Source: Economic Times, “Today’s ePaper”
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Sensex Powells Past 70K
The Indian stock market is experiencing a significant surge as the Sensex surpasses the 70,000 mark for the first time. This remarkable milestone has been reached partly due to the anticipation of three rate cuts by the Federal Reserve in 2024. This has caused a celebratory atmosphere on Dalal Street, a notable financial hub in Mumbai. Similarly, the Nifty Index has also reached new heights, closing above 21,000, indicating a robust performance. These indices are not only meeting but are also poised to exceed their targets for the year 2024.
India Inc’s Capex Cycle may Move into Top Gear
Indian corporations are showing a strong willingness to invest in capital projects. Despite concerns about geopolitical tensions that might affect future demand, India Inc remains committed to enhancing its capital expenditure (Capex). This indicates a positive outlook for the economy, as increased Capex usually leads to growth and expansion in various sectors.
Lodha to Continue as Chairman of MP Birla Group: Court
In a recent legal development, the Calcutta High Court has ruled in favor of Harsh Vardhan Lodha, allowing him to continue as the chairman of the MP Birla Group. This decision, made by a division bench of the court, reverses a previous judgment from three years ago. The MP Birla Group, valued at approximately $1.9 billion or ₹16,000 crore, remains under Lodha’s leadership following this verdict.
Biocon Weighs Sale of $1.5-b Generic API Biz
Biocon, a major player in the pharmaceutical industry, is considering selling its generic active pharmaceutical ingredient (API) business. This segment of the company is valued at around $1.5 billion. The proposed sale is part of a strategy to reduce the company’s overall debt. However, it’s important to note that no final decision has been made yet, and the company is still in the evaluation phase.
Rlys to Green Flag ₹1 L-cr Train Set Bids
The Indian Railways is embarking on an ambitious plan to modernize its fleet by purchasing new train sets worth ₹1 lakh crore. This initiative, as explained by Union Railways Minister Ashwini Vaishnaw, is aimed at meeting the increasing demand in passenger travel. The investment underscores the government’s commitment to enhancing the national transportation infrastructure.
Adesh Gupta to Quit as Director of ZEEL Ahead of AGM on Dec 16
Adesh Kumar Gupta is stepping down as a non-executive, non-independent director on the board of Zee Entertainment Enterprises Limited (ZEEL) before their annual general meeting (AGM) on December 16th. Gupta said he voluntarily resigned from his position given that ZEEL’s merger process with Culver Max Entertainment Private Limited has been completed and Culver has selected a new board. ZEEL is one of India’s largest TV and media entertainment companies. The merger with Culver, the parent company of Sony Pictures Networks India (SPNI), was announced last year and is expected to create one of India’s biggest media groups.
Lanco Lenders to Vote on Adani Power’s ₹4,100cr Offer
Lenders of Lanco Amarkantak Power Ltd (LAPL), a private thermal power plant company that has been undergoing insolvency proceedings, will soon vote on whether to accept a ₹4,100 crore takeover offer made by Adani Power Limited (APL). LAPL has run into major financial trouble in recent years due to high debt levels and was referred to the NCLT by lenders to recover money. Reports say APL made an unsolicited bid for the company which creditors are assessing currently. If approved, it would give Adani Power significant thermal generation capacity as it is already the largest thermal power producer in India.
Qualcomm and Mediatek Vie to Supply Majority of Chips for India’s 5G Smartphones
Qualcomm and Mediatek, two of the world’s biggest semiconductor firms, are engaged in intense competition to supply their processors/chips to most of the 5G smartphones expected to be sold in India over the coming years. India is the second largest smartphone market globally. Mediatek has been gaining share in lower-end phones but Qualcomm says it will avoid getting into a price war to defend its premium segment share. The advent of superfast 5G networks in India is expected to rapidly upgrade users to 5G devices in the next 3-4 years.
BFSI Industry Becomes Top Office Space Leaser in India: CBRE
The banking, financial services and insurance (BFSI) sector leased the maximum office space in India in the first nine months of 2022 according to CBRE, a real estate consultancy firm. At over 30% share, BFSI replaced the information technology (IT) industry as the top driver of office space leasing after nearly a decade – signalling the rising growth and expanding footprint of financial companies in India. The office market is seeing higher long-term commitments from companies focused on return to office plans, especially global capability centers of financial service firms.
