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11 January 2024 : Important Financial News in India

FINANCE MARKET HEADLINES TODAY
FINANCE MARKET HEADLINES TODAY

Source: Economic Times, “Today’s ePaper”
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Table of Contents

Vibrant Gujarat Summit: Prominent Business Leaders Commit to Major Investments

During the 10th Vibrant Gujarat Global Summit, notable figures such as Gautam Adani, Mukesh Ambani, Lakshmi Mittal, and N Chandrasekaran pledged substantial investments in Gujarat, the home state of Prime Minister Narendra Modi. This commitment reflects the confidence of these business magnates in Gujarat’s economic environment and potential for growth. Their investment promises, running into billions of dollars, signify a major boost to the state’s economy and are indicative of the larger positive trend in investment flows into India. This development also showcases Gujarat’s strategic importance in India’s overall economic landscape.

India’s Economic Composition: Predominantly Consumer-Oriented

Prem Watsa, the head of the Toronto-based investment behemoth Fairfax, with assets worth $84 billion, expressed his ongoing commitment to India’s economic potential. Emphasizing India’s major advantage, he pointed out that two-thirds of the Indian economy is consumer-oriented. Despite global economic challenges, Fairfax maintains its investment trajectory in India, indicating strong confidence in the country’s market dynamics and consumer base. This observation highlights the robustness of India’s internal market and its attractiveness to foreign investors.

Policy Shifts for Domestic Workers: Minimum Wage and Pension Plans

India is considering implementing social security measures for its millions of domestic workers. This move, anticipated before the upcoming general elections, aligns with the objectives of the Social Security Code, 2020. Although not yet enacted, this policy could mark a significant step towards universal welfare payments, offering minimum wage and pension benefits to a largely unregulated workforce. This potential change reflects an evolving approach towards labor rights and social welfare in India.

Government’s Cautious Approach in Disinvestment for FY25

The Indian government is likely to set conservative disinvestment targets for the financial year 2025 and the medium term. This revision in the disinvestment strategy, as indicated by senior officials, suggests a more measured approach towards selling stakes in public sector entities. This cautious stance may be driven by various market factors and the need for stability in public sector undertakings.

E-commerce’s Thrasio-Style Model Struggling for Viability

The Thrasio-style business model in e-commerce, which involves acquiring and scaling multiple brands, is facing difficulties. Key players in this space are halting new acquisitions as they seek additional capital. This development points to the challenges in sustaining such a model in the current economic climate, raising questions about its long-term viability.

NCLAT Overturns NCLT’s Decision on Srei Equipment

The National Company Law Appellate Tribunal (NCLAT) has overturned an order by the National Company Law Tribunal (NCLT) which had previously rejected a ₹919.78 crore claim by Srei Equipment Finance from ARSS Infrastructure Projects. The appellate tribunal deemed the rejection to be based on “flimsy grounds,” indicating a significant shift in the legal proceedings of this high-value financial dispute.

Mobile Industry Demands Lower Tariffs on Components for Export Enhancement

The Indian mobile phone industry is advocating for a substantial reduction in tariffs on components and sub-assemblies to boost smartphone exports. The industry points out that India faces the highest import duties on these inputs compared to countries like Vietnam, China, and Mexico, impacting its competitive edge in the global market.

Vodafone Idea Rebuked by Telecom Department for KYC Non-Compliance

The Department of Telecommunications (DoT) has criticized Vodafone Idea (Vi) for not adhering to the mandatory ‘know your customer’ (KYC) procedures for its corporate customers. This violation of customer verification rules, essential for preventing cyber fraud, highlights regulatory challenges in the telecom sector.

Imminent Appointment of New TRAI Chairman

The Telecom Regulatory Authority of India (Trai) is expected to soon fill its top position, vacant for over three months. Cabinet secretary Rajiv Gauba’s recent interviews with four candidates indicate a proactive approach to addressing this leadership gap, which is crucial for the regulatory body’s functioning.

