Posted at 4:17 PM , on November 18, 2019
Indian markets heaved a sigh of relief when the Supreme Court on Friday adjudicated in favor of the Committee of Creditors (COC). A quick background! In the Essar resolution case, Standard Chartered (an unsecured creditor) had approached the NCLAT (NCLT Appellate Tribunal) over the compensation given to it. NCLAT had ruled in favor of a higher compensation to Stanchart. This had resulted in the COC filing a review petition in the Supreme Court. The SC has now struck down the NCLAT order and restored full powers to the COC. This would have a much larger meaning for insolvency cases beyond the Essar case.
Posted at 3:51 PM , on November 18, 2019
In the last few days, there has been a flurry of results from telecom companies with all of them declaring huge losses! Between Vodafone Idea, Bharti Airtel and RCOM, these 3 companies reported net losses of Rs.100,000 crore for the September quarter. These losses were largely driven by the penal AGR charges imposed on these telecom companies under the Supreme Court order. All the telecom companies decided to take a hit on the charges in the September Q2 itself as the DOT had instructed these telcos to pay up in 3 months. How big could be the impact?
Posted at 3:43 PM , on November 18, 2019
If you were to look at the October flows into equity funds, one thing that will hit you is the big shift to passive. Index funds and index ETFs saw flows of Rs.6,000 crore in October almost equal to the total flows of all equity oriented active funds. But that is not all. In the last five years, the AUM of passive index funds in India has moved up sharply from Rs.3,500 crore to Rs.1,85,000 crore and this figure promises to only grow further. The AUM of passive index funds in India is just about 6% of the total AUM compared to 35% in the US, but the shift has surely begun. Here is why index funds are attractive.
Posted at 4:56 PM , on November 11, 2019
In the last few months, there have been strident calls for the government to intervene and sort out the DHFL mess. The problem is more than a year old. At one time, DHFL was considered the most aggressive home finance company although its valuations were always at a discount to the big names. Problems at DHFL started when IL&FS began to default in the middle of 2018. This not only led to bad investments for DHFL but it spiked the cost of funds for most NBFCs. The sharp spike in bond yields gave a clear indicate that default was a real possibility.