BQuick On Nov. 24: Top 10 Stories In Under 10 Minutes

Here is a roundup of the day’s top stories in brief.

1. Nifty Crosses 13,000...

It was a day of records for India’s equity markets as benchmark indices scaled new peaks, ending higher for the third straight day.

...But What Next?

The markets may correct anytime, but the deck is loaded in favor of those corrections being bought into, writes Niraj Shah.

• Investors, though, would do well to stay bottom-up, instead of pondering about market levels.
• People should bet on, and worry about, those, and not speculate on what after 13,000.

2. Foreign Inflows In Stocks Surge To Record

Foreign inflows into Indian stocks rose to a record in November on the back of liquidity injected by global central banks, driving domestic benchmarks to new life-time highs.

• Foreign portfolio investors have so far net invested Rs 55,552.6 crore in Indian equities in November, according to provisional data by NSDL.
• That’s the highest since the depository started recording data, beating the previous high of Rs 47,080 crore of August this year.

Find out the reasons behind the increased global interest in Indian equities.

3. U.S. Stocks Rally As Biden Begins Transition

U.S. stocks rallied toward records as investors piled into risk assets after President-elect Joe Biden formally began his transition, ending a three-week delay.

• The S&P 500 and Russell 2000 jumped, outpacing gains in the tech-heavy Nasdaq indexes as investors doubled down on economically sensitive sectors such as travel and energy.
• Oil and gas shares led the Stoxx 600 Index higher.
• Haven assets were broadly weaker, while Bitcoin extended its searing rally, surpassing $19,000 for the first time since 2017.

Get your fix of global markets update here.

Yellen To Head U.S. Treasury?

President-elect Joe Biden’s selection of Janet Yellen as Treasury secretary signals that he plans to act aggressively to revive the world’s biggest economy, putting a former Federal Reserve chair who’s not shied away from stimulus at the helm of his economic policy.

• With Yellen in charge, Biden’s Treasury department will be prepared to join Fed Chairman Jerome Powell’s policy of lower-for-longer interest rates with extended, expansionary government spending.
• While her reported pick was applauded both on Wall Street and in much of official Washington -- even by some of President Donald Trump’s allies -- Yellen is sure to be tested in her Senate confirmation hearings.

Yellen now stands to become a combatant for the first time in her career.

4. Bank Ownership Debate: Raghuram Rajan And Rashesh Shah Weigh In

India can’t risk the greater concentration of economic and political power that may come along with the entry of large corporate houses into banking, said former Reserve Bank of India Governor Raghuram Rajan.

• Speaking to BloombergQuint, Rajan said the experience across geographies has shown corporate-driven banks tend to lend to themselves which poses its own risks. Besides, it also results in undue concentration of economic and political power.

Read this BQ Blue Exclusive to see why Rajan wants more scrutiny before any such change is made.

Rajan has criticised the proposal. So has S&P. But Edelweiss’ Rashesh Shah is in agreement with the recommendation of the RBI's Internal Working Group that corporate houses be allowed an entry into banking.

• To grow from a $3 trillion to $5 trillion economy, India needs bigger banks and more banks. Banks need capital and large business groups can provide that, Shah argued in an interview to BloombergQuint.
• On the issue of connected lending and or contagion risks, he notes that large business houses are already dealing with household savings via their NBFC, mutual fund and insurance ventures.

An economy that wants to grow rapidly will require higher capacity, Shah said.

5. Why RBI May Bar Banks From Holding Subsidiaries With Similar Functions

An internal working group of the Reserve Bank of India has recommended that banks and their existing subsidiaries or associates be prevented from engaging in “similar activities”, especially those that banks can undertake “departmentally”.

• “The bank and its existing subsidiaries/JVs/associates should not be allowed to engage in similar activity that a bank is permitted to undertake departmentally,” the report released on Friday stated, adding that the term “similar activity” must be defined clearly.
• If a group entity desires to continue undertaking any lending activity, the same shall not be undertaken by the bank departmentally, the report said. “...the group entity shall be subject to the prudential norms as applicable to banks for the respective business activity.”

But will this move be disruptive?

6. Auto Sales Belie Festive Optimism

Indian automakers shipped more vehicles from their factories this festive period than last year, hoping for a recovery from the pandemic, but retail demand fell short of expectations.

• “While there is demand but not much year-on-year growth. We expected single-digit growth, and it’s on the same lines,” Ashish Modani, vice president and co-head of corporate ratings at ICRA Ltd., said over the phone.
• The double-digit growth that original equipment manufacturers were expecting hasn’t happened, he said.

At least two dozen dealers BloombergQuint spoke suggested that retail auto sales rose in low single digits. Find out here.

7. New Office Space Leasing Picking Up

Commercial office spaces in India have seen some improvement in new leasing over the preceding quarters, according to Embassy Office Parks REIT, as some occupiers slowly return to workplaces after the nation lifted the lockdown curbs. But the average demand over previous years is still significantly lower.

The rise in leasing activity signals that occupiers are returning to the drawing board to close stalled deals.

8. NSE Expels Karvy Stock Broking

The National Stock Exchange has declared Karvy Stock Broking Ltd. as a defaulter for non-compliance with the regulatory provisions of the bourse.

• In addition, Karvy Stock Broking has been expelled from the membership of the exchange, the NSE said in a circular.
• The move effective from Nov. 23, was taken as the broker failed to comply with NSE guidelines, it added.

Karvy had made unauthorised transfers of securities of clients into its demat accounts by misusing the power of attorney given by its clients.

9. Questions Around Astra-Oxford Vaccine Shots

The news reached Sarah Gilbert Saturday evening that the Covid-19 vaccine she’s developed with AstraZeneca Plc appeared to work. But the University of Oxford professor had expected a key number: Was it more than 90% effective, as others have been -- or less?

• Questions about the most effective dose of the vaccine, its safety record and the partners’ approach to testing it have cast doubt on whether the U.S. Food and Drug Administration will clear it.
• The puzzling part about Astra’s results was that bigger doses were less efficacious.

Lower- and middle-income nations are looking to the Astra-Oxford shot as a way out of the pandemic.

10. Used Car Startup Turns Unicorn

When the lockdown forced India's mass transit systems to shut down completely, a major beneficiary was the Gurugram-based used car marketplace Cars24 Services Pvt.

• The startup's valuation jumped to over $1 billion after a new round of funding led by DST Global, an investment firm led by Russian-born billionaire Yuri Milner.
• The investment doubles the total funds raised by Cars24 since the business was established five years ago.

By the middle of this year, Cars24 saw sales rise 20% from pre-lockdown levels. But the startup was surprised to see that demand sustain.