirojsha Godrej in a recent interview with Business Standard.
Gaurav Kumar, managing director, capital markets and residential business, CBRE India, believes that the pent-up demand of the last six months, a reduction in interest rates of home loans, the availability of completed units, and the ‘work-from-home’ imperative are expected to contribute to a strong recovery in the second half of 2020.
“We are already seeing signs of a revival with sales in the mid-market segment picking up across all metro cities,” Kumar said.

However, Amit Bhagat, managing director of fund management company ASK Property Investment Advisors, asks developers to be cautious. "It is advisable for developers to plan launches for affordable and mid-segment housing in H2 of 2020-21 since demand will gradually come back. It will be prudent to do a financial closure with tied up construction finance to avoid overdependence on cash flow from pre sales,” Bhagat said.

Transporters mull surrendering vehicles as loan moratorium comes to an end

 Transporters are on the verge of surrendering 50,000 vehicles to financiers, after being hit by sluggish economic activity, low freight availability, and end of the moratorium on August 31. This is based on the estimates of the Indian Foundation of Transport Research & Training (IFTRT), a New Delhi-based think-tank.

A sharp month-on-month drop of 10 per cent in freight rates for August has also added to woes. “The situation is very fragile,” said S P Singh, senior fellow at the IFTRT.
Consolidation has begun, due to which some are trying to trim the business and others seeking an exit, he said, adding that the situation would worsen after August 31. “We see 45,000-50,000 vehicles getting surrendered as transporters will not be able to meet payment obligations,” said Singh.

With no sight of recovery in loans already disbursed, getting credit for new vehicles is a major issue and loan rejection rates are very high, he added.
However, Umesh Revankar, MD and CEO, Shriram Transport Finance, has dismissed suggestions of any crisis. “I don’t see repossession or surrendering of vehicles happening. It’s just a hype. Financiers will allow customers to sort ot their problems and return,” he said.

ALSO READ: FM seeks investment from UAE for Rs 111 trn National Infra Pipeline

He pointed out that financiers including Shriram Transport have been providing working capital requirements. With the lockdown easing, things are improving month-on-month, he added.
Meanwhile, an end to the holiday from paying road tax on September 30, among others, is also bothering truck owners.

On June 9, the government extended the validity date of motor vehicle documents till September 30. Balmalkit Singh, former president of the Bombay Goods Transport Association, seconds IFTRT’s Singh.

chart“Demand is extremely sluggish. Only 40 per cent of the fleet is being utilised. Most transporters will not be able to meet their commitment, leading to a default. It’s going to be a huge crisis if the moratorium is not extended.”
Transporters have survived for so long because of the EMI holiday. High diesel prices and low freight have also weighed on the business, he added.

SC seeks govt view on Reliance Jio's liability for RCom's AGR dues

 The Supreme Court on Monday asked the Union government whether Reliance Jio could be held liable to pay the adjusted gross revenue (AGR) dues of Reliance Communications (RCom), a bankrupt firm, because the former was sharing spectrum with the latter and earning revenue from it. It sought the annual financial details of RCom because it would be crucial for the judgment on AGR dues.

Solicitor General Tushar Mehta told the court the Union government would support any decision it took to help recover the dues. He said the views of the Department of Telecommunications (DoT) and those of the Ministry of Corporate Affairs (MCA) on spectrum sale differed. The MCA had sought to allow spectrum sale whereas the resolution plan for RCom has not yet been approved.
According to the apex court, spectrum cannot be sold under the Insolvency and Bankruptcy Code (IBC).

chartReliance Jio told the court there was no legal basis to transferring RCom’s dues to it. The two companies have a spectrum-sharing agreement and do not share liabilities. Advocate Harish Salve, who appeared for Jio, said the company was not involved in any proceedings under the IBC and was not acquiring RCom’s spectrum.
Mehta said spectrum sharing was different from trading and the user must pay AGR-related dues.
At the end of the hearing, Salve told the Bench he would address the court on the legal issue as to whether spectrum could be sold under the bankruptcy process. Jio informed the court that in accordance with spectrum-sharing guidelines, the users were required to pay only usage charges. The next hearing in the matter has been adjourned till August 19.

