18 December 2023 : Important Financial News in India


Source: Economic Times, “Today’s ePaper”

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Table of Contents

SpiceJet, Two Others Try Late Check-in for Go First

In a surprising turn of events, three companies have expressed interest in acquiring the bankrupt airline Go First. This development is unexpected as it comes weeks after the deadline for submitting acquisition proposals had passed, and lenders were considering liquidating the airline. The interested entities include Sharjah-based aviation company Sky One, Africa-focused investment firm Safrik Investments, and the Indian airline SpiceJet. This late expression of interest in Go First indicates a potential revival for the beleaguered carrier, which was on the brink of liquidation. The involvement of these three diverse entities, each from different geographical and operational backgrounds, highlights the dynamic nature of the aviation industry and the potential value they see in Go First. This move could lead to a significant shift in the competitive landscape of the airline industry, particularly in regions where Go First had a strong presence. The final outcome of this acquisition process will be crucial for the stakeholders of Go First, including its employees, creditors, and the broader aviation market.

Red Sea Shipping Pause: Industry Sees 30% Rise in Costs, 2-Week Delay

The global shipping industry is facing a significant challenge due to a pause in shipping routes through the Red Sea and Suez Canal. This disruption is causing a 30% increase in freight and insurance costs, and a delay of approximately 15 days for shipments to reach Europe. This pause in Red Sea shipping is a consequence of global shipping majors avoiding these routes, though the specific reasons for this avoidance are not detailed. The impact of this disruption is considerable, affecting the flow of goods and commodities to one of the world’s largest markets, Europe. The increased costs and delays will likely have downstream effects on supply chains, potentially leading to higher prices for consumers and challenges for businesses relying on timely deliveries. The situation underscores the vulnerability of global trade to disruptions in key shipping lanes and highlights the need for robust contingency plans and diversification of shipping routes. The ongoing situation will be closely monitored by industry stakeholders, as it has the potential to affect global trade dynamics significantly.

Cos Infusing Influence Capital into Boards

Indian corporations are increasingly incorporating former government officials into their boards, a trend exemplified by Hindustan Unilever (HUL) appointing former revenue secretary Tarun Bajaj as an independent director. This move marks HUL as the second company in the Nifty 50 and the third Fast-Moving Consumer Goods (FMCG) company in India to make such an appointment in the last six months. This strategy, termed ‘infusing influence capital’, involves leveraging the experience, expertise, and networks of erstwhile bureaucrats to enhance corporate governance and strategic decision-making. These appointments are seen as a way to gain valuable insights into regulatory landscapes and to foster better relationships with governmental bodies. This trend reflects a broader shift in the corporate governance landscape, where the value of experience in public administration is increasingly recognized in the private sector. The integration of former government officials into corporate boards could lead to more nuanced and informed business strategies, particularly in industries that are heavily regulated or closely intertwined with public policy.

Week 7 & Counting: Will Markets Go 1 Step Forward or 2 Steps Back?

The Indian stock market is at a critical juncture after experiencing seven consecutive weeks of gains. Market analysts are now debating whether this bullish trend will continue or if the market is due for a correction. Historical data from the past decade suggests that the market is susceptible to declines after such a prolonged period of gains. This pattern raises questions about the market’s near-term direction. Investors and market watchers are closely observing various indicators and global economic signals to anticipate the market’s next move. The uncertainty is fueled by various factors, including global economic conditions, domestic policy changes, and geopolitical tensions. The outcome of this period will be significant for investors, as it may dictate investment strategies and risk assessments in the short to medium term. The market’s direction in the upcoming days could serve as a bellwether for the broader economic outlook and investor sentiment in India.

Many Senior Execs from Tech Cos Join ‘Big Four’ as Partners

In a notable shift in the professional landscape, nearly two dozen senior executives from various technology companies have transitioned into partner roles at the ‘big four’ professional services firms: Deloitte, PwC, EY, and KPMG. This trend, occurring over the past year, comes amidst challenging global conditions for the technology sector. These movements indicate a growing intersection between technology and traditional professional services. The expertise of these executives in technology is likely sought after to enhance the digital capabilities of these firms, aligning with the increasing demand for digital transformation solutions in various industries. This trend also reflects a broader industry movement where skills and experiences in technology are becoming critical across different sectors. The integration of these tech executives into leadership roles at professional services firms could lead to a significant transformation in the services offered, client engagement strategies, and overall operational dynamics within these firms.

