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Business News for Today: Sensex Today, Nifty Share Price, Red Flags in Govt's PSB Merger Decision

Professor of Financial Economics and Part-time Value Investor, Transfin.
Sep 3, 2019 2:18 PM 4 min read

Smartphone sales are going down,
If auto slows more it might drown. 



Sensex, Nifty plummet on low GDP numbers, auto slowdown and PSU mergers. 

From India...: Markets began September on a negative note. Sensex and the broader Nifty fell by around 2% each.
The performance is important to note because of the developments since Friday. The government announced bank mergers, GDP numbers showed the slowest growth in six years and the auto slowdown accelerated. The red numbers indicate markets are still on edge about the economy’s trajectory and have effectively given a thumbs-down to the government’s recent attempt at reforms.

Global indices fall too as trade war and Brexit uncertainty strike investor confidence.

...To the World: Markets abroad climbed down, too. London, Frankfurt, Hong Kong and Shanghai declined while Tokyo barely moved. Trade war tensions, renewed Brexit crisis and political crisis in Hong Kong dragged investor confidence down.




Cabinet approves capital infusion of INR9,257cr in IDBI Bank. 


It's All About the Money, Honey: The Union Cabinet today approved a one-time infusion of fresh capital of INR9,257cr by the government and Life Insurance Corporation (LIC) in IDBI.
As part of the plan, the government will infuse INR4,557cr, and Life Insurance Corporation (LIC) will infuse INR4,700cr.
Previously: Earlier this year, LIC had acquired a controlling 51% stake in the then crippling IDBI. 

Analysts raise red flags in Govt’s bank merger decision.

Red Flags: On Friday, the government announced a series of bank mergers to create four new mega-lenders that together would account for 56% of India’s banking industry. The move, right on the heels of the dismal GDP numbers that showed the slowest growth rate in six years, was touted as a way to alleviate a credit-stressed sector and increase efficiency. However, any analysts are unsure about the potency of the decision. A negative ramification on smaller lenders, increase in small banks’ loan books, near-term credit crunch, and the choice of merger candidates were some of the issues analysts have flagged.



NHAI could use roads as collateral to secure loans for projects. 

Roads As Collateral: The NHAI is reportedly looking to raise money by keeping roads as collateral. It is in talks with the SBI regarding this to fund future projects. The bank will lend the NHAI 80% of the project value, a loan that would be repaid over at least 15 years.


High-level panel recommends sweeping reforms to prepare India for the fintech age.

Preparing for the Fintech Age: A high-level government-instituted panel on fintech has made wide-ranging recommendations including a marketplace for P2P lending and a legal framework for consumer protections. Deatils here.



Automakers in India demand tax cuts amidst massive slowdown.

A Sorry Tale to Tell: Passenger vehicles sales in India are set to fall for a tenth consecutive month in August, forcing analysts to slash their 2019 sales forecasts.
Data from top six car makers, including Suzuki and Toyota, which make up more than 90% share of the market shows that passenger vehicle sales for August fell 34% vs previous year.
Data from Tata Motors and Mahindra & Mahindra, which together account for about two-thirds of the commercial vehicles market, show that sales of trucks, an indicator of economic activity, fell by almost 40%.
As per Rajan Wadhera, President of the Society of Indian Automobile Manufacturers (SIAM), the plunge in sales only highlight the need for the government to consider reducing the GST
Dragging On: Nifty Auto was down over 1%, dragged by Tata Motors which declined 2% followed by Eicher Motors, Bosch, Amara Raja Batteries, Mahindra & Mahindra, Maruti Suzuki, Tata Motors DVR and Ashok Leyland on back of the progressive decline in sales. 
Standing Out: While, the auto sector on a large is experiencing colossal downfall, some new entrants such as Kia Motors India and MG Motor India have attracted strong buyer interest. 
“This is perhaps indicative of the evolution in the behaviour of a certain segment of Indian customers, especially those below 35 years, as “value-conscious" from being “price-conscious". Know more about this here.



 Smartphone sales grow at slowest pace since demonetisation. 

Who’s Buying Smartphones: The slowdown has reached the smartphone sector. Market research firms are estimating the slowest growth in smartphone sales since 2016, which was the year of demonetisation. Indians are putting their smartphone buying plans on hold despite the festive season ahead as economic growth stalls.

Facebook planning to remove Like count.

Like My Post, Please: After Instagram, it’s Facebook that’s waging a war against envy. The social media site is reportedly planning to hide the Like counter under its posts to dissuade users from self-censorship and comparing themselves with others.
Instagram began testing a similar feature on its platform in April. It began in Canada but expanded to six other countries in July. This could indicate positive results for the company, to say nothing of the mental health of users, for many of whom Likes and Shares influence mood and mental health.  



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