PI Industries slips over 2% as CFO Subhash Anand steps down

 Shares of PI Industries slipped 2.3 per cent to Rs 1,892.25 per share on the BSE on Monday after the company's chief financial officer Subhash Anand quit from the company.

"We wish to inform the exchange that Subhash Anand, Chief Financial Officer of the Company has decided to step down due to personal reasons and has requested for early relieving. The management has accepted his request and accordingly he shall be relieved from his current responsibilities w.e.f. closing hours of August 18, 2020," it said in an exchange filing. READ HERE

At 1:09 pm, the stock was quoting at Rs 1,920 apiece, down 0.94 per cent, on the BSE. In comparison, the benchmark S&P BSE Sensex was at 37,917 level, up 0.11 per cent.

During the June quarter of FY21, the company posted a 43 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 146 crore against Rs 102 crore reported in the corresponding quarter of the previous fiscal. Revenue for the quarter came in at Rs 1,060, up 41 per cent YoY. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Rs 236 crore, up 55 per cent from Rs 153 crore registered in the year-ago period.

Gross margin, however, slipped 280 basis points (bps) to 42 per cent from 45 per cent in the June quarter of FY20 due to change in the business mix of Export, Domestic, and Isagro, the company said.

It hit an all-time high of Rs 1,966 on August 5, post its Q1 results.

Reliance in talks to acquire Urban Ladder, Milkbasket, says report

 In a bid to strengthen its e-commerce position, Reliance Industries (RIL) is in talks to acquire online furniture brand Urban Ladder and milk delivery platform Milkbasket, The Times of India reported.

According to the report, the discussion with Urban Ladder has been going on for the last few months and is now at an advanced stage. People close to discussion pegged the deal at around $30 million including further infusion in the business and earn-out for the management team.

Similarly, Milkbasket is inching close to RIL after its discussions with Amazon and Bigbasket failed to fructify. According to the TOI report, the recent capital infusion of $5 million has given the company a new lease of life and is negotiating over the valuation of the company.

ALSO READ: Milkbasket raises $5.5 mn in Inflection Point-led fresh funding round

The company serves over 130,000 households and fulfills needs of an entire household with 9,000 products across fruits and vegetables, dairy, bakery, and other FMCG categories. It is currently operating in Gurgaon, Noida, Dwarka, Ghaziabad, Hyderabad, and Bengaluru.

Milkbasket has witnessed a 2.2 to 2.5 times increase in average order value across 130,000 active user base while it has been onboarding 500-1,000 new signups on a daily basis since the lockdown. This comes as Covid-19 has given a fillip to e-commerce firms as more consumers have shifted to ordering groceries online. According to Forrester Research, India’s online grocery market could hit $3 billion in sales this year, an increase of 76 per cent over the previous year.

Apart from the two companies, the Mukesh Ambani led conglomerate is also in talks to acquire e-pharmacy startups like Netmeds and lingerie retainer Zivame as it aims to consolidate with Future Retail.

Despite a struggling economy, what is drawing people to the stock markets?

 Brokerages are seeing a boom of sorts when it comes to opening of new investor accounts. In the past four months, more than 4 million new accounts have been opened, taking the total to 44.3 million. Despite economic growth taking a hit, widespread job losses, and salary cuts, what is it that is driving people to the stock markets? We explore the reasons:

Ease of account opening, zero charges

Gone are the days when opening trading and dematerialised account used to take 70 signatures. Now an investor can open an account sitting at home thanks to e-KYC and savvy brokerages. A simple Google search leads to a slew of brokerages vying for your attention with offers such as zero-broking fees and no account opening charges. Some even promise to allow you to begin trading in just five minutes.

