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3 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

Religare Finvest and Esops Issuance to Saluja

Religare Enterprises (REL) experienced significant changes in its financial services conglomerate. Following the Burman family’s open offer to acquire more shares and gain control of REL, Rashmi Saluja, the executive chairperson, acquired an 8% stake in Religare Finvest (RFL), a shadow bank wholly owned by REL. This acquisition was made through an employee stock option plan (Esop) award. This strategic move came just a day after the Burman family’s offer, indicating a potential alignment of internal leadership goals with the major shareholders’ objectives.

Surge in Fintech Mutual Fund SIPs

The fintech industry, represented by startups like Groww, Angelonia, and PhonePe, is rapidly emerging as a dominant force in mutual fund distribution. These companies have been adding a significant number of new systematic investment plans (SIPs) monthly. This trend showcases the growing influence of fintech in traditional financial sectors and reflects changing investor preferences, particularly among the younger, tech-savvy demographic.

IPO Momentum in India for 2024

India’s primary market is gearing up for a surge in 2024, with expectations to raise over ₹1 lakh crore through initial public offerings (IPOs). This forecasted amount is more than double the ₹49,434 crore raised in 2023. This trend underscores India’s growing market potential and investor confidence in its economy, indicating a robust year for new public listings.

Record Institutional Investment in Indian Equities

December 2023 marked a record investment month for the Indian equity market, with institutional investors pouring in ₹90,029 crore ($11 billion). This figure significantly eclipsed the investment in the previous month and included contributions from both foreign portfolio investors (FPIs) and domestic funds. This surge reflects growing investor confidence in the Indian market.

State Bank of India’s Offshore Syndicated Loan

The State Bank of India (SBI) successfully raised $1 billion through an offshore syndicated loan. This amount was double the initially planned figure. The loan was arranged by HSBC and attracted global investors, highlighting the international appeal of Indian financial companies and the anticipation of India’s robust growth in a challenging global landscape.

Nifty’s Potential Post-Election Movement

SBI Securities predicts a significant rise in the Nifty index for 2024, setting a target range of 23,500-24,300. This forecast suggests an 8.5%-12.15% increase from its current level, indicating optimism in the market’s performance post-elections and confidence in the underlying economic strength.

RBI’s Revised Dividend Payment Norms for Banks

The Reserve Bank of India proposed new guidelines for banks regarding dividend payments. Banks with a net non-performing assets (NPA) ratio below 6% and sufficient capital adequacy for the past three years will be eligible to declare dividends. This move aims to ensure financial stability and responsible distribution of profits within the banking sector.

Vodafone Idea Denies Stake Sale Talks with Starlink

Vodafone Idea publicly denied rumors of discussions with Elon Musk’s Starlink for a stake sale. This denial came after media reports speculated on such negotiations, which led to a 5.65% drop in the telecom operator’s shares. This situation highlights the sensitivity of stock markets to rumors and news, especially involving significant industry players and influential figures like Elon Musk.

Radhakishan Damani Increases Stake in VST Industries

Notable stock investor and DMart founder Radhakishan Damani has increased his investment in VST Industries, a prominent cigarette maker, by 1.4%. This move was executed through an open market transaction. Damani’s investment decisions are closely watched by the market, as they often indicate broader trends and confidence in the companies he invests in.

Vedanta Resources’ Debt Restructuring Gains Momentum

Vedanta Resources Ltd (VRL), a London-based holding company with metals and resources businesses in India, is successfully attracting more bondholders for its debt restructuring plan. This is largely due to the introduction of a significant early consent fee, which incentivizes early participation in the restructuring process. Such financial strategies are crucial for companies looking to manage their debt efficiently in challenging economic environments.

Reactivating Dormant Bank Accounts: RBI’s New Rules

The Reserve Bank of India has updated its regulations regarding dormant, or inoperative, bank accounts. The new rules aim to simplify the process for account holders to reactivate their accounts and avoid penalties. This move reflects RBI’s effort to streamline banking operations and enhance customer experience.

