Here is a roundup of the day’s top stories in brief.
1. From Yes Bank To Lakshmi Vilas Bank, Lessons From Bank Failures
While bank failures are neither new nor unique to India, the quick succession in which we have seen lenders of material size fall is worrying, writes Ira Dugal.
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Over the last two years or so, we have seen IL&FS, DHFL, Yes Bank, PMC Bank, and now Lakshmi Vilas Bank go under.
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IDBI Bank, which was thought to be on the brink, was saved via an infusion of capital by LIC.
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If you exclude IDBI, lenders with a cumulative asset size of about Rs 5.5 lakh crore have gone under since 2018.
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These cases, together and separately, throw up some important lessons for the Reserve Bank of India and the country’s financial sector.
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A stressed lender paves the way for DBS Bank’s India ambitions.
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This time, India is getting a bank rescue right.
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India’s latest bank rescue lays out more creditor-friendly path.
2. Pfizer, BioNTech Vaccine Proves 95% Effective
Pfizer Inc. said a final analysis of clinical-trial data showed its Covid-19 vaccine was 95% effective, paving the way for the company to apply for the first U.S. regulatory authorization for a coronavirus shot within days.
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The U.S. drugmaker and partner BioNTech SE said their vaccine protected people of all ages and ethnicities, with no significant safety problems so far in a trial that includes almost 44,000 participants.
The update is the latest in a string of promising developments on the vaccine front in recent days.
Also Read: India Covid Tally Tops 89 Lakh With Over 38,000 New Cases
3. Vaccine Distribution: Two Key Challenges
While at least three potential Covid-19 vaccines have shown encouraging trial results, Snowman Logistics Ltd. sees two key hurdles.
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“The challenge that we have at hand is not only of the vaccine, but logistics is going to be quite complex,” Sunil Nair, chief executive at the cold-storage service provider, told BloombergQuint in an interview.
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Two things are very critical: the volume to be distributed and the time constraint to provide the shots, he said.
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Nair said India is prepared to face the challenge, provided there is clarity on the volume and timelines, and with private players pitching in.
The company wants to be part of the government’s immunisation programme and distribution process.
Also Read: Will Covid-19 Vaccines Be The Gift Of 2021?
4. Nifty Stone’s Throw Away From 13,000; Bitcoin Breaches 18,000
Indian stocks ended the day with gains after a volatile trading session as investors continued to snap up shares on expectations of a domestic economic recovery.
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The S&P BSE Sensex closed up 0.5% at 44,180.05 after falling as much as 0.4%, while the NSE Nifty 50 Index also climbed by a similar magnitude.
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Both gauges closed at all-time highs.
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Sensex is trading at a 12-month price-to-estimated earnings multiple of about 22 times — a record high and more than two standard deviations higher than its 10-year average.
Follow the day’s trading action here.
U.S. stocks were mixed as investors weighed signs that scientists are making fast progress toward a coronavirus vaccine with news of fresh restrictions to curtail the spread.
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The S&P 500 Index fluctuated between small gains and losses.
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The dollar neared its lowest level in almost two years before paring losses.
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Bitcoin surged past $18,000 for the first time since December 2017 before paring the advance.
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West Texas Intermediate crude gained 1.2% to $41.94 a barrel.
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5. Repaying DHFL’s Depositors, Bond Holders
Financial creditors to Dewan Housing Finance Corporation Ltd. are considering an option where retail depositors and small investors in non-convertible debentures can have their principal dues settled in full.
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According to two people with direct knowledge of the matter, creditors led by State Bank of India have proposed that about 5% of the proceeds from DHFL’s resolution process can be set aside for such a settlement plan.
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The amount which is set aside by the creditors can be used to settle principal dues of retail depositors and small non-convertible debenture holders up to Rs 5 lakh, the two people said.
This could cover nearly 90% of these retail depositors and bondholders. More details here.
6. BPCL’s New Suitor
Vedanta Group on Wednesday confirmed putting in an expression of interest for buying government’s stake in Bharat Petroleum Corp.
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Vedanta’s interest in India’s second-largest fuel retailer is because of synergies with its existing oil and gas business.
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The expression of interest is at a preliminary stage and exploratory in nature, Vedanta said.
Read more here.
7. Howard Marks Turns Cautious Again
Howard Marks, the dean of distressed-debt investing who turned bullish within days of the sector’s 2020 low, is back to a cautious stance now that the ensuing rally has whittled attractive targets down to pre-pandemic levels.
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“When the level of optimism is high, there is usually more room for disappointment,” Marks, the co-founder of Oaktree Capital Group, said in a Tuesday telephone interview.
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“The main way to achieve high returns in a low-return world is through taking increased risk. And I don’t think this is the climate to take more risk,” he said.
While Marks still believes there is no point in timing the market, he has doubts about the wisdom of buying at current prices.
Also Read: Oaktree, Apollo Lead Giants Betting on Stressed India Assets
8. India’s Hottest Internet Stock
As optimism about a coronavirus vaccine drives a shift away from technology shares, one such stock in India keeps rallying as market watchers bet its investments in startups will start to pay off.
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Info Edge India Ltd. climbed to a record on Wednesday and is the top gainer this month on the National Stock Exchange’s 10-member IT index.
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The stock’s 188.7% surge over the past two years has it trading at more than 12 times analysts’ 12-month forward estimated earnings, data compiled by Bloomberg show.
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The company’s quarterly profit and revenue missed analysts’ forecasts and there are concerns that it may be overvalued.
Still, that skepticism hasn’t stopped the stock’s advance.
9. Boeing’s 737 Max Gets Green Light To Fly Again
Boeing Co.’s 737 Max can safely return to the skies with an extensive package of fixes, U.S. regulators ruled, after a scarring 20-month hiatus prompted by a pair of fatal crashes.
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The actions, which the Federal Aviation Administration began to post on its website Wednesday, mark the end to the longest grounding of a jetliner in U.S. history and set the stage for airlines and other regulators around the world to resume passenger service with the plane.
SpiceJet Ltd. is one of the world’s biggest customers for the 737 Max jets.
10. Pizzas Vs Burgers
Indians ordered more pizzas than burgers during the pandemic even as Asia’s third-largest economy gradually reopened businesses after one of the strictest Covid-19 lockdowns in the world.
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At least that’s what earnings of Domino’s and McDonald’s for July-September suggest.
Jubilant Foodworks Ltd., the operator of Domino’s Pizza chain in India, saw its same-store sales contract 20% over a year earlier in the quarter ended September, according to its filing. -
That compares with a 40% contraction for Westlife Development Ltd., the operator of McDonald’s outlets in the south and west India.
Demand, however, was driven by online orders.
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