Market rally

The new account openings have been underpinned by a sharp rally in the stock markets. From the March lows, the benchmark Sensex and the Nifty have rebounded more than 40 per cent. Several stocks in the broader markets are doubling in a matter of days. After the March selloff, the market direction has largely been upwards thanks to the aggressive stimulus measures taken by the global central banks, particularly the US Federal Reserve. This means, majority of whom who have entered the market post March, there is a high probability that they made handsome gains. This has prompted then to invest more and nudge others also to open trading accounts.
Improved mobile apps

Fast internet and smartphones have become ubiquitous. Brokerages have been quick to tap into this opportunity. Mobile trading apps have become user-friendly and intuitive. The new-age apps have led to the gamification of stock market trading. It has become an in-thing for investors to post snapshots of the mark-to-market gains they make on their investments. Also, many apps show real-time gains an investor makes. This gives many the adrenaline rush to increase the wager, without necessarily giving too much importance to the fundamentals of the stock. Experts say people across age groups who are equipped to use a smartphone are being drawn to trading.

Work from home

One often-cited reason for the traction in new account openings is the ‘work from home’ phenomenon. Staying at home has given people more time, which many are using to trade with the intention of making a quick buck. This is also reflecting in the numbers. In July, the share of non-institutional investors in trading volumes surged to 72 per cent in July—highest in more than a decade. Experts say this data point suggest that small investors are not just opening new accounts but are actively trading.

Access to stock tips

Now this is the potentially most risky element but a driver nevertheless. Whatsapp, Telegram and other social media platforms are flooded with groups that dole out investment tips every second. Joining many of these groups is free and a lot of young generation is seen seeking advice from this medium. “When you have an active trading account all you need is actionable tips. Which groups on Telegram provide. Also, as the market has been buzzing, most of the tips are generating returns. The bubble is intact but is only getting larger,” says a market expert.

Worst profits by Nifty50 firms in a decade are beating analyst estimates

 You wouldn’t expect analysts to draw comfort when a nation’s top companies post the worst profit decline in at least 10 years. The pandemic has made that a reality in India.

While aggregate net income of 47 NSE Nifty 50 Index members slumped 40 per cent in the quarter ended June from a year ago, nearly two thirds of these companies met or exceeded estimates, data compiled by Bloomberg show. For analysts struggling to justify the stock market’s rebound since March, that passes for good news.

“To be honest, we had written off this quarter,” said Abhimanyu Sofat, head of research at IIFL Securities Ltd. “But majority of the Nifty companies have come with better-than-expected results.”

Like in other major markets, earnings in India weren’t as bad as feared as companies slashed costs to save cash, with a reduction in estimates ahead of the results season also making it easier to beat them. Analysts have cut the 12-month average profit estimates for Nifty members by 20 per cent since January on concerns about a patchy recovery and climbing virus numbers.

“Even if things improve in the remaining quarters, full year FY21 will look flattish at best, with risks tilted toward the downside” because of rising virus cases and some states battling a second wave of lockdowns, said Gautam Duggad, head of research at Motilal Oswal Securities Ltd. in Mumbai.
Still, not everyone is putting emphasis on past performance. Some brokers have switched to publishing two-year price targets to eliminate the short-term noise in their research. Optimists say the market has priced in a broad-based earnings recovery to begin in the fiscal year starting next April.

Worst profits by Nifty50 firms in a decade are beating analyst estimates
"Corporate earnings will recover in 2022, and the market is looking at that is my sense,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore. “Pockets of the market have huge potential.”

Only three Nifty 50 companies including Coal India Ltd., Oil & Natural Gas Corp. and Zee Entertainment Enterprises Ltd. have yet to report results. The regulator has extended the timeline for reporting June-quarter earnings till Sept. 15 amid the pandemic. The quarterly report card includes earnings from HDFC Life Insurance Co., which replaced Vedanta Ltd. in the Nifty index on July 31.

The gauge rose 0.2 per cent at 11:05 a.m. in Mumbai on Monday, after swinging between gains and losses earlier.