Electronic Appliances’ Sales Pick Up During Wedding Season

The wedding season has brought a surge in sales for home appliance and consumer electronics makers. This increase is primarily driven by demand for entry-level mass products in non-metro cities. The trend highlights the significant role of cultural events and traditions in driving consumer behavior, particularly in regional markets. The uptick in sales during the wedding season reflects the importance of these occasions in consumer spending patterns, especially in home appliances and electronics, which are often seen as essential purchases for new households. This pattern underscores the need for businesses in this sector to tailor their marketing and sales strategies to align with cultural and regional trends to capitalize on such seasonal opportunities.

Gujarat Bets on Infrastructure to Attract Investments in Auto Sector

Gujarat is strategically focusing on infrastructure development to attract more investments in its automobile sector. The state’s auto sector gained momentum in 2009 with Tata Motors establishing its Nano manufacturing plant in Sanand. Since then, Gujarat has become a hub for significant investments from domestic and international players in the auto industry. This focus on infrastructure highlights the state’s commitment to creating a conducive environment for industrial growth, particularly in the automotive sector. The move is part of a broader strategy to enhance industrial capacity and attract investors, thereby boosting the state’s economic growth and employment opportunities.

Diesel Sales Recover in Dec Post Diwali Dip

In India, diesel sales have shown a recovery in the first half of December following a significant drop during the Diwali period. This fluctuation in diesel consumption is attributed to transporters taking breaks during the Diwali festival. However, despite the recovery, sales remain lower than the previous year’s figures. This trend offers insights into the seasonal variations in fuel consumption and the broader economic activities in the country. Diesel sales are often viewed as an indicator of economic activity, especially in transportation and industrial sectors. The recovery post-Diwali provides an indication of the resumption of normal business activities, but the comparison with last year’s figures also reflects the ongoing challenges and changes in the economic landscape.

BBC ex-Staffers’ Firm Collective Newsroom Ropes in MSKA & Asso as Statutory Auditor

Collective Newsroom, formed by former BBC staff to assist BBC India in complying with foreign direct investment (FDI) norms in digital news, has appointed MSKA & Associates as its first statutory auditor. This development is a strategic move for the firm, which plays a crucial role in ensuring compliance with regulatory standards in the rapidly evolving digital news landscape. The appointment of a statutory auditor is a key step in establishing the firm’s credibility and adherence to financial and regulatory norms. This move signifies the importance of maintaining high standards of corporate governance and financial transparency, especially in sectors that are subject to intense scrutiny and regulatory requirements.

Smaller Cities a Big Market for Apple, Account for Over 60% of Sales Now

Apple is experiencing significant sales growth in smaller towns and cities in India, with over 60% of its sales, particularly iPhones, now coming from outside Tier-I cities. This shift indicates a broadening of Apple’s market base in India, reflecting the growing demand and purchasing power in smaller cities. The trend is significant for Apple, traditionally seen as a brand more prevalent in larger, urban markets. This expansion into smaller markets signifies a strategic shift in Apple’s marketing and distribution strategies, catering to a wider demographic and geographic audience. This growth in smaller cities can be attributed to various factors, including increased brand awareness, the availability of more affordable models, and improved retail and online distribution channels.

Qualcomm Open to Working with OneWeb and Jio for Mobile Satcom Services: Top Exec

Qualcomm, the leading smartphone chipmaker, is open to collaborating with Bharti-backed OneWeb and Reliance Jio’s satellite arm to bring satellite connectivity to mobile devices. This potential partnership would mark a significant advancement in mobile communications technology, blending satellite and traditional mobile networks. Qualcomm’s interest in such a collaboration underscores the growing importance of satellite technology in enhancing global connectivity, particularly in remote and underserved areas. The involvement of major players like Qualcomm, OneWeb, and Jio highlights the potential for innovative solutions in the telecommunications sector, which could lead to more widespread and reliable connectivity options.

ZEEL Asks Sony to Extend Cut-off Date to Complete Merger

Zee Entertainment Enterprises Ltd. (ZEEL) has requested an extension from the Sony Group Corp-owned Culver Max Entertainment (formerly Sony Pictures Networks India) and Bangla Entertainment to complete their merger. The request comes as the original cut-off date of December 21 approaches. This merger is a significant event in the media and entertainment industry, indicating a consolidation trend within the sector. The extension request suggests complexities and challenges in finalizing such large-scale mergers, which involve intricate legal, financial, and regulatory processes. The outcome of this merger will have substantial implications for the media landscape, potentially reshaping market dynamics and competition.

