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Moody’s cuts India outlook to ‘negative’, Govt says macro stats strong

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New Delhi, Nov 8 : Global rating agency Moody’s Investors Service on Friday cut India’s outlook from ‘stable’ to ‘negative’ reflecting increasing risks to the country’s economic growth and the government’s failure in addressing long-standing economic and institutional weaknesses.

The government however, said that India continues to be among the fastest growing major economies in the world, and its relative standing remained unaffected. BSE Sensex was down 168.17 points at 10.45 a.m.

Moody’s only adds to the growing list of global agencies, including the Reserve Bank of India, that have downgraded the India growth story for the same reasons. Fitch Ratings and S&P Global Ratings still hold India’s outlook at ‘stable’.

Moody’s also affirmed India’s Baa2 foreign-currency and local-currency long-term issuer ratings. Baa2 is the second-lowest investment grade score, and the agency said it could downgrade the nation if fiscal metrics deteriorate materially.

Warning that India could be heading for a debt trap and recessionary phase, the agency said it doesn’t expect the credit crunch among non-bank financial institutions, the main source of consumer loans in recent years, to be resolved quickly.

At a six-year low, India’s economy grew only 5.0 per cent year-on-year between April and June, its weakest pace since 2013, as consumer demand and government spending slowed amid global trade frictions.

Backing its other ratings for India, the agency said it estimates that the country’s growth slowdown is in part long-lasting.

However, the Finance Ministry rejected the claim, saying: “India continues to be among the fastest growing major economies in the world, India’s relative standing remains unaffected. IMF in their latest World Economic Outlook has stated that the Indian economy is set to grow at 6.1 per cent in 2019, picking up to 7 per cent in 2020. As India’s potential growth rate remains unchanged, assessment by IMF and other multilateral organisations continue to underline a positive outlook on India.”

“The government has undertaken a series of financial sector and other reforms to strengthen the economy as a whole. The government has also proactively taken policy decisions in response to the global slowdown. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments.

“The fundamentals of the economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in the near and medium term,” the Finance Ministry add.

The downgrade now puts additional pressure on India, which tried to revive demand in the economy in September with an unexpected cut in corporate taxes. But chances of more such reforms have diminished, and Moody’s expects the government to struggle to narrow its deficit or contain a growing debt burden.

According to Moody’s, “investors and rating agencies will closely monitor the nation’s gross domestic product data (for Q2) for signs of further and long-lasting weakness, which could result in another negative shift. Stabilisation in the non-bank financial sector, meantime, would be credit positive and could flag less risk of negative spillover into banks”.

“Moody’s decision to change the outlook to negative reflects increasing risks that economic growth will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses than Moody’s had previously estimated, leading to a gradual rise in the debt burden from already high levels,” the rating agency said in a statement.

“While government measures to support the economy should help to reduce the depth and duration of India’s growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions (NBFIs), had increased the probability of a more entrenched slowdown,” it said.

Moody’s has also cut India’s GDP growth forecast for the current year to 6.2 per cent, citing factors such as weak hiring, distress among rural households and tighter financial conditions.

Almost every major global financial institution has trimmed India’s growth forecast ever since the country’s GDP growth rate slipped to a six-year low of 5 per cent in the April-June quarter and the Reserve Bank of India (RBI) slashed GDP growth estimate for the current fiscal to 6.9 per cent from the previous estimate of 7 per cent, in the wake of slowdown in demand and investment.

The International Monetary Fund (IMF) last month slashed India’s GDP growth rate projections to 6.1 per cent from the 7 per cent it forecast in July.

S&P Global Ratings last month also lowered India’s Gross Domestic Products (GDP) forecast to 6.3 per cent for the current financial year from 7.1 per cent projected earlier, on the back of decline in private consumption.

“India’s slump is deeper and more broad based than we expected. In the March-June quarter, the economy expanded by just 5 per cent, below potential, which we estimate to be north of 7 per cent. Most alarming has been the precipitous decline in private consumption growth that had been the engine of the economy in recent years – down to about 3 per cent in the March-June quarter,” the global rating agency said in a recent report on the Asia-Pacific region.

On the government’s effort to revive economy through cut in corporate taxes, it said it would cost the exchequer 0.7 per cent of the GDP, though the net impulse would be smaller, with the government eliminating some exemptions.

The Asian Development Bank had in July slashed India’s growth projection to 6.5 per cent from 7 per cent for the current year on the back of fiscal shortfall concerns.

The World Bank has cut India’s GDP growth for 2019-20 to 6 per cent in its latest South Asia Economic Focus report. “India’s cyclical slowdown is severe,” said the report. It has projected the growth rate for 2020-21 at 6.9 per cent, and for 2021-22 at 7.2 per cent .

In April, the World Bank had forecast a growth rate of 7.5 per cent for India, but in 2018, it pegged the rate lower at 6.8 per cent.

The indicators from other rating agencies started coming in June, when Fitch Ratings cut India’s growth rate projections to 6.6 per cent from 6.8 per cent. Later on September 20, the Organisation for Economic Co-operation and Development (OECD) also revised its forecasts for India, lowering it by 1.3 percentage points from its previous projection in May to 5.9 per cent.