Worst profits by Nifty50 firms in a decade are beating analyst estimates
Key Highlights

Four of India’s five biggest technology companies joined their global peers in beating earnings forecasts amid rising tech demand, spurring the biggest earnings upgrades for the sector since 2013
Consumer staples producers posted the biggest leap in earnings, with Britannia Industries Ltd. posting 117 per cent growth on an adjusted basis
Most banks reported declines in profits as they continued to bolster buffers against the pandemic. Profit at State Bank of India, the nation’s largest, was helped by sale of stake in its insurance unit
Communication services, consumer discretionary and industrials posted the steepest declines on an adjusted basis
Automakers took a hit. Top carmaker Maruti Suzuki India Ltd. posted its first quarterly loss on record as the lockdown stopped people from visiting showrooms
Analyst Comments

Analysts expect software exporters and drugmakers to continue to report strong earnings for the year ending in March, backed by solid demand and cost-savings from remote-working arrangements
Rural economies are recovering rapidly because of the government’s initiatives to boost incomes in the villages, said Deven Choksey, who oversees investment and research as managing director at KRChoksey Investment Managers Pvt
Most companies got “significant cost advantages because of working from home and that cost saving is going to be a permanent feature going forward”
Based on both earnings growth expectations and valuations, “we like banks, capital goods, cement, electric utilities, gas utilities, technology, oil marketing companies and telecom sectors,” said Rusmik Oza, head of fundamental research at Kotak Securities Ltd.

Broader markets race ahead in August, even as large-caps show fatigue

 Even as large-caps are showing signs of fatigue after logging their best two-month performance in more than a decade, small- and mid-caps continue to charge ahead at a brisk pace. So far in August, the Nifty Midcap 100 and the Nifty Smallcap 100 have gained 6 per cent and 7 per cent, respectively. By comparison, the bluechip-focused Nifty is up just 1 per cent.

In the previous two calendar months, the Nifty had gained 16 per cent – its best two-month performance since March 2009. The gain for the Midcap 100 index had been in line with that for the Nifty. The Smallcap 100 had surged 25 per cent during the June-July period.

To underscore the buying frenzy in the broader markets, nearly 300 stocks have gained more than 25 per cent this month, and more than 40 of them have gained over 50 per cent each. Most of these stocks belong to the small-cap universe, where foreign portfolio investors (FPIs) or large mutual funds (MFs) abstain from investing because of sparse liquidity.

As a result, experts said gains in the small-cap universe could be fuelled by retail investors, who are not particularly known to place well-researched bets.
"Vaccine hopes, the global market recovery, and the hype built around them have contributed to gains in the broader markets. But it is unlikely to sustain, as it has entered a dangerous territory. There is no liquidity from institutional investors. Much of the investment is coming from retail investors.

And that cannot substitute institutional investment,” says G Chokkalingam, founder, Equinomics.
ALSO READ: Worst profits by Nifty50 firms in a decade are beating analyst estimates

Market players say the recent move by stock exchanges to relax circuit filters have given small investors more ammunition.

Earlier this month, the BSE widened trading limits on 36 stocks, from 5 per cent to 20 per cent. Nearly 200 saw theirs going up from 10 per cent to 20 per cent.

In total, exchanges have revised circuit limits on 645 stocks, of which only 10 have seen narrowing of limits.

According to experts, new investors coming into the markets are getting lured into investing in little-known companies, given their sharp gains. Since March, over 3 million demat accounts have been added.

“There is no justification for the gains that some of the stocks have made. Many operators have got active and are trying to inflate prices to draw the interest of small investors. One should exercise caution. The party is good until it lasts. Once the tide turns, many investors may not be able to exit,” said an investment expert.

Last month, Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi had expressed concerns over how small investors were approaching the markets. “It has to be a gradual entry. They should start by investing in government securities (G-secs) and later move to other products. They should make well-informed decisions,” he had said.

Telecom stocks trade flat ahead of today's SC hearing on AGR payments

 Telecom stocks were little changed on Friday as investors remained cautious ahead of the Supreme Court hearing in the adjusted gross revenue (AGR) case later in the day.

Among individual stocks, Bharti Airtel was trading almost flat -- 0.08 per cent higher -- at Rs 536.10 on the BSE, at 1 PM. The stock hit an intra-day high and low of Rs 542.55 and Rs 534.75, respectively. Vodafone Idea was trading 1.33 per cent higher at Rs 9.16 and had hit an intra-day high of Rs 9.33 and an intra-day low of Rs 8.91. Reliance Industries, meanwhile, rose as high as Rs 2,156.50 ( up 1.6 per cent). Bharti Infratel was last trading 0.55 per cent lower at Rs 200.35.