Nifty Rally likely to Continue, 21,700-21,800 Levels Possible

Technical indicators are signaling a likely continuation of the current upward momentum in the Nifty index. Analysts suggest that if the Nifty exceeds and sustains levels above 21,600, it could lead to a short covering scenario, pushing the index towards the 21,700-21,800 range. This optimistic outlook is based on the analysis of various technical factors and market trends. The potential rise in the Nifty reflects broader positive sentiments in the equity market, driven by various economic and corporate factors. Investors and traders will be closely monitoring the market for signs of this anticipated movement, as surpassing such thresholds can often lead to significant changes in market dynamics and investor behavior.

Banks Open to Exploring a Pact on Sharing Default Info with Rating Cos

Banks are considering an agreement to share information on defaults with credit rating agencies (CRAs). This move comes in response to recurrent issues in financial markets where CRAs have been criticized for lack of information access. By sharing sensitive default information, CRAs can make more accurate assessments, potentially leading to more informed investment decisions in the financial markets. This collaboration could enhance transparency and reduce the risk of financial mishaps caused by uninformed or late reporting of financial distress in companies. The pact would represent a significant step towards improving the flow of critical financial information between lending institutions and rating agencies.

Mcap of Top 9 Cos Jumps ₹2.26 L cr; TCS, Infy Gain Most

The combined market capitalization of nine of the top-10 most valued Indian firms surged by ₹2.26 lakh crore last week. Tata Consultancy Services (TCS) and Infosys were the primary contributors to this jump, amidst an overall bullish trend in equities. This significant increase in market valuation reflects the robust performance of these companies and a positive investor sentiment in the broader market. The rise in market cap of these leading firms, including giants like Reliance Industries, TCS, and ICICI Bank, indicates strong corporate fundamentals and investor confidence in their future growth prospects.

Split Money Across Two SGB Tranches, Gold Prices have Support, say Analysts

Wealth managers advise investors to diversify their investments across two tranches of sovereign gold bonds (SGB) announced by the Reserve Bank of India. This recommendation is based on the belief that gold prices have underlying support and splitting investments could mitigate risks and optimize returns. Sovereign gold bonds offer a secure way to invest in gold and benefit from price movements. This strategy of diversification reflects a cautious yet opportunistic approach to investing in precious metals, considering the current economic climate and market trends.

Reliance Biggest Wealth Creator: Study

A study by Motilal Oswal Financial Services has identified Reliance Industries as the biggest wealth creator between 2018 and 2023. During the same period, Adani Enterprises emerged as the top all-around wealth creator. This finding underscores the significant impact these companies have had on wealth generation in India’s stock market. Their performance reflects strong business models, strategic expansions, and resilience in the face of economic fluctuations. These companies’ ability to consistently create wealth over a period of years highlights their importance in the Indian economy and their influence on investor portfolios.

FPIs Pump ₹1.5 lakh cr into Indian Equities in ’23

Foreign Portfolio Investors (FPIs) have injected a staggering ₹1.5 lakh crore into Indian equities in 2023. This resurgence of foreign investment is driven by optimism about India’s economic resilience amidst a challenging global economic environment. Experts predict this positive trend may continue into 2024. The substantial inflow of foreign investment indicates growing international confidence in the Indian market, likely influenced by favorable economic policies, robust corporate earnings, and the potential for high returns. This trend is a positive sign for the Indian economy, as it can lead to increased liquidity and potentially higher valuations in the stock market.

Familiar Names Throw Their Hats in 2024 IPO Market Revival Ring

Several well-known unicorns and decacorns are gearing up for initial public offerings (IPOs) in 2024, signaling a revival in the IPO market. Despite being strong candidates this year, many delayed their listings, possibly due to market conditions. The anticipated return of these mega-listings next year suggests a resurgence of investor interest and confidence in the market. These companies entering the public market could provide a significant boost to investor sentiment and contribute to the overall dynamism of the equity market. Their successful listings could pave the way for more companies to follow suit, potentially leading to a vibrant IPO market in 2024.