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Galaxy S11 may come with a 120Hz high refresh rate display

The Galaxy S11 is not the only device rumoured to launch with a 120Hz display, OnePlus is also looking forward to launch its new smartphone with ultra-high refresh rate.

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Seoul, Nov 21 : South Korean tech giant Samsung is reportedly planning to introduce a high refresh rate of 120Hz display with its upcoming smartphone Galaxy S11.

Famed leakster Ice Universe Ice universe tweeted screenshots of Samsung’s latest One UI beta update that insinuate the Galaxy S11 could receive a 120Hz display.

The Galaxy S11 is not the only device rumoured to launch with a 120Hz display, OnePlus is also looking forward to launch its new smartphone with ultra-high refresh rate.

Recently, a code in the APK file (the Android app software file) for Samsung’s camera app suggests that Galaxy S11 lineup would support 8K video recording.

The Exynos 990 chipset, which is expected to power the international variants of the device, features [email protected] video decoding/encoding capabilities.

Additionally, Qualcomm’s upcoming Snapdragon 865 chip, which will power the US variants of the S11, is also expected to have enough horsepower to offer 8K video recording.

Earlier, famed leakster Ice Universe had claimed that the Galaxy S11 would not use the 108MP ISOCELL Bright HMX sensor that it launched earlier this year, but would instead utilise an upgraded second-generation sensor.

The upcoming Samsung Galaxy S11 smartphone will be available in three screen sizes – 6.4 or 6.2-inch being the smallest, mid-sized with 6.4-inch and 6.7-inch being the largest one.

As per a recent report, Galaxy S11 would arrive in the third week of February 2020 and the launch event is said to take place in San Francisco.

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Punit Goenka to ZEEL staff: Stake sale as per debt repayment plan

Shares of ZEEL on the BSE, closed at Rs 345.25 on Thursday, higher by Rs 38.10 or 12.40 per cent from the previous close.

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New Delhi, Nov 21 : Punit Goenka, the MD and CEO of Zee Entertainment Enterprises (ZEE) has written to the employees of the company saying the proposed sale of 16.5 per cent stake by the Essel Group is in line with the overall debt repayment plan.

Describing the decision as a strong step forward, Goenka, who was reappointed as the MD and CEO earlier in November, said he looks forward to work with the employees and elevate the company to a global media and entertainment powerhouse, said the communication seen by IANS.

He said the promoters would continue to hold 5 per cent stake in the company and thanked the employees for their trust and support.

The Subhash Chandra-led Essel group on Wednesday announced that it is planning to sell 16.5 per cent stake in ZEEL to financial investors in order to repay loan obligations to certain lenders of the group.

After this transaction, the promoter stake in Zee Entertainment will be reduced to 5 per cent, which means that media baron Subhash Chandra will lose control of Zee Entertainment Enterprises Ltd.

Zee, considered a pioneer of television entertainment industry in India, was launched by Subhash Chandra in 1992. Ever since the launch year, the company expanded operations to enter packaging, infrastructure, education, precious metals, finance and technology sectors.

Earlier this year, Essel Group sold up to 11 per cent in Zee Entertainment to Invesco Oppenheimer Developing Markets Fund for Rs 4,224 crore.

Prior to the Wednesday announcement, Subhash Chandra’s Essel Group companies held 22.37 per cent promoter stake in Zee. Of this, 21.48 per cent was pledged as collateral against finances availed by Essel Group firms.

Post completion of the transaction announced on Wednesday by the company, Oppenheimer Developing Markets Fund and OFI Global China will together hold 18.74 per cent.

Shares of ZEEL on the BSE, closed at Rs 345.25 on Thursday, higher by Rs 38.10 or 12.40 per cent from the previous close.

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Slowdown dents October Mergers and Acquisitions deal activity: Report

The report disclosed that while domestic deal segment saw a downtrend in terms of both volumes and value, the cross-border deals value almost doubled.

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Mumbai, Nov 21 : Slow economic growth, amid prevailing uncertainties have dented the volume of ‘Mergers and Acquisitions’ activity in the country which declined by 40 per cent to 28 deals last month from 47 reported for the corresponding month of last year, a report showed on Thursday.

According to Grant Thornton’s M&A Dealtracker report for October 2019, a total of $1.53 billion worth of transactions were spread across 28 deals from a year-on-year level of 47 deals worth $2.81 billion.

However, the report revealed an increase in the deal values despite 22 per cent fall in deal volumes as compared to September 2019, showing signs of improved sentiments and appetite for big ticket deals.

“This was driven by the corporate tax cut, which has improved both investor sentiment and confidence. This also resulted in the average deal size more than doubling from $24 million in September 2019 to $55 million in October 2019,” the report said.

Besides, the report disclosed that while domestic deal segment saw a downtrend in terms of both volumes and value, the cross-border deals value almost doubled.

“The month also displayed great potential in the automotive and infra space, attracting big cheques of over $100 million each amid the recent slowdown in the auto sector,” the report said.

“Consolidation in these sectors was driven by strategic reasons to access combined market potential and gain sizeable market share.”

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