The S&P BSE Telecom index advanced 0.2 per cent as compared to the benchmark S&P BSE Sensex's 0.32 per cent gain. Tata Communications, Optiemus Infracom Ltd (both up 5%) and Reliance Communication (up 4%) were the top index gainers.

In its last hearing on August 10, the Supreme Court had adjourned its hearing in the AGR matter and had asked the Centre to prepare a plan for recovering AGR dues from bankrupt telecom operators -- Reliance Communications (RCom), Aircel, and Videocon Telecommunications.

The amount recoverable from RCom is Rs 31,000 crore, while that from Aircel is Rs 12,389 crore. Insolvency proceedings had begun following claims made by operational creditors Ericsson and China Development Bank.

In an affidavit filed with the Supreme Court, Sistema Shyam Teleservices (SSTL) had said RCom was liable to pay its AGR dues.

The Department of Telecommunications has arrived at a combined AGR liability of Rs 25,195 crore for RCom and SSTL as on March 6, 2020. RCom had filed for insolvency back in February 2019.

Meanwhile, on July 20, the apex court had reserved its order allowing a staggered payment schedule to telcos for paying up their AGR dues. It had further made it clear it will not hear "even for a second" the arguments on reassessment or re-calculation of the AGR related dues of telecom companies which run into about Rs 1.6 lakh crore.

According to the DoT’s calculations, Bharti Airtel owes Rs 43,780 crore in AGR dues, of which the company has paid Rs 18,004 crore, with the balance at Rs 25,776 crore.

Vodafone Idea has so far paid Rs 7,854 crore of its total Rs 50,399 crore in dues, while Tata Teleservices has paid Rs 4,197 crore with the balance at Rs 12,601 crore.

The apex court had asked Bharti Airtel and Vodafone Idea to come out with a “reasonable payment plan”, make some payment to “show their bona fide”, and also file their books of accounts for the last 10 years.

July WPI at -0.58%, in negative zone for fourth month on the trot

 The Wholesale Price Index continued to be in the deflationary territory for the fourth straight month in July. Data released by the Commerce Ministry on Friday showed that WPI inflation came in -0.58 per cent year-on-year, compared with -1.81 per cent in June and a 4.5-year low of -3.37 per cent in May.

The steep fall in deflation from June to July slightly reduced the gap between WPI and Consumer Price Index-based inflation. On Thursday, official data had shown that retail inflation came in above the monetary policy committee’s target band of 4 per cent (with a margin of +/-2) for the fourth consecutive month in July. CPI inflation rose to 6.93 per cent year-on-year, up from 6.23 per cent in June, mainly because of a rise in food and petroleum prices.

Wholesale food prices continued to rise. The WPI Food Index-based inflation rose to 4.32 per cent in July compared with 3.05 per cent in June and 2.73 per cent in May. Wholesale prices of fuel and power rose sharply as well, to -9.84 per cent in July from -13.6 per cent in June and -23.08 per cent in May.

Among wholesale food price sub groups, vegetable saw the biggest spike in prices at 8.20 per cent in July compared with -9.21 per cent in June, while fruits fell to -3.03 per cent from 2.31 per cent. Wholesale onion prices deflated to -25.56 per cent from -15.27 per cent.

“The wholesale primary food inflation recorded a sharper climb in July 2020 relative to the previous month, as compared to the modest uptick in the retail food inflation, highlighting the varied trends at the mandi and retail level. Nevertheless, the CPI food inflation remained much higher than the wholesale food inflation in July 2020,” said Aditi Nayar, Principal Economist with ICRA Ltd.

“With a sharp base effect. we expect the core items to record a turnaround to a mild inflation in August 2020, even as the headline WPI may remain in disinflation, the pace of which is likely to narrow further,” Nayar said.

“Wholesale price inflation in the next month could pick-up further and could record positive inflation in August largely driven by pick-up in wholesale food prices owing to supply disruptions led by imposition of lockdown measures in certain parts of the country. However, supply of fresh kharif stocks could partially ease wholesale prices to some extent. Prices in the fuel segment could continue to remain in the negative trajectory owing to benign crude oil prices,” said Madan Sabnavis, Chief Economist with Care Ratings.