Prime Minister Modi’s Global Invitation for Investment in Rising India

Prime Minister Narendra Modi, foreseeing India as the third-largest economy shortly, has extended an invitation to the global industry to invest in India. He emphasized the country’s role as a key pillar of stability in the world, encouraging international investments.

Adani Group’s Massive ₹2 Lakh Crore Investment in Gujarat

Gautam Adani, chairman of the Adani group, announced a significant investment of more than ₹2 lakh crore in Gujarat over the next five years. This investment, expected to generate around 100,000 direct and indirect jobs, underscores the group’s commitment to the region’s economic development.

Reliance Industries’ Major Investments in Gujarat

Mukesh Ambani, chairman of Reliance Industries Ltd, revealed that one-third of his company’s $150 billion investments in India in the past decade were made in Gujarat. This substantial investment reflects the company’s ongoing commitment to the state’s economic growth.

Tata Group to Establish Semiconductor Factory in Gujarat

N Chandrasekaran, Chairman of Tata Sons, announced the establishment of a semiconductor factory at Dholera in Gujarat. This development is part of the group’s broader initiative, including launching a 20 GW gigafactory for lithium-ion batteries in Sanand within two months.

Maruti Suzuki’s Major Investment for Increased Car Production

Maruti Suzuki India plans to invest ₹38,200 crore in Gujarat to double its production capacity to 4 million units by FY31. This ambitious plan involves the establishment of a facility capable of producing 1 million cars per year.

Gujarat to Host World’s Largest Steel Plant

Lakshmi Niwas Mittal, chairman of steel multinational ArcelorMittal, announced that the completion of the second phase of the Hazira steel plant by 2029 will make it the world’s largest steel plant, with a capacity of 24 million tonnes.

Influx of Private Jets at Vibrant Gujarat Summit

The Vibrant Gujarat investor summit witnessed an extraordinary arrival of 70 private jets, carrying heads of states and top global corporate leaders to Ahmedabad. This unprecedented event highlights the summit’s significance in the global investment landscape.

Anticipated Surge in India’s Housing Demand

The Confederation of Real Estate Developers’ Associations of India (CREDAI) projects a more than threefold increase in housing demand in India, reaching 93 million units by 2036. This growth is spurred by robust demand and supply in various tier-II and -III cities.

Indian Navy Acquires First India-Made Drones from Adani Defence

The Indian Navy received its first locally manufactured medium altitude long endurance drones from Adani Defence. This delivery, facilitated through emergency financial powers last year, marks the Adani Group’s first major entry into defense equipment supply.

Care Hospitals’ Expansion Plans in Eastern India

Backed by Blackstone, Care Hospitals Group is exploring further acquisitions as it aims to become India’s third-largest hospital chain. This move indicates a strategic expansion in the healthcare sector, particularly in Eastern India.

Increase in Indian Diesel Exports to EU Following Russia Sanctions

India’s diesel exports to the European Union surged by 42% year-on-year in December. This increase is attributed to heightened winter demand and the reduced supply from Russia due to sanctions.

Government Postpones $600 Million Investment in Strategic Oil Reserves

The finance ministry has deferred a ₹50 billion ($602 million) plan to top up the nation’s strategic crude oil reserves. This decision comes amidst market volatility and the anticipation of further declines in oil prices.

Soaring Premium Erodes Valuation Comfort in Indian Equities

The Indian equity market, after delivering a robust 20% return in 2023, is currently facing a valuation challenge. The premium on these equities has risen significantly, moving from merely being stretched to a point where it’s becoming distended. This change suggests that the market might be overpriced relative to its actual value, raising concerns about potential overvaluation. Investors might become cautious, leading to a potential slowdown or correction in the market. This situation demands careful consideration from investors and market analysts who track the performance and valuation of Indian stocks.

Manappuram Shares Experience a Sharp Decline

Manappuram’s stock prices have recently fallen sharply. The management, addressing this issue in a conference call with analysts, assured them that the queries raised by the Securities and Exchange Board of India (Sebi) would be adequately addressed. Despite these regulatory challenges, the company remains optimistic about its forthcoming Initial Public Offering (IPO). This indicates that while facing immediate market pressure and regulatory scrutiny, Manappuram is confident about its compliance and future market prospects.

