Here is a roundup of the day’s top stories in brief.
1. Lakshmi Vilas Bank Shareholders Denied Interim Relief
The Bombay High Court has denied interim relief to the shareholders of Lakshmi Vilas Bank Ltd. who had sought a stay on the lender’s merger with the Indian subsidiary of Singapore’s DBS Bank Ltd.
- The bank’s shareholders approached the court challenging the merger on various grounds, including cancellation of their existing shares in the bank.
- Indiabulls Housing Finance also challenged certain aspects of the scheme floated by the Reserve Bank of India.
- The high court will later pass a detailed order giving reasons for rejecting the interim relief, it said.
- Counsel for the shareholders alleged that DBS Bank India had been given a “free gift” under the scheme.
Here are the key arguments made by both parties before Bombay High Court.
2. Laurus Labs’ Finds ‘Fourth Lever Of Growth’
Pharmaceutical ingredients maker Laurus Labs Ltd. has found its “fourth lever of growth” in the biotech space, according to Chief Executive Officer Satyanarayana Chava, and its most recent acquisition will fast-track this ambition.
- “The gestation period to enter the biotech space is a 6-7 years,” he told Bloomberg Quint’s Menaka Doshi in an interview. “Our idea is to cut down this gestation period significantly by making an acquisition.”
- On Nov. 26, Laurus Labs closed a Rs 250-crore deal to acquire a majority stake in Richcore Lifesciences, marking its entry into the biotech space. It currently has three divisions: active pharmaceutical ingredients, formulations and synthesis.
Chava expects a significant return from the investment to come from Richcore’s contract manufacturing. More details here.
3. Nielsen Cuts India’s FMCG Growth Forecast, Again
India’s FMCG sector is expected to contract more than expected in 2020, owing to the lingering effects of the Covid-19 lockdown in the April-June quarter, Nielsen India said.
- The market researcher has cut the growth forecast for India’s consumer goods makers to -3% to -1% from the earlier projection of -1% to 1%.
- This is the third time Nielsen India has made a downward revision to the consumer sector’s outlook this year.
- At the start of 2020, the forecast was pegged at 9-10%, which was later revised to 5-6% and then to -1 to 1%.
Consumption was partly aided by rural demand. Still, that may not have aided recovery for the full year.
4. Nifty’s Second Best F&O Series Of 2020
Indian equity markets saw a sharp surge in the final hour of trading to end the November F&O expiry session on a strong note.
- The S&P BSE Sensex ended 1% higher at 44,259 points while NSE Nifty 50 index recovered over 200 points from the day’s low to end just below the 13,000-mark.
- For the November Series, the Sensex ended with gains of 11.7% while the Nifty ended 11.5% higher. Out of the 20 sessions this series, the Nifty gained in 16 of them—the best since April F&O Series.
Follow the day’s trading action here.
- Bajaj Auto ends at nine-month high on bullish Morgan Stanley commentary.
- Siemens shares end at 10-month high on September quarter earnings beat.
- Astral Poly shares hit record high on new business foray, expansion plans.
- ICICI Lombard shares end at record high on improving growth outlook.
5. Why Short-Term Rates Are Crashing In India
A glut of cash-chasing assets in India has caused short-term rates to plunge.
- A three-month treasury bill was sold at a record low yield on Wednesday, while the market repo clocked a trade at 0.01%.
- Key borrowing costs like the weighted interbank call rate and collateralized money-market rates are way below the Reserve Bank of India’s benchmark in recent days, indicating investors such as mutual funds are accepting returns lower than what RBI’s deposit window would offer banks.
- A liquidity bloat is coming from RBI’s intervention in the foreign currency market, as it seeks to rein in the rupee and keep exports competitive.
Here’s what the RBI may have to do to suck out this liquidity.
6. How India’s Exit From Asian Trade Bloc Backfired
India’s key manufacturing exports may lose market share to China-backed Asian trade bloc, from which Prime Minister Narendra Modi walked away last year to protect the interests of local farmers and industry.
- Some of India’s top 10 exports—such as engineering goods, chemicals, pharma, and electronics—face erosion in market share on account of lower tariffs that members of the 15-nation Regional Comprehensive Economic Partnership enjoy for trading among themselves, according to economists.
- To put things in perspective, engineering products alone account for a quarter of the nation’s merchandise exports.
- Since Modi pulled out of RCEP, things have downhill for the economy. For India, the withdrawal will result in a loss of 1.2% of the nation’s projected GDP in 2030.
Is it time for India to re-think joining such multilateral trade pacts?
7. Worries Over Default Push Vedanta To Approach Bondholders
Vedanta Resources Ltd. has begun sounding out debt holders about the possibility of extending maturities on some of its dollar bonds to reduce refinancing pressures.
- The mining compnay started approaching the investors to discuss possible debt repayment extensions after the its failed attempt to delist its India unit, Vedanta Ltd., people familiar with the matter said.
- “We would like to clarify that Vedanta Resources is not in talks with any bondholder for debt tenure extension,” a spokesman for Vedanta said in a statement, after the Bloomberg story was published. The spokesman had earlier declined to comment.
Pressure is mounting at Vedanta after a flopped delisting attempt amid rising warnings from credit-rating firms.
8. Capital Account Convertibility A Process, Rather Than An Event: Das
India will continue to approach capital account convertibility as a process rather an event, Reserve Bank of India Governor Shaktikanta Das said on Thursday.
- The central banker said that the capital account is convertible to a great extent at present and enumerated the specifics on both inward and outward flows which are allowed.
- It can be noted that capital account convertibility is a very sensitive subject as it deals with liberalisation of capital transactions into and out of a country.
- India, which started opening up on this front with the reforms of the early 1990s, is partially convertible right now with caps and other restrictions.
Read more to see what Das had to say about foreign capital inflows and internationalisation of markets.
9. Over 25 Crore Workers Protest New Labour, Farm Laws
Kerala, Puducherry, Odisha, Assam and Telangana witnessed complete shutdown and normal life was affected in many other states as over 25 crore workers participated in a nationwide strike against new labour and farm laws, according to central trade unions.
- The day-long countrywide strike has been called by a joint platform of 10 central trade unions to protest against the central government’s new farm and labour laws, among other workers-related issues, as well as to raise various demands.
- Various independent federations and associations are also part of the platform.
Demonstrations in defiance of the new laws have swept across states despite police restrictions.
Farmers Marching To Delhi…
Farmers from Punjab faced water cannons and broke police barriers at the Haryana border as they pushed towards the national capital Thursday in their ‘Delhi Chalo’ march against the Centre’s farm laws.
- Haryana Police used trucks to block farmers’ tractor-trolleys—some of them laden with food—on the Amritsar-Delhi highway.
- There were also demonstrations at Delhi’s border with Ghaziabad in Uttar Pradesh, and traffic jams at the Gurugram border.
- Farmer bodies said they will hold a dharna wherever they are stopped from moving towards the national capital.
Follow all updates on the farmers’ march here.
10. Trump-Bump, Troll Factories And Lessons For Indian News Media
If we have learned anything from the news nightmares of the last four years in the U.S., it is that alternate news media doesn’t sound the death knell of journalism with integrity, writes Parry Ravindranathan.
- The media has been split along partisan lines for some time and both sides of the aisle have benefitted hugely from it.
- You have several instances today where a set of media will interpret a story or even economic data in completely opposing ways.
- Credible news media organisations will need to evolve from being stuck in a vicious news cycle generated by any one character.
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