This is a roundup of the day's top stories in brief.
1. Lenders Sign Inter-Creditor Pacts To Speed Up Bad Loan Resolution
India's lenders, led by the State Bank of India, have come together to sign an inter-creditor agreement that aims to speed up the process of stressed asset resolution.
The inter-creditor agreements are part of the ‘Sashakt' resolution framework released by banks in July. The new framework puts the onus on the lead lender, who is then responsible for implementing a resolution plan in a time-bound manner. The framework also envisages the setting up of an asset management company, which raises an alternative investment fund to invest in stressed assets.
With the signing of the inter-creditor agreements, the first of the steps envisaged in the Sashakt plan is in place.
According to the agreement:
- The lead lender will submit a proposed resolution plan to an overseeing committee.
- Terms of the resolution plan will need to be approved by 66 percent of lenders.
- The resolution plan approved by majority lenders shall be final and binding.
- Relevant lenders shall take all necessary actions for implementation of the approved resolution plan within the agreed timelines.
Read more about the agreement. Meanwhile bankers say the inter-creditor agreement will be used to fast-track resolution for mid-sized stressed loan accounts.
2. It's An Extended Sale Season For Consumers
Home appliance makers and electronics retailers expect an extended boost in demand, first driven by a lower Goods and Services Tax rate and followed by the festival season.
The immediate push is expected from a 10 percent drop in the tax rate. The GST Council lowered rate on a number of appliances, including washing machines, refrigerators and vacuum cleaners, to 18 percent from 28 percent. That comes about a couple of months before India's festival season— considered auspicious to buy everything from gold, cars and appliances— kicks off in September end.
Companies will pass on the cut to consumers, Vijay Sales' Managing Partner Nilesh Gupta told BloombergQuint. “The entire consumer durables bucket will see an 8-10 percent surge in sales over the next eight months. The industry will start advertising. Everyone will be in a gung-ho mood,” he said.
Find out more about what consumer durable makers are saying. Meanwhile, hoteliers are divided over the impact of the move to levy GST on the transaction value of hotel rooms instead of the declared tariff.
3. Sensex Hits Record; U.S. Stocks Fluctuate
India's S&P BSE Sensex Index rose to a record closing high as investors cheered Prime Minister Narendra Modi's trust vote win and GST rate cut.
Sensex rose 0.61 percent or 222 points to 36,718.60 and the NSE Nifty 50 Index climbed 0.68 percent or 75 points to 11,084.75.
Rally in today's session was led by FMCG and consumer durable shares after a government panel cut GST rates on over 50 goods including refrigerators, televisions, footwear and paints etc.
All sector gauges barring the Nifty IT index ended higher led by the NSE Nifty FMCG Index's 2.46 percent gain. The mid- and small-cap shares outperformed their larger peers as the NSE Nifty Midcap 100 Index rose 1.1 percent and NSE Nifty Smallcap 100 Index advanced 0.7 percent.
Follow the day's trading action here.
U.S. stocks struggled for traction on Monday while European stocks pared a drop as investors digested warnings from the world's financial leaders about the impact of protectionism on growth. Oil climbed amid tensions between the U.S. and Iran.
The S&P 500 Index fluctuated, with tech shares declining while financials gained. Treasuries and the dollar were steady. The Stoxx Europe 600 Index edged lower after sudden changes in leadership at Fiat Chrysler hit carmakers, while travel companies declined after Ryanair posted a 20 percent decline in first-quarter profit.
Get your fix of global markets update here
4. Bajaj Auto's Low-Cost Motorcycle Push Leaves Investors Anxious
Shares of motorcycle makers have fallen amid investor worries that Bajaj Auto Ltd.'s push to gain a bigger slice of the low-cost market will increase competition and hurt industry margins.
Bajaj Auto's stock has fallen 14 percent in the last five trading sessions and Hero MotoCorp Ltd., India's largest motorcycle maker, fell 9 percent during the same period.
The maker of Bajaj CT 100 motorbike, in an analyst conference call, said it wants to take advantage of the expanding market for low-cost 100-cc bikes. The company, according to its conference call, wants to boost its share from 35 percent to 45-50 percent and is ready for aggressive pricing even if it means lower margins for next several quarters.
It's a change in strategy from the Pune-based automaker that's known to prefer protecting margins over volumes. That comes when demand from rural India is reviving after back-to-back normal monsoons.
Here's why Bajaj is willing to sacrifice margins.
5. Earnings Update: ACC, Hindustan Zinc
ACC Ltd. reported earnings ahead of analysts' estimates for the sixth straight quarter, aided by strong volume growth.
Net profit rose 1 percent from the year-ago period to Rs 325.5 crore in the April-June quarter, the cement maker said in an exchange filing today. The bottomline was aided by a 7 percent growth in volume to 7.24 MT.