Japan’s Topix Index Reaches a Historic 34-Year High

In a remarkable turn of events, Japan’s broad Topix index has soared to a 34-year high, defying the general downward trend in Asian markets. This surge is attributed largely to the weakening of the yen, which has given a significant boost to Japanese exporters. The strength of the Topix index in such an economic climate indicates a unique resilience and growth potential in the Japanese market, especially for companies involved in export-oriented businesses. This milestone is significant for investors looking at Asian markets, as it highlights the diverging trends and opportunities within the region.

State Bank of India’s Successful $3.5 Billion Bond Issuance

The State Bank of India (SBI) marked a significant achievement in the global finance market by raising $600 million through 5-year bonds via its London branch. The issuance was met with overwhelming interest, attracting bids totaling a massive $3.5 billion. This event, being the first major US dollar bond issuance by an Indian company in 2024, underscores the strong investor confidence in SBI and reflects a positive outlook for Indian financial institutions in the global market. The successful bond issuance also signifies the growing presence and credibility of Indian companies in international finance.

Oil Prices Fluctuate Amidst Middle East Supply Concerns

Oil prices have been experiencing fluctuations, primarily influenced by geopolitical tensions in the Middle East. Concerns over supply disruptions stemming from the ongoing Israel-Hamas conflict and the shutdown of a key Libyan oilfield have led to uncertainty in the oil market. However, these concerns are somewhat balanced by the prevailing worries about weak global economic growth, which could reduce demand for oil. This situation creates a complex scenario for oil traders and nations dependent on oil imports or exports, highlighting the sensitivity of oil prices to geopolitical events.

Medi Assist’s Ambitious ₹1,172-Crore IPO

Medi Assist Healthcare Services, a Bengaluru-based company, is preparing to launch a significant Initial Public Offering (IPO) on January 15. The IPO aims to raise around ₹1,172 crore, with shares priced between ₹397 and ₹418. This move represents a significant step for the company in its growth and expansion strategy. The IPO’s success could be a bellwether for the health services industry in India, indicating investor confidence in the sector’s growth potential and the company’s business model.

Government’s Proactive Legal Strategy on Sugar Usage for Ethanol

The Indian central government has taken a preemptive legal stance by filing caveats in the High Courts of Bombay and Karnataka. This action is in response to the government’s recent restrictions on the use of sugar for ethanol production. By filing these caveats, the government seeks to ensure that it is heard before any potential judicial stay orders are passed on this policy. This move reflects the government’s commitment to its policy decisions and highlights the complexities involved in balancing economic, environmental, and legal considerations in policy-making.

FPI Custodians Finalise Disclosure Exemption Rules

Custodians of foreign portfolio investors (FPIs) have finalized rules regarding the disclosure exemptions. These rules allow the custodians to rely on regulatory filings available on the websites of regulators for verifying the global assets under management (AUM) of FPIs. This information pertains to the regulated investment manager, trust bank, or trustee of the fund. This revised standard operating procedure simplifies the process for FPI custodians, enabling a more streamlined approach to verifying the legitimacy and scale of the foreign investments they manage.

Rel Power & Rel Infra Commit to Settle Their Dues by Fiscal-end

Reliance Power and Reliance Infrastructure, companies promoted by Anil Ambani, have committed to settling their dues by the end of this fiscal year. They have entered into separate standstill arrangements with their respective lenders, DBS Bank and JC Flowers Asset Reconstruction Company. This commitment to settle loans indicates an effort by these companies to address their financial liabilities and potentially stabilize their financial standing, which is crucial for their operational sustainability and investor confidence.

Old Bridge’s Maiden Fund a ‘Concentrated’ Play, may Not Suit All

Old Bridge Asset Management, a new player in the mutual fund industry, is launching its first equity scheme — the Old Bridge Focused Equity Fund. Described as a ‘concentrated’ play, this fund may not be suitable for all investors due to its focused investment approach. This suggests that the fund might be investing in a limited number of stocks or sectors, potentially offering higher returns but also carrying higher risks compared to more diversified funds.

