Business Live: Sensex scales 42K, Nifty at record high  01/16/2020 08:29:55  5

The Nifty and the Sensex have opened the day with some marginal gains. The Sensex breached the 42,000 mark briefly before dropping below. Both indices have largely been trading flat this week. Bond yields have dropped marginally this morning after rising the past few days amidst inflation worries.

Room is limited for further RRR cuts in China: PBoC official

China's reserve requirement ratio (RRR) is at appropriate level and there is limited room for further cuts, a central bank official said on Thursday.

China will make timely adjustments to benchmark deposit rates, and should pay more attention to changes in real interest rates when discussing whether to cut interest rates, Sun Guofeng, head of monetary policy department of the People's Bank of China told a news briefing in Beijing.

Real interest rates have been falling significantly and funding costs for small firms also declining, Sun added.

The PBOC has cut RRR eight times since early 2018, including one earlier this month, to help shore up the cooling economy. Analysts have forecast more this year. Reuters

Exim Bank to raise up to $3 billion from overseas borrowings in FY21

The Export-Import Bank of India (Exim Bank) is looking to raise up to USD 3 billion (about Rs 21,000 crore)from overseas borrowing in next financial year (2020-21), a top official said.

The bank has raised USD 1.7 billion (about Rs 11,900 crore) of overseas borrowing through bond issuances and foreign loans in current financial year.

As a going concern, not only I have to refinance my borrowing but I also need to have fresh borrowings for new business to come up. For any typical year, our gross borrowing requirement is USD 1.5-3 billion. The next fiscal also it is expected to be up to USD 3 billion, Exim Bank Managing Director David Rasquinha said.

He was speaking to reporters after listing of the banks recently raised USD 1 billion bond on India International Exchange (India INX) platform.

On January 6, the bank raised USD 1 billion through a 10-year 144A/Reg S bond, priced at CT10+150 basis points.

This was the third such issuance of 144A/Reg S bond by the bank under its USD 10 billion global medium term notes (GMTN) programme. PTI

SC stays HC order allowing shifting of HDIL promoters from jail to their residence

The Supreme Court on Thursday partially stayed the Bombay High Court order allowing shifting of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, accused in the multi-crore Punjab & Maharashtra Cooperative (PMC) Bank scam case, from Mumbais Arthur Road Jail to their residence.

A bench comprising Chief Justice S A Bobde and justices B R Gavai and Surya Kant took note of the submissions of Solicitor General Tushar Mehta that the high court order to the extent of allowing their release from prison needed to be stayed.

The law officer said the other aspect of the high court order such as sale of assets of the accused promoters under the supervision of high court appointed committee should be allowed to remain operative and the sole objection was with regard to their release from Arthur Road Jail.

The top court agreed with the submissions. PTI

PMC Bank scam: SC to hear today plea against HC order directing shifting of HDIL promoters from jail

The Supreme Court on Thursday agreed to hear a plea filed by the ED and Economic Offence Wing challenging the Bombay High Court order directing shifting of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, arrested for their alleged involvement in the PMC bank scam, from Mumbais Arthur Road Jail to their residence.

Solicitor General Tushar Mehta mentioned the matter before a bench headed by Chief Justice S A Bobde and said the Punjab and Maharashtra Cooperative (PMC) bank scam involved Rs 7000 crore and the high court had on Wednesday passed a very unusual order while hearing a public interest litigation (PIL).

Mehta told the bench, also comprising justices B R Gavai and Surya Kant, that the father-son are presently lodged under Arthur Road jail in judicial custody and if they are shifted to their residence as per the high courts order, it would be like bail to them.

The high court had on Wednesday set up a three-member committee for valuating and sale of encumbered assets of Housing Development and Infrastructure Limited (HDIL) to expeditiously recover dues payable by her firm to PMC bank.

The high court had directed the superintendent of Arthur Road jail to shift both the accused to their residence under the supervision of two jail guards to ensure their cooperation to the committee.

The high court had passed the order while hearing a PIL seeking direction for expeditious disposal of HDIL assets and properties attached by the Economic Offence Wing and the Enforcement Directorate and repaying PMC bank depositors at the earliest.

The fraud at PMC Bank came to light in September last year after the Reserve Bank of India discovered that the bank had allegedly created fictitious accounts to hide over Rs 4,355 crore of loans extended to almost-bankrupt HDIL. PTI

Sundaram Finance to sell entire 10% stake in Equifax Credit lnformation

Non Banking Finance Company Sundaram Finance Ltd on Thursday said it will sell its entire 10 per cent equity in credit information firm Equifax Credit lnformation Services Pvt Ltd, a move that will fetch the company around Rs. 91 crore.

Both the companies have executed an agreement to this effect.

Sundaram Finance Ltd (SFL) has executed a share purchase agreement for sale of its entire equity stake of 10 per cent in Equifax Credit lnformation Services Pvt Ltd, the company said in a regulatory filing.

Sundaram Finance holds 10 per cent of equity or 1,35,00,000 equity shares in Equifax Credit lnformation Services Pvt Ltd.

The company said Rs 67.43 is the price at which the shares will be divested, which will be increased by 2.2 per cent per annum for the period from October 2019 till the date of Closing (assuming closing occurs prior to March 31, 2020).

At this price Sundaram Finance will fetch around Rs. 91 crore.

The transaction is expected to be completed by the fourth quarter of this financial year. PTI

Rising sea levels threaten sovereign credit ratings: Moody's

Economic shocks stemming from rising sea levels pose a long-term risk to the sovereign credit ratings of dozens of countries which have large areas at risk of submersion, including Vietnam, Egypt, Suriname and the Bahamas, Moody's said on Thursday.

