BQuick On Dec. 5: Top 10 Stories In Under 10 Minutes  

This is a roundup of the day's top stories in brief.

1. Moody's Downgrades Yes Bank

Moody's Investors Service downgraded Yes Bank Ltd.'s long-term foreign currency issuer rating to ‘B2' from ‘Ba3', bringing it down by two notches.

• The outlook for the bank has been retained at negative, Moody's said.
• It had put the bank's rating on review last month.
• The rating agency has also downgraded the bank's long-term foreign and local currency bank deposit ratings, foreign currency senior unsecured medium-term note program rating and baseline credit assessment.
• The downgrade takes into account the pool of bank's stressed assets and low loss-absorbing buffers for those assets.

Moody's also said that the lender's capital will come under considerable pressure.

2. MPC's Surprise And The Cost Of Inflation Targetting

India's Monetary Policy Committee decided to keep interest rates unchanged, pausing a rate-cutting cycle that began in February.

• The committee, however, said that its monetary policy stance remains “accommodative as long as it is necessary to revive growth while ensuring that inflation remains within the target”.
• The committee cut its growth forecast for FY20 to 5 percent from 6.1 percent and raised its inflation forecast for the second half of the year to 4.7-5.1 percent.

Read the key highlights of the surprise MPC decisions where the committee explains why it chose to keep rates still.

The MPC was forced to pause its interest rate cutting cycle, despite lagging growth, due the inflation targeting mandate it has been giving, argues Ira Dugal.

• The framework has brought greater predictability to inflation and interest rates in India.
• But in turn, it has reduced the flexibility that the central bank enjoyed for decades to toggle with its priorities based on the most pressing needs of the economy.
• On Thursday, the MPC paid the price for the loss of that flexibility.

Could the committee then have looked through inflation and chosen to focus on growth?

3. Monitoring NBFCs, Higher P2P Lending And Tighter Rules For Cooperative Banks

Reserve Bank of India Governor Shaktikanta Das on Thursday said the regulator is fully cognizant of the situation across non-bank lenders and is closely monitoring the 50 largest companies that represent 75 percent of the sector.

• While the RBI has not yielded to calls for an asset quality review, Governor Das said that the regulator is keeping close watch.
• Das added that management and promoters of these NBFCs are asked to report to the RBI at periodic intervals where discussions are held about the companies' current status.

The central bank is also monitoring their liquidity position.

India's central bank has raised the lending cap for peer-to-peer platforms fivefold, providing a boost to such lending.

• The aggregate exposure of a lender to all borrowers at any point of time, across all non-banking financial company-peer-to-peer platforms, will be capped at Rs 50 lakh against Rs 10 lakh at present, the Reserve Bank of India said in a statement on Developmental and Regulatory Policies issued on Dec. 5.
• The cap on exposure of a single borrower, however, remains at Rs 50,000 across all NBFC peer-to-peer platforms.

This will enable peer-to-peer platforms to serve more customers and borrowers.

The RBI has decided to tighten exposure norms for urban cooperative banks to protect the interest of depositors. The decision follows the collapse of Punjab & Maharashtra Cooperative Bank, which had loaned a large part of its funds to one corporate house.

• The regulator will amend norms for exposure limits, according to the RBI's ‘Statement on Developmental and Regulatory Policies.'
• These would primarily relate to single and group or interconnected borrowers, the RBI said.

The central bank will shortly issue draft guidelines.

4. Nifty Ends Volatile Day In Red

Indian equity benchmarks ended lower after a topsy-turvy session, following a surprise pause by the Monetary Policy Committee.

• The S&P BSE Sensex fell 0.17 percent to end at 40,779.59
• The NSE Nifty 50 fell 0.21 percent to close at 12,018.40.
• The broader markets represented by the NSE Nifty 500 Index fell 0.25 percent.

Follow the day's trading action here.

The bond markets did not enjoy the MPC's decision either. Sovereign bonds declined the most in more than two months.

• “This signals that RBI's appetite for easing has nearly sapped as the aggressive easing earlier in the year bore no fruit,” said Prakash Sakpal, an economist at ING Groep NV economist in Singapore.

Read more about the bond market reaction here.

Stocks were mixed as investors weighed the chances that the U.S. will scrap a tariff hike on Chinese goods scheduled for Dec. 15. Bonds fell.

• The S&P 500 Index edged higher after a sell-off sparked by a spike in trade tensions.
• Treasury 10-year yields climbed above 1.8 percent as data showed U.S. jobless claims unexpectedly dropped to a seven-month low, signaling resilience in the labor market ahead of Friday's jobs report.
• Oil advanced as OPEC ministers gather in Vienna to discuss output cuts.

Get your daily fix of global markets here.