Borrowing Costs Rise for NBFCs and Cos

Following the Reserve Bank of India’s tighter credit regulations for non-banking financial companies (NBFCs), the cost of borrowing for these entities has significantly increased. Additionally, banks are facing higher costs for funds due to tight liquidity conditions in the banking system. This rise in borrowing costs could impact the financial performance and growth prospects of NBFCs and banks, potentially leading to a reevaluation of their strategies and financial planning. This situation underscores the broader impact of regulatory changes on the financial sector and the need for financial institutions to adapt to evolving market conditions.

Better Margins, Lower Valuation Than Peers Make Happy Forgings a Good Bet

Happy Forgings, specializing in forged and machined components for trucks, plans to raise ₹1,008 crore through an initial public offering (IPO), valuing the company at ₹8,000 crore. The company’s attractive margins and lower valuation compared to its peers make it an appealing investment option. This IPO could provide investors an opportunity to invest in a company with strong fundamentals in a specialized manufacturing sector. The success of this offering will depend on investor perception of the company’s growth potential and its competitive positioning in the market.

Falling Prices of Oil Will Add Extra Zip to Rally in EM Assets

The declining oil prices are expected to further boost the rally in emerging-market (EM) assets, which have already been performing well this month. Optimism over the Federal Reserve’s shift to interest-rate cuts has been driving gains in EM bonds and currencies. Lower oil prices could enhance these gains by reducing input costs and improving trade balances for oil-importing emerging economies. This development could attract more investors to EM assets, seeking to capitalize on the favorable conditions.

Varde May Invest in GMR Airports’ Bond Issue

Private equity fund Varde Partners is reportedly considering an investment in GMR Airports’ upcoming ₹800-crore bond issue. This fundraising effort is aimed at refinancing high-cost debt and investing in airport upgrades. The involvement of a significant investor like Varde Partners could be a positive sign for GMR Airports, indicating investor confidence in the company’s future prospects and its strategic initiatives. The success of this bond issue could be crucial for GMR Airports in terms of improving its financial health and supporting its expansion plans.

Wall St’s China Stock Bulls Keep Hopes Alive for ’24

Wall Street’s China stock bulls are maintaining optimism for 2024, despite a challenging 2023 marked by a 14% drop in the MSCI China Index. Last year, global investment banks were almost unanimously optimistic about the Chinese market, but their expectations were not met due to various economic and geopolitical factors. The continued optimism for 2024 suggests that investors still see potential in the Chinese market, banking on its recovery and growth prospects. This sentiment reflects the dynamic nature of global investment strategies and the importance of adapting to changing market conditions.

GMR Mops Up Rs3,215-crore Funds for Vizag Int’l Airport

GMR Visakhapatnam International Airport has secured a substantial term loan of Rs 3,215 crore from a consortium of five lenders. This financial backing marks a significant step for the GMR Group, as it prepares to construct its fourth airport in India. The mobilization of such a large sum underscores the confidence of the lenders in the project and the potential they see in the expansion of India’s aviation infrastructure. This development could significantly impact the regional economy and connectivity, enhancing travel and trade opportunities. The successful execution and operation of this project will be a testament to GMR Group’s growing influence in the airport infrastructure sector in India.

Realty Body Wants Govt to Abolish Tax on Unsold Flats

The National Real Estate Development Council (NAREDCO) is advocating for the abolition of income tax on unsold flats and the granting of MSME status to builders. This proposal, directed at Finance Minister Nirmala Sitharaman, aims to alleviate financial pressures on real estate developers. The removal of tax on unsold properties could provide significant relief to the sector, which often struggles with inventory overhang. Additionally, MSME status would enable builders to access low-interest loans, potentially boosting the real estate industry. This request reflects the challenges faced by the real estate sector and the need for supportive measures to sustain its growth.

Swiggy’s ‘Collection Fee’ Sparks Dispute with Restaurants

Swiggy’s introduction of a 2% collection fee on all orders, effective December 20, has led to a dispute with restaurant owners. Described as an “unwelcome distraction” by a leading restaurant body, this decision could strain the relationship between Swiggy and its restaurant partners. The imposition of this fee highlights the ongoing challenges in the food delivery ecosystem, where balancing profitability and maintaining strong partnerships with restaurants is crucial. The reaction from the restaurant industry suggests a need for more collaborative approaches to fee structures in the food delivery business.

