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Narendra Modi-led BJP Wins Re-Election in a Landslide Victory, Sensex NIFTY Chart Historic Highs, Hinduja Group to Bid For Jet, Facebook Plans to Launch 'GlobalCoin' Cryptocurrency et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
May 26, 2019 7:01 AM 7 min read

Narendra Modi-led BJP wins re-election in a landslide victory. Sensex NIFTY chart historic highs on back of election results. Hinduja Group to begin bidding process for Jet Airways. Consortium of banks led by SBI might hold a 20% stake in Jet to facilitate the Etihad-Hinduja deal. India halts Iranian oil imports. Crude oil prices rebound after worst trading day in 2019. Facebook plans to launch 'GlobalCoin' cryptocurrency in 2020. India revealed to be the nation with the maximum app downloads in the world this year, Tiktok emerges as the most downloaded. Theresa May to resign as Britain’s Prime Minister on 7 June. 


Moving on to the top Business news of the week.


Narendra Modi-led BJP wins re-election in a landslide victory. Sensex and NIFTY chart historic highs on back of election results. India's 10-year bond prices hit a 13-month high. Merger of PNB, OBC, Andhra Bank and Allahabad Bank likely to ensue post the appointment of the new administration.
Ebb and Flow: After clocking record highs during the day on back of the election results, Indian equity market lost all gains with benchmark indices falling around 1% each
BSE Sensex closed lower by 298.82 points or 0.76% at 38,811 after gaining 1,000 points to breach the historic 40,000 mark for the first time ever during the day. Nifty was down by 80 points or 0.69% down at 11,657.05 after crossing the key 12,000 mark and set a new record, at closing.
Scaling New Highs: India's 10-year bond prices hit a 13-month high today. The 10-year bond yield was at 7.201% vs Wednesday's close of 7.26% - level last recorded on 6 April 2018. 
As per a DBS report, if the BJP and its allies return to power with a majority, it would bode rather well for policy/reform continuity and will be welcomed by the markets.
This will be in line with the proposition of the Narendra Modi-government, which has been advocating for the creation of 5-6 larger banks in the country. 
If the merger goes through, it would be a significant one after the state-run Bank of Baroda was merged with Dena Bank and Vijaya Bank under the current NDA regime.


Hinduja Group to begin bidding process for Jet Airways. Consortium of banks led by SBI might hold a 20% stake in Jet to facilitate the Etihad-Hinduja deal.
Start Afresh: The Hinduja Group to start the process of bidding for Jet Airways, having obtained the assent of key stakeholders in the grounded airline including founder Naresh Goyal and Etihad Airways. 
To facilitate the due diligence process, the Group has engaged investment bankers led by SBI Capital Markets. 
Final Attempt: As per reports, this could possibly be the last attempt by SBI to rescue the grounded airline. If the talk fails this week, it could be curtains for the airline which stopped operations from April 17 due to shortage of funds
Rebound: Jet Airways share price spikes more than 16% on back of the news before closing at INR148.40 (+12.94%).
Saving the Day?: Consortium of banks led by SBI might agree to acquire upto a 20% stake in Jet Airways in order to facilitate the Etihad-Hinduja deal.
While the Hinduja Group had previously expressed its interest to bid for the grounded airline, it is not keen to exceed its shareholding beyond 30%.
As per the plan, the banks will hold the stake for up to two years. Subsequently, they can sell it and cash out.
The deal is to be finalised today in the Etihad headquarters at Abu Dhabi, with top executives from SBI in attendance.  
India halts Iranian oil imports. Crude oil prices rebound after worst trading day in 2019.

Breaking Up: India has stopped importing oil from Iran after the United States refused to extend exemption from sanctions earlier this month. 
Iran earlier used to supply 10% of India's oil needs. 
What You Need to Know: The US re-imposed sanctions in November on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. Washington, nevertheless, granted waivers to Iran’s eight main buyers - China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece - that allowed them limited purchases for six months. However, last month, the US announced that it will no longer grant sanctions waivers to any country that is importing Iranian oil.
Rebound: Crude oil prices rebounded on Friday in Asia after settling down almost 6% the previous session, after the US Energy Information Administration reported that crude inventories had unexpectedly risen by 4.74 million barrels last week, vs the forecasted 600,000 barrel decline.
US Crude Oil WTI Futures gained 1.2%. International Brent Oil Futures also rose 1.2% to $68.56.
Oil prices had settled down more than 5% on Thursday. It was the steepest drops since the start of the year.

