🏦 Bank deposits lag

Good morning and happy Friday.

Ananya Panday’s ‘Call me Bae’ is out today so we know what we will be doing (read binging) this weekend 📺️ 🍿 

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 🇺🇸 White House likely to block Nippon Steel's acquisition of U.S. Steel

• 🏦 Bank deposits lag

• 🗞️ Bite-sized summaries

  • 📜 Nykaa sues Gopal Asthana

  • 🔍️ Investigating Infosys

  • 🧑‍🏫 Should teachers make more than IAS officers?

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Benchmark indices ended lower, with the BSE Sensex dropping 151 points and the NSE Nifty50 shedding 53 points. Reliance Industries led the decline, while small-cap stocks outperformed. IT, media, and metal sectors gained, while pharma, auto, and realty declined. Reliance approved its first bonus issue since 2017.

🌍️ International

• U.S. markets closed lower amid volatility. Investors reacted to mixed economic reports, including a decline in private sector hiring, raising concerns about the labour market and potential Federal Reserve rate cuts. Tesla's stock rose on plans to launch Full Self-Driving technology in Europe and China, while Frontier Communications fell sharply after Verizon announced a $20B acquisition deal.

US NEWS

🇺🇸 White House likely to block Nippon Steel's acquisition of U.S. Steel

The White House is signaling a potential blockade of Nippon Steel's proposed takeover of U.S. Steel, as the government review of this controversial acquisition nears its end. This development amidst growing political opposition to the deal in an election year.

Key points:

1. The Washington Post reported that President Biden plans to stop the deal, though the White House awaits the official recommendation from the Committee on Foreign Investment in the United States (CFIUS).

2. Biden had previously voiced objections to the merger, aligning with the United Steelworkers union's stance.

3. The deal's fate carries significant political weight, given U.S. Steel's headquarters in the swing state of Pennsylvania and its symbolic importance to American manufacturing.

4. Both Vice President Kamala Harris and former President Donald Trump have expressed opposition to the merger.

5. U.S. Steel's stock fell approximately 17% following news of the potential block.

6. The company maintains there are no national security issues associated with the transaction, given Japan's status as a close ally.

7. Nippon Steel argues it's the only company able to make an investment that would strengthen the entire U.S. steel sector.

8. U.S. Steel warns that without the deal, it may pivot away from blast furnace facilities, potentially risking thousands of union jobs.

The CFIUS review, which typically focuses on national security implications of business deals, is expected to conclude soon. Both U.S. Steel and Nippon Steel await official updates from the federal government.

As the situation unfolds, the decision will likely have far-reaching implications for the American steel industry, labour relations, and international business partnerships in a politically charged environment.

Read more: ABC News

ECONOMY

🏦 Bank deposits lag

Recent data from the Reserve Bank of India (RBI) reveals a growing gap between bank deposits and credit growth, raising concerns among financial regulators. As of June 2024, bank deposits grew at 11.7%, while credit rose by 15%, creating potential asset-liability mismatches for lenders.

Key factors contributing to this trend include:

1. Shift to capital markets: More households are investing in stocks and mutual funds, attracted by higher returns and easier access through digital platforms. The number of demat accounts increased from 11.45 crore in FY23 to 15.14 Cr. in FY24.

2. Mutual fund growth: The mutual fund industry's net assets under management reached a record high of Rs 64.97 lakh Cr. by July 31, 2024, with 9.33 Cr. SIP accounts.

Consequences and concerns:

• RBI Governor Shaktikanta Das warned of potential structural liquidity issues due to slower deposit growth.

• Finance Minister Nirmala Sitharaman urged banks to focus on mobilising small deposits.

Banks' response:

To address the issue, banks are launching special deposit schemes with attractive interest rates:

• State Bank of India's "Amrit Vrishti" offers 7.25% interest on 444-day deposits.

• Bank of Baroda's "Monsoon Dhamaka" scheme provides 7.25% for 399 days and 7.15% for 333 days.

Other banks like Bank of India, Bank of Maharashtra, RBL Bank, and Bandhan Bank have also introduced similar initiatives.

Despite these efforts, experts predict that deposit tightness is likely to persist throughout the current financial year. Banks face the challenge of maintaining strong credit growth while offering competitive deposit rates, which may keep the cost of funds elevated for the sector.

As the banking landscape evolves, institutions must innovate to attract deposits while adapting to changing consumer preferences in savings and investments.

Read more: Indian Express

GENERAL OVERVIEW

🗞️ Bite-sized summaries

📜 Nykaa sues Gopal Asthana - Nykaa, a beauty and fashion retailer, has filed a lawsuit against its former chief business officer, Gopal Asthana, now CEO of Tata Cliq. Nykaa is accusing Asthana of breaching confidentiality, misusing proprietary data, and attempting to harm its business by recruiting Nykaa employees to Tata Cliq. The company seeks a refund of approximately ₹24 Cr. in stock options and damages. The Bombay High Court has issued an interim order preventing Asthana from hiring Nykaa executives for Tata Cliq. Asthana denies the allegations, stating they are incorrect.

🔍️ Investigating Infosys - The Ministry of Labour has instructed Karnataka's Labour Commissioner to investigate Infosys' delayed onboarding of over 2,000 candidates, following a complaint by IT union NITES. The union criticized Infosys for unprofessional treatment and exploitation. Infosys has begun issuing joining dates to the affected engineering graduates and plans to onboard all by December, as it sees increased demand and revised revenue guidance. Over 1,000 appointment letters were sent this week. NITES president Harpreet Singh Saluja warns of potential protests if onboarding delays continue, particularly for the 500 graduates still awaiting dates.

🧑‍🏫 Should teachers make more than IAS officers? - Former Education Minister Manish Sisodia emphasized that teachers should earn higher salaries than IAS officers to help India become a developed nation by 2047. Speaking at a Teachers' Day event, he cited examples from countries like Germany and Switzerland, where teachers earn more than bureaucrats. Sisodia also shared his experiences from his 17-month incarceration in Tihar jail, where he spent 8-10 hours daily studying education systems globally. He highlighted the critical role teachers play in shaping India's future and urged policymakers to support them. Sisodia was released on bail last month after facing charges in an excise policy-linked case.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• A 14-year-old student fatally shot 4 people in a rampage at a Georgia high school.

• Raygun apologises to the breakdance community for backlash to her Paris Olympic performance.

• Zomato shares rally 8% as JPMorgan hikes target price to ₹340.

• India, Singapore sign Memorandum of Understading in fields of digital technology, semiconductor.

• VAT on petrol, diesel hiked in Punjab.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Jack Draper beats Alex de Minaur to reach US Open semis. All latest US Open updates here.

• Shah Rukh Khan topped the list of highest tax-paying Indian celebrities for the financial year 2024, contributing ₹92 Cr, surpassing other stars like Salman Khan and Amitabh Bachchan.

• Alia Bhatt and Vedang Raina unveiled intense new posters for their upcoming film "Jigra".