MMT: An Idea Whose Time May be Up Post Covid

Modern Monetary Theory (MMT), once heralded as a solution to economic problems, is facing skepticism in the post-Covid economic landscape. The surge in global inflation has dampened the enthusiasm for MMT, which advocates for extensive government spending financed by money creation. The current economic conditions, marked by high inflation, challenge the core principles of MMT, suggesting that its applicability and effectiveness may be limited in the current global economic scenario.

Proxy Advisor Against Aster DM’s Gulf Deal

Institutional Investor Advisory Services India (IiAS), a proxy advisory firm, has recommended institutional investors to vote against the resolutions proposed by Aster DM Healthcare. These resolutions seek shareholder approval for a $1 billion deal involving the sale of its business in the Gulf Cooperation Council (GCC) region to Alpha GCC Holdings. The opposition from IiAS indicates concerns about the deal’s structure or its implications for shareholders, highlighting the importance of shareholder scrutiny in major corporate transactions.

VRL’s Bonds Rebound After Parent Restructures its Debt

Vedanta Resources Ltd (VRL) saw its bond prices recover from distressed levels to standard ranges following a debt restructuring by its London-based holding company. This restructuring likely improved the company’s debt profile, leading to increased confidence among bond investors. The rebound in bond prices is a positive sign for the company, indicating improved market perception of its financial health and stability.

India’s GDP to Hit $5 Trillion by FY28: Finance Minister

India’s Finance Minister Nirmala Sitharaman has projected a significant growth trajectory for the country’s economy. She stated that India is on track to achieve a Gross Domestic Product (GDP) of $5 trillion by the financial year 2027-2028. Furthermore, she pitched the India story to investors, emphasizing the country’s potential to emerge as a developed nation by 2047. By a conservative estimate, the GDP could reach $30 trillion by that time. This ambitious forecast reflects the government’s confidence in the country’s economic growth and development strategies, aiming to position India as a major global economic power.

‘India, UAE Start Direct Trade in Rupee-Dirham’

India and the United Arab Emirates (UAE) have initiated direct trade using their respective currencies, the rupee and the dirham. This development, announced by Commerce and Industry Minister Piyush Goyal, is a significant step towards strengthening bilateral trade relations. The two countries aim to expand their bilateral trade to $100 billion under their free trade agreement. This move to bypass the traditional reliance on major global currencies like the US dollar for trade transactions reflects a strategic economic partnership and could simplify and strengthen trade ties.

CBIC App to Cut Litigation Time

The Central Board of Indirect Taxes & Customs (CBIC) is set to launch an application designed to expedite the disposition of tax appeals. This app will provide officials with timely alerts regarding the litigation process, enabling them to track all cases effectively. The aim is to reduce the time taken in handling litigations, thereby enhancing the efficiency of the tax appeal process. This initiative is expected to streamline the tax litigation system, reducing delays and improving the overall administration of tax disputes.

PSBs Set to Evaluate Legal Firms for Insolvency Cases

State-owned banks in India are preparing to evaluate the performance of legal firms that have been engaged for handling insolvency and bankruptcy cases. This move comes in the wake of concerns raised by the government regarding substantial haircuts and delays in resolutions under the Insolvency & Bankruptcy Code. The government has directed these lenders to develop an effective framework for monitoring the progress of legal processes. This evaluation aims to ensure the efficiency and effectiveness of legal firms in managing complex insolvency proceedings.

Viksit Bharat’s Key Element Will Be a Strong Middleware

The concept of ‘Viksit Bharat’ (Developed India) revolves around economic growth and terminologies, focusing particularly on GDP. According to current World Bank standards, a $22-trillion Indian economy could achieve the status of ‘Viksit Bharat’ for its projected peak population of 1.6 billion, if it reaches a per capita nominal gross national income threshold of $13,845. This concept underscores the importance of substantial economic growth and equitable wealth distribution to achieve the status of a developed nation.