Adani Green Energy Forms Two New Subsidiaries
Adani Green Energy Ltd (AGEL), one of India’s largest renewable power companies, announced it has established two new subsidiary firms – Adani Renewable Energy Fifty One Ltd and Adani Renewable Energy Fifty Five Ltd. These firms have been set up via AGEL’s existing subsidiaries Adani Saur Urja Ltd and Adani Renewable Energy Holding Nine Ltd respectively. They are likely to be used as special purpose vehicles for housing future renewable energy projects as AGEL continues its rapid growth in solar, wind and hybrid power capacities across India.
Adani Group Reports Increase of 13.7% in Cash Balances
The Adani Group, India’s largest infrastructure conglomerate, reported a 13.7% year-on-year rise in its combined cash reserves held by all group companies. Total cash stood at ₹45,895 crore at the end of first half of FY 2022-23. The group’s earnings before interest, tax, depreciation and amortization (EBITDA) also grew by around 41% annually, indicating strong profitability momentum across its various businesses like ports, power, transmission and mining. Consolidated gross debt levels were flat over last year. The group is expanding rapidly across transport utility verticals.
Essar to Invest ₹55,000 Crore in Energy and Port Projects in Gujarat
Conglomerate Essar Group announced planned investments of ₹55,000 crore in energy transition, power and port infrastructure projects within Gujarat. This includes India’s largest 1 Gigawatt green hydrogen project at Hazira, expansion of the Essar Power plant at Salaya, and upgrading of captive jetties at the Salaya port terminal the group owns. The investment is aimed at contributing significantly to Gujarat’s renewables, infrastructure and industrial development over the coming years. The group already has massive investments in steel, port and power facilities in the state.
Commerce Min Shares List of Goods Facing Inverted Duty Structure
The Indian Ministry of Commerce and Industry has recently highlighted a significant issue impacting certain sectors of the economy: the inverted duty structure. This situation arises when the import duties on raw materials are higher than those on finished goods. The ministry has compiled a list of about 13-14 products that are affected by this issue and shared it with the Finance Ministry. This problem can have adverse effects on domestic manufacturing as it makes imported finished goods cheaper than those produced locally, thus disadvantaging local manufacturers. The identification of these products is a crucial step towards rectifying this imbalance, potentially leading to policy changes that could benefit domestic industries.
India Appeals WTO Panel Report
India has made a significant move in the international trade arena by appealing against a World Trade Organization (WTO) panel’s decision. This decision had previously gone against India’s policy of imposing tariffs on certain Information and Communication Technology (ICT) goods, including mobile phones and electronic components. The appeal underscores India’s attempt to protect its domestic industries against what it perceives as unfair trade practices. The outcome of this appeal could have far-reaching implications for India’s trade policies and its standing in the global trade community.
India, US Reaffirm Pledge to Combat Illicit Finance Risk
India and the United States, in a notable collaboration, have reaffirmed their commitment to jointly tackle global illicit finance risks. This renewed pledge, made during high-level talks, focuses on strengthening cooperation and sharing information to more effectively combat activities such as sanctions evasion and terrorist financing. This joint effort is a testament to the growing strategic partnership between India and the U.S., particularly in addressing complex global financial crimes that have far-reaching implications for both national security and the global economy.
WPI Inflation at 8-Month High in Nov
India’s Wholesale Price Index (WPI)-based inflation, a key indicator of the price movement in wholesale goods, has reached an eight-month high of 0.26% in November. This rise ends a seven-month streak of negative WPI inflation. The significant driver of this inflation spike is the sharp increase in food prices. Understanding WPI inflation is crucial as it helps in gauging the health of the economy and informs policy decisions regarding interest rates and monetary policy.
Procurement from GeM in FY24 Seen at ₹3.5 L Cr
The Government eMarketplace (GeM), an online platform for facilitating procurement of goods and services by government departments, is projected to witness procurement worth ₹3.5 lakh crore in the current financial year. This expected increase, as outlined by GeM’s CEO PK Singh, is indicative of the platform’s growing relevance and efficiency in streamlining government purchases. This trend is seen as a move towards greater transparency and efficiency in government procurement processes.