Cost management measures have favourably impacted our financials, Managing Director and Chief Executive Officer Neeraj Akhoury said. "We are upbeat about developing new revenue lines and strengthening the performance in cement and ready-mix businesses," he added.
Read here on how the company fared in the quarter gone by.
Hindustan Zinc Ltd.'s profit fell short of street estimates as the cost of producing zinc rose, and a mark-to-market loss reduced investment income.
Net profit rose 1 percent from last year to Rs 1,918 crore, according to the miner's filing with the stock exchanges, lower than Rs 2,131-crore consensus forecast.
Here's a snapshot of Hindustan Zinc's first quarter performance.
6. Trump Warns Iran's Rouhani To ‘Never, Ever Threaten' The U.S.
U.S. President Donald Trump launched a new broadside against Iran, warning of unspecified “consequences” if Hassan Rouhani continues threatening America.
To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!
The threat -- similar to ones Trump issued last year in warning North Korea about its rapidly improving nuclear weapons program -- risks leading to a speedy escalation if neither side backs down. Oil rose as tensions over Iran countered growing concerns that trade protectionism would hit economic growth.
Read more about the U.S.-Iran tension.
7. Emerging Markets At Mercy Of Yuan Swings
China's yuan is back at the top of emerging-market investor worries as the deepening standoff between the U.S. and China over trade threatens to evolve into a currency battle.
As the dollar strengthens amid the trade tensions, the slide in the yuan is spurring concern that China might be embracing purposeful devaluation as a policy tool. That stoked the ire of U.S. President Donald Trump, who accused the country and the European Union of manipulating their currencies. China's foreign ministry spokesman said Monday the country has no desire to boost its exports through competitive devaluation while the nation's sound economic fundamentals are providing support to the currency.
Here's why further fall in Yuan may trigger panic.
8. What The Fed Will Signal Next Week: Mohamed El-Erian
The Federal Reserve is highly unlikely to raise rates at its policy meeting next week. The view that the event will be a snoozer, with little potential to move markets significantly, is reinforced in two ways: The semi-annual report to Congress on monetary policy by Chair Jerome Powell last week that involved comprehensive written submissions and hours of Q&A; and because the meeting on July 31 and Aug. 1 will not be accompanied by a news conference or the release of new economic and policy projections (including the “blue dots”).
Yet this sense of quiet may be too partial. Central bank officials face a series of delicate internal judgement calls about the economy and the path of both interest rates and balance-sheet policies.
Here's what El-Erian thinks the Fed has to decide on now.
9. Bad News For iPhone Fans
If you paid top dollar for the iPhone X and Apple Inc.'s other flagship smartphones expecting the fastest mobile internet speeds around, you won't like these results.
Apple's iPhone 8, iPhone 8 Plus and $1,000 iPhone X trail the latest smartphones from Samsung Electronics Co. and Alphabet Inc.'s Google in download speeds, according to data from Ookla LLC, a company that provides the most popular online service for measuring the speed of an internet connection with its Speedtest app and website.
Faster internet data means that users can load websites and start watching movies more quickly, make crisper video calls and get higher-quality video. As smartphones start to look more like each other, handset makers are trying to tout under-the-cover hardware features. Samsung has marketed the issue against Apple with commercials highlighting the faster mobile internet speeds in its recent TV ad push.
Here's how they stack up
10. James Bond's Legacy Is Saving Jamaica
In 1949, Ian Fleming bought a blank naturalist's notebook which he grandly labeled “Sea Fauna or the Finny Tribe of Goldeneye.” Bound in leather and its title embossed in gold, he took it with him when he departed London for his beloved Jamaica, where he would immerse himself in the island's natural beauty and dive among its plentiful barracudas. He called two of the larger specimens Bicester and Beaufort, similar to creatures seen in “Thunderball,” one of a dozen novels he would later write about a certain British spy.
Sixty years on, the pristine Jamaica of James Bond's creator is in danger. Overfishing has imperiled the barracuda's habitat: Fewer algae-eating fish spurs coral die-off, and the practice of fishing with dynamite has had catastrophic effects. But over the past seven years, a former record company executive has slowly built a network of conservationists to help protect the ecosystem near Fleming's home, dubbed Goldeneye, creating a template for others in the process.
Chris Blackwell, 81, founded Island Records and launched Bob Marley's career, among others. He's the son of Blanche Lindo, Fleming's close friend, and he now owns Island Outpost, a chain of boutique luxury, nature-oriented resorts. Its gem is GoldenEye, where guests can rent the original Fleming villa near the village of Oracabessa (“GoldenEye” is also the name of a 1995 Bond film). The Oracabessa Foundation, which operates as the headquarters of Blackwell's conservation efforts, is located there.
Find more on how Bond's birthplace is helping save the Caribbean.
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