OVL Incorporates Unit in GIFT City

ONGC Videsh Ltd (OVL), the overseas investment arm of the state-owned Oil and Natural Gas Corporation, has established a new wholly-owned subsidiary named OVL Overseas IFSC Ltd in GIFT City, Gujarat. This incorporation is a strategic move by OVL to expand its global investment footprint and leverage the opportunities provided by GIFT City, which is emerging as a hub for global financial and IT services. The establishment of this subsidiary in GIFT City signifies OVL’s commitment to enhancing its international business operations and investments.

Ola’s Parent ANI Technologies Narrows Loss by 65% to ₹1.1k Cr in FY23

ANI Technologies, the parent company of the popular ride-hailing service Ola Cabs, has successfully reduced its standalone loss by 65% to ₹1,082 crore in the last financial year. This significant reduction in losses indicates an improvement in the company’s financial health, potentially driven by strategic business adjustments and possibly increased market demand for their services.

Netflix India Reports 24% Revenue Growth and ₹35 Cr Profit in FY23

Netflix India has experienced a notable 24% increase in its revenue, reaching ₹2,214 crore in FY23, while logging a profit of ₹35 crore. This growth has been attributed to more affordable subscription plans and an expanded range of titles, suggesting successful market adaptation and customer engagement strategies by the streaming giant in India.

FCC Commissioner Urges Indian Government to Keep Chinese Apps in Check

US Federal Communications Commission Commissioner Brendan Carr has advised India to continue its vigilance over “data-hungry Chinese apps,” including scrutinising the child-focused app BabyBus. This statement underscores ongoing concerns about data security and privacy associated with apps originating from China.

Amagi Reports 58% Revenue Increase in FY23

Amagi, a media technology software provider, reported a substantial 58% increase in its revenue from operations, totaling ₹680.5 crore in fiscal 2023. This significant revenue growth highlights the company’s successful business performance and potential market expansion in the media technology sector.

Mental Health Startup Amaha Secures ₹50 Cr Funding

Amaha Health, a startup focused on mental health, has raised ₹50 crore (approximately $6 million) in funding. The round was led by Fireside Ventures with ₹36 crore, with additional contributions from angel investors and family offices. This funding highlights the increasing investment and recognition of the importance of mental health services.

The Baker’s Dozen Raises ₹33 Cr from Wipro Consumer Arm and Others

The Baker’s Dozen, a Direct-to-Consumer (D2C) bakery brand, has raised ₹33 crore in funding. The round was led by Wipro Consumer Care Ventures, along with Mirabilis Investment Trust, She Capital, and existing investor Fireside Ventures. This funding indicates growing investor interest in D2C brands and the potential of the bakery market.

InMobi Group to Layoff 5% Workforce Amid AI-First Strategy Shift

The InMobi group, a Bangalore-based advertising technology company, is transitioning to an artificial intelligence (AI)-first approach, leading to a reduction of 125 employees or 5% of its global workforce. This strategic shift indicates the company’s focus on integrating AI into its operations, aligning with emerging technological trends in the advertising industry.

Upekkha Announces First Close of $40M VC Fund for SaaS Startups

Upekkha, a startup accelerator focusing on the software-as-a-service (SaaS) sector, announced the first close of its $40 million venture capital fund at $15 million. This move highlights the growing interest in the SaaS space and Upekkha’s commitment to fostering innovation and growth in this sector.

Velocity Earmarks $36M Fund for B2B SaaS Companies

Velocity, a revenue-based financing platform, has set aside ₹300 crore (about $36 million) to support the growth capital needs of B2B SaaS companies over the next 18 months. This fund allocation underscores the potential and growth prospects of the B2B SaaS market.

Intel to Manufacture AI-Powered Chips for Automotive Industry

Intel announced plans to launch automotive versions of its latest AI-enabled chips, entering the competitive market for car semiconductors. This move pits Intel against established players like Qualcomm and Nvidia, signaling Intel’s strategic expansion into the rapidly evolving automotive technology sector.

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