‘No US Fed Effect, Domestic Factors to Guide RBI Policy’
According to economists, the recent indication by the US Federal Reserve of three rate cuts in the next year is unlikely to sway the monetary policy decisions of the Reserve Bank of India (RBI). The RBI is expected to base its interest rate and monetary policy decisions primarily on domestic economic factors. However, the Fed’s move might influence the RBI to revisit its stance, potentially adjusting to global economic trends while focusing on the Indian economy’s specific needs.
Rules Tweaked: Cos Can Now Bid for Mineral Blocks Explored by Them
In a significant policy amendment, the Indian government has altered the rules regarding mineral block auctions. Notified private exploration agencies (NPEAs) can now bid for mineral blocks that they have explored. This change aims to incentivize private investment in mineral exploration and could lead to more efficient exploitation of mineral resources, potentially impacting industries like mining and metallurgy.
India’s Logistics Cost at 7.8-8.9% of GDP in FY22
A study commissioned by the Department for Promotion of Industry and Internal Trade (DPIIT) has revealed that India’s logistics costs accounted for 7.8% to 8.9% of its Gross Domestic Product (GDP) in the fiscal year 2021-22. These figures, provided by the National Council of Applied Economic Research, highlight the significant economic impact of logistics in India. Efficient logistics are crucial for economic growth, and these numbers underscore the need for improvements in this sector to enhance overall economic efficiency.
Taxman Told to be Watchful in Sending Out Notices to MNCs for Secondments
The Central Board of Indirect Taxes & Customs (CBIC) has issued guidelines for a more nuanced approach in dealing with multinational companies regarding secondment arrangements. Secondments involve employees being temporarily transferred to work in different parts of the same organization or in a different organization. This directive aims to ensure that tax notices sent to multinational companies are fair and considerate of the complex nature of these arrangements.
Parliament Watch
In a significant update from Parliament, it has been reported that the Employees’ Provident Fund Organisation (EPFO) saw a substantial increase in the number of new women subscribers in the fiscal year 2023. With 28,69,688 new female subscribers, there’s a noticeable rise compared to 15,93,614 in the fiscal year 2019-20. This data points to an increase in women’s employment during the pandemic, suggesting a positive trend in gender diversity in the workforce.
Vedanta Resources Announces Bond Restructuring Terms
Vedanta Resources, a major resource and mining company, has revealed the terms for its bond restructuring, which has prompted some private banks and wealth clients to sell their bonds. One of the bonds set to mature in January experienced a 2-3 point drop, now trading at 90/91, according to a trader.
Explanation: Vedanta Resources, a big mining company, has made an important announcement about changing the terms of its bonds. These bonds are like loans that people give to the company, and they can be bought and sold like other things. When the company said they are changing the terms, it made some banks and rich clients decide to sell these bonds. One of the bonds that were supposed to be paid back in January is now worth 2-3 points less than before, which means it’s not as valuable. So, people who own these bonds might get less money when they sell them.
World Telecom Body Opens 6 GHz Spectrum for Telcos
The World Radiocommunication Conference (WRC) has given India’s telecom operators a reason to celebrate by making a decision to allow the use of a part of the 6 GHz spectrum for mobile services all over the world. They have also designated another part of the 6 GHz spectrum for mobile services in Europe, the Middle East, and Africa.
Explanation: There’s a group called the World Radiocommunication Conference, and they made a decision that’s good news for phone companies in India. They said that a part of the 6 GHz radio waves can now be used for mobile services worldwide. It’s like opening up a new road for the phone companies to make their services better. They also set aside another part of these radio waves just for mobile services in Europe, the Middle East, and Africa, which is also great news for people in those places who use mobile phones. This decision makes the phone companies happy because they can provide better services now.
Bank of England Maintains 15-Year High Interest Rates
The Bank of England (BoE) made a decision to keep the interest rates where they are, even though many people are worried that the British economy might be going through a tough time. These interest rates are the amount of money you have to pay when you borrow from the bank, and they have been kept at a high level for 15 years.
