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New Moon at ICICI, ZEE5 Goes Global et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 4, 2018 1:00 PM 3 min read
Editorial

Good evening reader,

 

Mr. Urjit Patel and Co. kicked off RBI's latest monetary policy review yesterday. Scheduled to decide whether short-term interest rates will go up, down, or stay same, this time's bi-monthly ritual would be different.

 

Consumer inflation calmed down at 3.69% (within RBI's target range of 4% plus or minus 2%) in August, thereby requiring no change solely based on its traditional driver. However, one mustn't forget that Central Bankers make their big bucks (pun intended) not for thinking about the past, but what's expected in the future.

 

External factors such as a weakening Rupee (which hit c. INR74 to the Dollar today), falling markets (Sensex -2.24% and Nifty 50 down -2.39% in the last 2 days) and a painfully continued rise in crude oil prices ($85/bbl the last time we checked), which would spike future inflation, are acting as headwinds.

 

RBI is hence in a difficult place with pressure to increase rates due to external factors in an economy, which cannot really be accused of "overheating". Though the government has recently thrown in measures to control currency flows (ECB allowances for Oil Marketing Companies, import duties etc.), better optics would warrant something rather 'decisive' (code for rate hike).

 

Here are today's Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

ICICI Bank MD & CEO Chanda Kochhar resigns with immediate effect.

Chanda Kochhar quit as ICICI Bank’s MD & CEO today, after the Board of Directors accepted her request for an early retirement. She will no longer hold a seat on the Bank Board as well as its subsidiaries. Sandeep Bakshi, Head of ICICI Prudential Life Insurance, has been appointed MD and CEO for a period of five years, starting 3rd October 2018. ICICI Bank’s stock climbed 4% after the announcement.

 

RBI allows Oil Marketing Companies to raise USD from overseas markets to stabilize INR.

Reserve Bank of India has allowed Oil Marketing Companies (OMCs) to raise up to $10bn in the form of External Commercial Borrowings (ECBs) without any hedging requirements. This move comes after INR dropped to 73 against USD. The government also announced a cut in price of Petrol and Diesel by INR2.5.

 

Sensex falls 806pts; Nifty dips 259pts as Rupee weakens further.

Sensex and Nifty closed at 35,169.16 (-2.24%) and 10,599.25 (-2.39%) respectively, after INR breached the 73-mark yesterday. This is the largest drop the Sensex has seen since February.

 

Zee Entertainment launches in 190 countries with digital platform, ZEE5.

Zee Entertainment Enterprises Ltd introduces over-the-top (OTT) streaming services in 190 countries, with their new digital platform ZEE5. The platform will be available on Android, iOS and web format. Company CEO stated that their revenue model would depend on the specific market.

 

US/INTERNATIONAL

 

Barnes & Noble explores sale options.

US-based bookseller, Barnes & Noble in a statement announced that multiple parties have expressed interest in acquiring the company. In a report, store sales in the fiscal year were reported 5.4% lower than last year, on back of declining sales since 2014, unable to compete with online sellers like Amazon.

 

China to sell $3bn in USD bonds amidst trade tensions with US.

In a move to lure foreign investors, China plans to sell $3bn in USD bonds this month, to calm turbulence in its stock market. Shanghai Composite Index has been down 15% since year beginning. This USD-bond sale would be China’s second within a year, if successful.

 

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