Climate science suggests that sea levels will continue to rise for decades, contributing to increasingly frequent natural disasters such as storm surges, floods and cyclones, the credit rating agency said in a report.

The economic and social repercussions of lost income, damage to assets, a loss of life, health issues and forced migration from the sudden events related to sea level rise are immediate, Moody's said.

Vulnerability to extreme events related to sea level rise can also undermine investment.

Farming, tourism and trade are all threatened by rising sea levels, especially in countries with a large proportion of land and people at risk of submersion, including island states like the Philippines, Fiji and the Maldives.

While high-income economies, such as Japan and the Netherlands, are also exposed, they have countermeasures in place that mean their credit ratings are unlikely to be materially impacted, Moody's said. Reuters

Markets eye improved transparency in Budget

Indian financial market will look for improved transparency in the Union Budget announcements next month, according to a report by Singapore banking group DBS.

Any reduction in the fiscal deficit could result in a negative credit impulse in the near-term, but will need to be balanced with a credible consolidation plan further-out, according to the the banks research report India Budget Preview: Loosening the purse released on Thursday.

The report noted that fiscal deficit in the first eight months of FY20, stood at 15 per cent above target, driven by weak revenues.

At an aggregate level, expenditure has been in line with the budget trend. The fiscal tear-to-date (FYTD) deficit overshoot is not out of sync with past trends, it added.

This is because, typically, the fiscal run-rate worsens for three-fourths of the year and then moderates in the final quarter as expenditure is scaled back and seasonal revenue flows kick-in, wrote DBS economist Radhika Rao. PTI

Asia's dollar bond issuance off to record start in 2020

U.S. dollar bond issuance in Asia hit a record high in the first two weeks of 2020, data showed, as companies and governments took advantage of low interest rates to shore up capital.

China's Evergrande, the mainland's third-largest property developer, was the latest to tap investors on Thursday when it launched a deal to raise up to $2 billion to help repay other bonds coming due this year.

In Asia excluding Japan, offshore borrowers have raised $29.15 billion through 52 deals since Jan. 1 - a record for the period, according to data from Dealogic. The data does not include Evergrande's deal which is yet to price.

Companies typically rush to market in January, seeking to tap investors with fresh mandates.

This year's deal flow is a continuation of a trend that started in the fourth quarter last year with the market benefiting from forecasts of greater stability in U.S. interest rates and a pause in the escalation of trade tensions between the U.S. and China, said Andrew Heathcote, Freshfields Bruckhaus Deringer's head of Asian debt capital markets.

In 2019, during the same time period, $12.5 billion was raised in 33 deals, the data showed.

So far this year Chinese companies have accounted for $17.72 billion over 34 deals - more than half of the total.

Indonesia's government did the largest deal, raising $3.1 billion, followed by a $2 billion offering from Asian Development Bank, according to Dealogic. Reuters

Sensex crosses 42K for first time ever; Nifty hits record high

Market benchmark Sensex on Thursday scaled the 42,000 mark for the first time ever and Nifty hit its record peak in opening session tracking positive cues from global equities after the US and China signed an initial trade deal.

After hitting a record peak of 42,009.94, the 30-share BSE index was trading 127.65 points or 0.30 per cent higher at 42,000.38.

Similarly, the broader NSE Nifty scaled a lifetime intra-day high of 12,377.80. It was trading 28.45 points or 0.23 per cent higher at 12,371.75.

Sun Pharma was the top gainer, rising 1.30 per cent, followed by Nestle India, HUL, Kotak Bank, UltraTech Cement, Bajaj Auto and Bharti Airtel.

On the other hand, IndusInd Bank, Tata Steel, NTPC, Titan, Mahindra and Mahindra, Tech Mahindra, ONGC and Asian Paints were trading in the red.

According to traders, global stocks rallied as investors heaved a sigh of relief after the US and China on Wednesday signed the first phase of a trade deal, concluding more than a year of tough negotiations between the two largest economies of the world. PTI

India plans new law to protect foreign investment

India is planning a new law to safeguard foreign investment by speeding up dispute resolution, aiming to attract more capital from overseas to boost stuttering domestic growth, two officials with direct knowledge of the matter told Reuters.

In a 40-page initial draft, India's finance ministry has proposed appointing a mediator and setting up fast-track courts to settle disputes between investors and the government, one of the sources said.

The idea is to attract and promote foreign investment, but a major issue for investors is enforcement of contracts and speedy dispute resolution, said the official.

The draft proposal is aimed at diffusing investor mistrust around the sanctity of agreements, which has worsened recently after some state governments decided to review approved projects, or threatened to cancel contracts.

Both officials declined to be named as the proposal is not public, and is still being assessed by different ministries and regulators.

A spokesman for the finance ministry did not respond to a request for comment.

Foreign investors have highlighted the enforcement of contracts as one of their biggest concerns, said the second official, adding that improving on this front would also reduce litigation for the government.

While investors can still rely on the existing legal system to settle disputes, it often takes several years for cases to be decided or settled. Reuters

India's 2019 electricity demand rise smallest in six years

India's annual electricity demand in 2019 grew at its slowest pace in six years with December marking a fifth straight month of decline, government data showed.

Power demand rose 1.1% in 2019, the smallest rise since 2013, data compiled by the Central Electricity Authority showed.

December demand for electricity fell to 100.81 billion units from 101.28 billion a year earlier, representing a fifth consecutive month of decline. Reuters

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