This decision is different from what the United States Federal Reserve (often called the Fed) is doing. The Fed has been reducing interest rates to help the economy, but the Bank of England is not doing that right now. It seems like the Bank of England doesn’t plan to lower the rates anytime soon.
Explanation: The Bank of England has decided to maintain the current high interest rates, which determine the cost of borrowing money, despite concerns about the state of the British economy. This decision marks a 15-year high in interest rates. Unlike the US Federal Reserve (commonly known as the Fed), which has been lowering interest rates to stimulate economic growth, the Bank of England is opting to keep rates steady. This suggests that, for now, the Bank of England is not considering a rate cut as a measure to boost the economy. The decision indicates a different approach to monetary policy compared to the Fed, which has been more aggressive in its efforts to support economic recovery.
Indian IT Companies Anticipate 5-6% Increase in Hiring for 2024
Amid a period of reduced hiring activity, the Indian IT services industry is witnessing a resurgence, with a 5-6% year-on-year uptick in hiring reported as of December. This news comes as the industry gears up for higher spending on technology in 2024.
Explanation: After a slowdown in hiring, the Indian IT services sector is seeing an increase in job openings. Recent data indicates that compared to the previous year, there has been a 5-6% rise in hiring by IT companies as of December. This uptick in hiring is happening because these companies expect to spend more on technology in the year 2024. It means they are looking for more people to join their teams to work on various tech projects.
Infosys Founder NR Narayana Murthy Warns Against Deepfakes
Deepfakes, which are fake videos created using artificial intelligence and voice-cloning technologies, have become a concern in the corporate world. NR Narayana Murthy, the founder of Infosys, has cautioned people not to fall victim to these deceptive videos.
Explanation: Deepfakes are videos that are not real but are made to look real using special computer programs. These fake videos are created with the help of artificial intelligence and technology that can copy someone’s voice. NR Narayana Murthy, who started Infosys, has advised people to be careful and not believe everything they see or hear in these fake videos because they can trick people.
Udaan Secures $340 Million Investment from M&G Prudential and Others
Udaan, a business-to-business (B2B) e-commerce startup, announced that it has raised $340 million in a funding round. The investment was led by UK-based savings and investment firm M&G Prudential.
Explanation: Udaan, a company that helps other businesses buy and sell things online, has received a big amount of money, $340 million, from investors. The main investor is a company called M&G Prudential from the United Kingdom. This money will help Udaan grow and do more business.
Infibeam Acquires 49% Stake in Pirimid
Payment solution provider Infibeam Avenues has purchased a 49% stake in Pirimid Fintech, a capital markets financial software provider, for ₹25.1 crore.
Explanation: Infibeam Avenues, a company that helps with online payments, has bought almost half (49%) of another company called Pirimid Fintech, which makes software for financial markets. They paid ₹25.1 crore for this stake, which means they now partly own Pirimid Fintech and can work together on financial technology.
Asha Ventures Raises ₹400 Crore for Impact Investment Fund
Mumbai-based impact investor Asha Ventures has successfully raised ₹400 crore for its first investment fund, which will have a total of ₹750 crore.
Explanation: Asha Ventures, a company that invests money in projects that aim to do good things for the world, has gathered ₹400 crore for its first fund. This fund will have a total of ₹750 crore that can be used to support projects and businesses that make a positive impact.
Fed Policy Stance Triggers Bank Stock Rally
Banking shares surged on Thursday after the U.S. Federal Reserve’s latest meeting minutes signaled a potential pause in aggressive interest rate hikes in 2023. The BSE Bankex index closed 1.26% higher led by a rally in leading lenders like HDFC Bank, ICICI Bank and Axis Bank. Analysts said the dovish tone has stoked hopes of a peak in benchmark rates, which will support credit growth and improve profitability for banks.
PSU Market Value Doubles to ₹46 Lakh Crore in Sensex Rally
As the Sensex crossed 70,000 points after starting 2022 around 60,000, listed public sector undertakings (PSUs) have played a pivotal role, shattering perceptions of poor performance. The combined market capitalization of key government owned companies across oil & gas, power, banks and others has more than doubled over the past year to ₹46.4 lakh crore. Analysts credit major strategic shifts and profitability improvements driven by the Centre.
