SEBI has launched a new surveillance system to prevent misuse of the shares of clients in the broking account. SEBI had observed in the Karvy case that client shares were pledged as collateral by the broker and that had caused untold hardships to clients to get back their shares. The new system will prepare client level register of shares with the broker and compare the same with the demat account of the client. Any discrepancy will be immediately highlighted to the stock exchange for necessary action and follow up. This is expected to reduce the risk of brokers misusing the shares belonging to clients.
Nestle India reported the fastest pace of profit growth in the last six quarters. For the quarter ended Dec-19, Nestle India reported a 38% growth in net profits to Rs.473 crore. The last time the company had recorded similar growth was in the Jun-18 quarter. This is slightly better than the street estimates for Nestle India profits. Top line growth continues to be tepid but that is expected to pick up once the spending impact of tax cuts is factored and the rural spending starts to take shape. Some of the marquee products of Nestle India include Maggi Noodles and Kit Kat chocolates, apart from Nescafe.
The Supreme Court is scheduled to hear the plea by telecom companies for a new schedule for the AGR payments. Last year, the SC had passed an order favouring DOT allowing them to collect nearly Rs.92,000 crore from major telecom companies towards adjusted gross revenue (AGR) charges. Bharti Airtel, Vodafone Idea and Tata Teleservices are parties to this plea. The telecom companies want to negotiate a fresh payment schedule with DOT for AGR payments and also want the DOT to review the levy of interest and penalty on AGR dues. AGR payouts are likely to pose a real challenge to Vodafone.
Moody’s has warned that the RBI decision to not classify real estate loans as restructured for one year could actually be credit negative for banks. According to Moody’s, this will lead to delay in recognition of such loans from the realty sector and consequently, the appropriate loss provisioning also will not be made, putting banks at additional back-ending of risk. Moody’s feels that this move will not address the stress in the banks or the credit needs of the realty companies. Weak NBFC funding and rising real estate inventory cannot be addressed by this postponement, according to Moody’s.
The quarter ended Dec-19 was extremely positive in terms of FPI flows with foreign investors infusing close to $6.3 billion into India during the quarter. This contrasts with the $3.22 billion outflow that India saw from FPIs in the Sep-19 quarter. Most foreign investors had turned sceptical after the Union Budget but the sharp cut in corporate taxes from 30% to 22% announced by the Finance Minister on September 20th changed the sentiments of FPIs in a big way. The FPIs were also impressed with the government’s intent and commitment to push through with the reforms process and that led to a surge in FPI inflows. Apart from the corporate tax rate cut, the government also rolled back the surcharge on the super rich, clarified on buyback tax, put off public holding expansion and increased liquidity support for NBFCs.
Net profits of BPCL tripled to Rs.2051 crore for the quarter ending Dec-19. On a YOY basis, the revenues for the quarter dropped by nearly 5% to Rs.85,927 crore for the quarter. This was largely on the back of weak oil prices that has remained under pressure for some time now. BPCL did well in the refining business as well as the fuel marketing business leading to the tripling of the net profits. It may be recollected that BPCL is one of the major disinvestment candidates of the government of India this year and the government is even open to reduce its stake in BPCL to below 51%. That could be interesting.