5. A Merger To Solve The PMC Bank Crisis?

The Maharashtra government has suggested a merger of Punjab & Maharashtra Cooperative Bank with the Maharashtra State Cooperative Bank in a bid a provide relief to depositors of the troubled lender, state minister Jayant Patil said.

• If needed, the state government will speak to the RBI on the issue of merger of the MSC and PMC banks, he said.
• “I spoke to the MSC Bank chairman day before yesterday. We have suggested to MSC Bank that they should try to merge PMC Bank with it so that the poorest of its depositors get relief,” Patil told reporters.

Patil said that MSC Bank's health is good and there should be no problem in case PMC Bank is merged with it.

6. Allcargo-Gati Deal Is Done

Allcargo Logistics Ltd.'s board has approved acquisition of 19.43 percent stake in Gati Ltd., effectively taking over management control of the Hyderabad-based supply chain solutions company.

• Allcargo Logistics will acquire the stake for Rs 177.9 crore via equity and preference shares, according to its exchange filing.
• The container freight stations operator also announced an open offer for acquisition of up to 3.17 crore shares, which represent 26 percent of the paid-up voting share capital, to comply with the SEBI's norms.
• The acquisition, expected to be completed by March 30 next year, is subject to approval from shareholders and other authorities, it said.

Bloomberg News first reported the deal in September this year.

7. Flipkart Dips Into Its Wallet Again To Take On Amazon

Walmart-owned Flipkart led a $60 million funding round in logistics startup Shadowfax as the e-commerce firm plans to strengthen its delivery service and take on Amazon Prime.

• The deal will give Flipkart “a significant minority stake” in the company, Abhishek Bansal, co-founder of Shadowfax, told BloombergQuint over the phone.
• Existing investors, including NGP Capital, Qualcomm Ventures, Mirae Asset Financial Group, Eight Roads Ventures, the investment arm of Fidelity International, and World Bank-backed International Finance Corporation participated in the Shadowfax funding round.
• This is the third investment by Flipkart in a logistics startup. The online retail giant has backed business-to-business logistics firm Blackbuck and locker service provider, QikPod. Besides, the e-commerce firm has its own supply chain subsidiary, Ekart.

The investment comes ahead of Flipkart's launch of a two-hour delivery of groceries.

8. Key Oil Benchmark Falls To 10-Year Low

The Singapore gross refining margin, a benchmark of profitability for crude refiners, dropped to its lowest in 40 quarters as the global economy slows and demand for high-sulfur oil fell with the shipping industry switching to cleaner fuel.

• The Asian benchmark—a measure of how much a refiner makes by turning a barrel of crude into finished products—has averaged around $2.6 a barrel in the ongoing October-December quarter, down 60 percent over the previous three months, according to data compiled by BloombergQuint.
• That's the lowest since the third quarter of 2009-10.
• The benchmark turned negative in the last two weeks, probably for the first time ever, due to a sharp decline in margins on fuel oil used by ships.

Here's why GRMs dropped as opposed to what most analysts had forecast.

9. Justice Arun Mishra Apologises For Threatning Lawyer With Contempt

Supreme Court Justice Arun Mishra apologised for any offence parted, after a group of Supreme Court lawyers criticised the judge for threatening a lawyer of contempt while arguing a land acquisition matter two days ago.

• Senior advocates - led by Kapil Sibal, Mukul Rohatgi, Abhishek Singhvi and Supreme Court Bar Association President Rakesh Khanna - requested Justice Arun Mishra on Thursday to be patient in dealing with lawyers.
• They mentioned this issue as soon as a bench of Justices Arun Mishra and MR Shah assembled in court number 3 for the day's proceedings.
• The issue has cropped up as Justice Mishra, who is heading a five-judge constitution bench hearing land acquisition matters, had warned senior advocate Gopal Sankaranarayanan on Tuesday of contempt while he was advancing his arguments in the matter.

Mishra said he respects the bar more than any other judge and apologised.

10. The New Entrant That's Shaking Up The SUV Market

At a time India's carmakers are grappling with the worst auto slowdown in two decades, Kia Motors Corporation is having a dream debut.

• In just four months, the South Korean company has sold more utility vehicles than rivals with its first India product, the Seltos SUV, being a runaway success.
• Combined with the volumes of parent Hyundai Motor India Pvt. Ltd., the group is now the nation's No.1 maker of sports- and multi-utility vehicles—ahead of the largest carmaker Maruti Suzuki India Ltd.—as Indians now look for roomier cars.
• The Seltos SUV's launch couldn't have come at a worse time, when Indians are buying fewer cars as incomes stagnate in a slowing economy.
• But Kia Motors defied the gloom.

So why is Seltos standing out in an already crowded SUV market?

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