IT Firms Recover on Expectations of Moderating Rate Hikes
Information technology stocks rebounded sharply on Thursday, recovering some losses suffered the previous day. The rally came as investors expect the U.S. Fed to reduce the pace of interest rate hikes through 2023. IT companies get a major share of revenue from the U.S. and tend to benefit from a weaker rupee. But higher U.S. rates have negatively impacted the sector this year. Dovish signals offered some relief.
Sensex Advance Driven Mainly by Domestic Investors
The Sensex taking 551 trading sessions to rise from 60,000 to the historic 70,000 level reflects a more gradual, domestically-driven rally unlike previous rapid surges fueled by foreign funds. Retail investment into equities has boomed since 2020, aided by pandemic savings. Though FPIs pulled out ₹1.5 lakh crore in 2022, domestic institutional inflows cushioned markets.
Equities Vastly Outperform Gold, Debt and Real Estate Over 10 Years
Analyzing returns across top asset classes highlights the standout performance of equities over long-term horizons. The Nifty has delivered 14% annualized returns over 10 years compared to just 7.3% for gold, indicating the power of stocks. However, gold has matched or exceeded Nifty returns over shorter 1 and 5 year timeframes. Across timeframes, equity returns have been multiples higher than fixed income, real estate etc.
Despite Market Highs, Advisors Recommend Balanced Asset Allocation
Even as Indian equity indices scale fresh highs, wealth managers are advising investors to avoid overweight positions in stocks and instead maintain balanced asset allocations. They recommend spreading capital across equities, debt, gold and real estate. This approach helps optimize returns from market uptrends along with downward protection and diversification in case of corrections. Regular rebalancing is also suggested.
RBI Builds Reserves Amid Global Dollar Shortage
While most Asian currencies have gained strength against the US dollar due to signals from the US Federal Reserve of a more lenient monetary policy in 2024, the Indian rupee’s gains have been less significant. The Reserve Bank of India (RBI) is actively building up its reserves and prioritizing export competitiveness to counteract the worldwide scarcity of the US dollar.
Explanation: The value of the Indian rupee compared to the US dollar hasn’t gone up as much as other Asian currencies because the Indian central bank, RBI, is working to save up more US dollars and keep the rupee competitive for foreign trade. This is happening because there is a shortage of US dollars in the global market, making them more valuable. Other countries’ currencies are getting stronger against the US dollar, but the rupee is not rising as fast because India wants to make sure it has enough dollars in reserve.
Federal Reserve Considers Injecting Money to Stabilize Markets
As global financial markets feel the pressure from US bond yields staying high for a longer time, the US Federal Reserve might change its approach. They could start putting more money into the financial system by either May or June next year. This is to prevent major disruptions in the worldwide financial system, according to Neelkanth Mishra, chief economist at Axis Bank.
Explanation: Global financial markets are facing some challenges because US bond interest rates are staying high for longer than expected. To prevent big problems in the financial system worldwide, the US Federal Reserve is thinking about giving more money to the system. They might start doing this by May or June next year. It’s like adding more money to a game to keep it going smoothly.
RBI to Infuse ₹1 Lakh Crore into Banking System
The Reserve Bank of India (RBI) is planning to inject ₹1 lakh crore into the banking system through a 7-day variable rate repo auction on December 15. This is the first time in six months that the central bank is putting extra money into the banking system.
Explanation: The RBI, which is like India’s central bank, is going to add ₹1 lakh crore (a really big amount) into the banking system. It’s like putting more money into the bank so that banks have enough money to lend to people and businesses. They are doing this through an auction, which is a way to sell this extra money to banks.
HDFC Bank to Raise ₹10,000 Crore with Infrastructure Bonds
HDFC Bank, India’s largest private lender, plans to collect up to ₹10,000 crore by selling infrastructure bonds. This is the first time they’re doing this since their merger with Housing Development Finance Corporation in July.
Explanation: HDFC Bank, which is a big bank in India, wants to get ₹10,000 crore by selling special bonds for infrastructure projects. This is the first time they are doing this since they joined with Housing Development Finance Corporation in July. These bonds are like loans that people give to the bank, and in return, the bank pays them back with interest.