Facebook plans to launch 'GlobalCoin' cryptocurrency in 2020. Snapdeal close to acquiring ShopClues in an all-stock deal. Flipkart plans to open brick-and-mortar stores in India to sell food items. India revealed to be the nation with the maximum app downloads in the world this year, Tiktok emerges as the most downloaded. Uber Eats to offer an unlimited delivery subscription. 
Facebook's GlobalCoin: In an attempt to tap into the payments sector, social media giant Facebook is planning to launch its own cryptocurrency, dubbed GlobalCoin, in early 2020, allowing users to make digital payments in over a dozen countries.
The currency would enable Facebook’s 2.4 billion monthly users to change dollars and other international currencies into its digital coins. The coins could then be used to buy things on the internet and in shops and other outlets, or to transfer money without needing a bank account.
More on the GlobalCoin here.
Final Lag: Online marketplace Snapdeal is close to acquiring its nearest rival ShopClues in an all-stock deal.
If the merger goes through, the deal is likely to see ShopClues investors get one Snapdeal share for every nine they hold, and will likely give them a 10% stake in the combined entity. Interestingly, Shopclues has been pushing to get at least a 30% stake in Snapdeal as part of the transaction.
What You Need to Know: While foreign investors are not allowed into the retail space, 100% FDI is allowed in “food retail” business and lets the investor open physical store. 
Globally, around 50-60% of Walmart’s sales come from food. Flipkart’s foray into offline store will be in line with Walmart’s overall scheme of things.
Hooked!: As per data by intelligence firm Sensor Tower, India downloaded 4.5 billion apps in the first quarter of 2019, making it the country with the highest number of app installations in the world. 
Trending: Tiktok emerged as the most-downloaded app, with 88.6 million users having joined the short video creation platform this year. 
The growth can be attributed to the increasing number of smartphone users in the country, and cheaper internet access. 
Future Plans: Uber Eats is planning to offer a $9.99 monthly subscription to its users. The feature intends to their service fee, thereby reducing the cost of every order by 15%.
The service is likely to help Uber retain customers considering  that consumers will be reluctant to order from other food delivery apps if they’re already paying for a subscription on one.
Theresa May to resign as Britain’s Prime Minister on 7 June. Latest increase in tariffs on Chinese imports costs $831 per household. Trump announces $16bn farm aid package.
The move comes after May repeatedly failed to win parliamentary backing for the Brexit divorce agreement she negotiated with the European Union.
With little prospect of getting her deal passed, three years after the UK voted to leave the bloc, Mrs. May said the race to find her replacement would formally begin after she quits as head of her party on June 7.
Costing a Fortune: The Trump administration’s latest increase in tariffs on Chinese imports is costing the average US household $831 per year through higher prices and reduced economic efficiency, as per a paper published by the Federal Reserve Bank of New York.
The tariffs, which essentially impose taxes on imported goods, will result in higher prices paid by importers and consumers, the New York Fed’s report said.
In addition, it said, the US economy stands to take a hit as companies buy more from suppliers outside China at prices higher than they paid before the tariffs.
Mr. Trump this month raised the tariff rate on approximately $200bn in goods imported from China to 25% from 10% as talks on a deal to remove the levies hit an impasse. The Trump administration is also considering tariffs on most of the remaining $300bn in imports from China.
The Trump administration on Thursday unveiled a $16bn farm aid packageto offset losses from the ongoing trade war with China. 
The $16bn farm plan, which won’t require congressional approval, largely consists of direct payments to US farmers hit hard by Chinese tariffs on crops. Payment rates to farmers would be determined by where they farm rather than what crops they grow.
The action comes as prices for commodities such as soybeans, corn and sorghum, already mired in a yearslong slump and hit by flooding and wet weather, fell last week to their lowest level in more than 10 years.
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