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DHFL Share Price Tanks After It Misses Interest Payment, New Draft National Education Policy to be a Game Changer for Nurses and Other Top Business News Today

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jun 5, 2019 12:48 PM 3 min read

Global growth to slow down in 2019, Forecasts for India through 2021 intact, says World Bank. DHFL misses interest payment, exposed Mutual Funds suffer. Fed Governor hints towards Rate Cut, Trade War cited as concern. India's Services PMI hits 12-month low, thanks to electoral disruptions. New Draft National Education Policy to be a game changer for Nurses. Critics claim Old wine in new bottle.


Moving on to the top Business news today:



Global growth to slow down in 2019, Forecasts for India through 2021 intact, says World Bank

What?: World Bank recently released its June 2019 Global Economic Prospects (GEP) Report, which maintained that Global growth has continued to soften this year, downgrading real GDP growth to 2.6% for 2019, down 0.3% points vs its prior forecast in January.  

Why?: Subdued investment in emerging market and developing economies (EMDEs) cited as principal drivers. Outlook deemed as negative, possibly due to escalating trade tensions. Rising debt to make recovery increasingly challenging. 

India: India's growth projections in FY19/20 maintained at 7.5%, unchanged from previous forecasts. Strengthening credit growth and accommodative monetary policy of the RBI to provide support. Outlook for South Asia at-large positive, barring risk of military escalations.



India's Services PMI hits 12-month low, thanks to electoral disruptions

PM what?: PMI, standing for Purchasing Managers' Index, is a "sentiment tracking" measure which looks at intensity of business activity / new orders. PMI gives a sense of contraction or expansion of a particular sector. 

May 2019: India's services sector activity increased at its slowest pace in a year in May, falling to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion. "India's dominant service economy again suffered the impacts of election disruptions, with growth of both new work and business activity softening for the third straight month," said Pollyanna De Lima, Principal Economist at IHS Markit, and author of the monthly report.

But: "Signs that we may see a revival in the service sector in the near-term were, however, evidenced by a pick-up in hiring activity and improved sentiment. Also supportive of greater client spending and investment among businesses is the evident lack of inflationary pressures," Lima added.

Data: To get a full sense of where the numbers stack, check out India's Services PMI data mapped since June 2018.  



New Draft National Education Policy to be a game changer for Nurses. Critics claim Old wine in new bottle

Lateral Entry: Policy includes proposal to allow lateral entry of nursing and dental graduates into MBBS courses via a common foundation course for doctors, dentists and nurses. 

Other significant changes: Curbing the role of the various councils for medicine, nursing and dentistry; Outsourcing inspection and accreditation work to “empanelled agencies”; Doing away with fee regulation completely while mandating scholarships for 50% of students, with 20% to get full scholarships

Haters Gonna Hate: Check this interesting critique of the Policy overall



DHFL misses interest payment, exposed Mutual Funds suffer

Delay: DHFL missed an interest payment due on Tuesday. The NBFC is seeking a seven-day grace period to prevent a default. Share price tanked 1.24%. DHFL has been facing a cash crunch since September last year when IL&FS defaulted on its payment obligations. It has been raising capital via secularization meanwhile, but apparently the deal in the build-up to Tuesday's deadline did not close. 

Mutual Funds in turmoil: The delay in payments will require MFs exposed to DHFL to mark down their Net Asset Values (NAVs) by about 75% to avoid redemption pressure. As of 30th April, 165 schemes are exposed to DHFL with a cumulative exposure of INR5,336cr, of which 106 schemes have an exposure of more than 5% of assets.



Fed Governor hints towards rate cut, Trade War cited as concern

The Speech: Jerome H. Powell, Federal Reserve chairman alluded that the Fed was prepared to act "to sustain the expansion", if President Trump’s trade war weakens the economy. US markets interpreted this as a potential rate cut. S&P 500 up 2.14%.

“We do not know how or when these issues will be resolved” 

"We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”

I Concur: Sarah Bloom Raskin, member of the Fed board from 2010 to 2014 said “I think Chairman Powell has given a message to markets that’s indicating that a rate cut is coming. This is, in essence, a very strong signal that the FOMC is actually ready to talk about cutting rates.” 


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