Impresario Hospitality Plans to Go Public in 2-3 yrs: CEO

Impresario Hospitality & Entertainment, known for its popular restaurant brands like SOCIAL, Smoke House Deli, and Boss Burger, plans to go public in the next two to three years. This announcement by the company’s managing director reflects confidence in the growth prospects of the casual dining segment. An IPO (Initial Public Offering) could provide the company with additional capital to expand its operations and consolidate its position in the competitive hospitality market. The decision to go public indicates the company’s maturity and readiness to enter a new phase of growth and financial transparency.

Can’t be Complacent about Market Share: Unilever CEO

Unilever’s CEO, Hein Schumacher, emphasized the importance of not being complacent about the company’s market share. He acknowledged the increasing competition and the possibility of Unilever’s historically strong market position weakening. This statement reflects the dynamic nature of the consumer goods market, where staying competitive requires constant innovation and responsiveness to changing consumer needs and market trends. Schumacher’s remarks suggest a strategic focus on maintaining and growing Unilever’s market presence amidst evolving competitive challenges.

Telecom Bill to be Tabled Today in LS; OTT Apps may be Kept Out

The upcoming Telecom Bill, set to be tabled in the Lok Sabha, is expected to exclude over-the-top (OTT) applications from the definition of telecommunication services. This decision provides significant relief to communication service providers such as WhatsApp and Telegram, as they will remain outside the purview of telecom regulation. The exclusion of OTT apps from telecom regulations indicates a recognition of the distinct nature of these services compared to traditional telecom services. This development is crucial for the OTT industry, as it impacts how these platforms are regulated and their operational freedom in the Indian market.

Tata Steel Looks to Complete Kalinganagar Expansion by Dec 2024

Tata Steel aims to complete the second phase of its Kalinganagar project expansion in Odisha by December 2024. This expansion, which began in November 2018, will increase the production capacity from 3 million tonnes per annum (mtpa) to 8 mtpa, with an investment of ₹23,500 crore. The completion of this expansion will significantly boost Tata Steel’s production capabilities, reinforcing its position in the steel industry. This strategic investment highlights the company’s commitment to growth and its confidence in the future of the steel market.

Greater Market Access Sought for Domestic Alcoholic Products in EU

The Confederation of Indian Alcoholic Beverage Companies (CIABC) is advocating for increased market access for Indian alcoholic products in the European Union. The body is calling for the removal of non-tariff barriers to boost exports. This move could open new opportunities for Indian alcoholic beverage makers in the European markets, potentially leading to increased trade and recognition of Indian brands internationally. The success of these efforts will depend on trade negotiations and the willingness of the EU to lower barriers.

‘No New Interim Norms to Regulate Big Tech Players’

The Competition Commission of India (CCI) Chairperson, Ravneet Kaur, has stated that there are no plans to introduce new regulations for digital players until the government decides on the necessity of a new law to regulate big tech. This announcement clarifies speculations about interim norms and suggests that the regulatory framework for big tech in India is still under consideration. The approach taken by CCI indicates a cautious and deliberate process in formulating regulations that could impact the rapidly evolving digital sector.

Insurers may get Aid to Deal with Nature’s Fury

A parliamentary panel is likely to recommend policy measures to help the insurance sector better manage the impact of natural calamities on large infrastructure projects. These measures could provide significant support to insurers, enabling them to handle the increasing frequency and severity of natural disasters more effectively. Enhancing the insurance sector’s capacity to deal with such events is crucial for the stability and resilience of the economy.

Top 3 Banks Working with Govt on Funding Rules for Green H2 Projects

India’s top banks, including State Bank of India, HDFC Bank, and ICICI Bank, are collaborating with the government to develop a financing framework for green hydrogen projects. This initiative underscores the growing focus on sustainable energy and the role of financial institutions in supporting green initiatives. The formulation of funding rules for green hydrogen projects is a critical step towards achieving India’s climate goals and fostering a sustainable energy future.

Ministry Road map Soon for Exporters to Deal with CVD Cases

India is expected to engage in talks with the US to address concerns related to the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. This follows the US’s imposition of countervailing duties on certain Indian exports as retaliation against the RoDTEP scheme. The Indian government’s efforts to negotiate with the US aim to ensure the compatibility of the RoDTEP scheme with global trade rules, crucial for maintaining healthy trade relations and protecting the interests of Indian exporters.

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