Rays Power Infra’s IPO Filing with SEBI

Mumbai-based Rays Power Infra has filed its draft red herring prospectus (DRHP) with SEBI, signaling its intention to go public. The proposed IPO includes a fresh issue of shares worth Rs300 crore and an offer for sale by existing shareholders. Such public listings indicate a growing trend among renewable energy companies to access capital markets for expansion.

Diffusion Engineers’ IPO Prospectus Submission

Diffusion Engineers has submitted its draft red herring prospectus (DRHP) to SEBI, proposing to raise funds through an initial public offering (IPO). This step marks the company’s entry into the public market and reflects the broader trend of Indian companies capitalizing on investor interest to fund growth and expansion.

Canara Bank’s Cybersecurity Wing Launch

In response to the growing concern over online fraud and the surge in digital transactions, state-run Canara Bank is set to inaugurate a dedicated cybersecurity wing on April 1. This initiative underscores the increasing importance of digital security in the banking sector and represents a proactive step in safeguarding customer information and transactional integrity in an increasingly digital financial landscape.

Fastest Rate Hike Transmission by Banks

Data from the Reserve Bank of India indicates that banks have passed on the central bank’s higher interest rates faster than in the previous three rate-increase cycles. This quick transmission is largely attributed to the RBI’s mandate requiring banks to link lending rates to external benchmarks. This policy ensures more responsive and transparent interest rate mechanisms in the banking sector, benefiting both lenders and borrowers.

Incentive Schemes for Bank Deposits and UPI Spends

To attract customer deposits and promote digital transactions, banks are offering various incentives. For instance, the state-run Bank Of India has introduced a special fixed deposit scheme with a 7.5% interest rate for substantial deposits, while DCB Bank is offering cashback for digital transactions through UPI. These schemes reflect the banks’ strategies to increase their deposit base and encourage digital transaction methods among their customers.

Rise in Arbitrage Fund Returns

Arbitrage funds in India are now yielding higher returns than liquid funds and are attracting investors due to their favorable tax treatment. The assets under management (AUM) for these funds have risen by 60% in a year to Rs1.38 lakh crore. This trend signifies a shift in investor preference towards asset classes that offer both tax efficiency and higher returns in a volatile market.

RBI Pushes for Efficient Grievance Redressal by Credit Info Companies

Deputy Governor Swaminathan J of the Reserve Bank and other senior officials met with the chief executives of credit information companies (CICs). The RBI emphasized the importance of quick and effective redressal of client grievances. This meeting is part of the central bank’s broader engagement with supervised entities to enhance the overall efficiency and responsiveness of the financial sector.

Coal India’s Investment Appeal

Coal India is expected to continue attracting investor interest in 2024, following a year where its shares saw a remarkable 67% gain. Experts believe there is further upside potential, largely due to increasing volumes and reduced costs. Coal India’s performance is indicative of the broader energy sector’s dynamics and its role in the country’s economic growth.

Union Bank’s Move to Pay Benefits via e-Rupee

Union Bank of India is planning to transfer claims related to various employee benefit schemes to the central bank digital currency (CBDC) wallet, instead of employees’ salary accounts. This initiative is part of the broader effort to promote the Reserve Bank of India’s digital rupee. It reflects the increasing integration of digital currency into mainstream banking operations.

RBL Bank’s Sale of Stressed Credit Card Loans to Kotak Bank

RBL Bank has sold nearly ₹800 crore of its stressed credit card portfolio to Kotak Mahindra Bank at a significant discount. This transaction reflects the growing concerns in the unsecured loan segment, particularly credit cards. Such deals indicate the banks’ strategies to manage and mitigate risk in their loan portfolios, especially in the context of rising defaults and financial stress.

Day Trading Guide for Nifty

For day traders, the Nifty index presents specific resistance and support levels to watch. It faces resistance near the upper end of the rising channel, with 21,800-22,000 levels as crucial resistance for the week. On the other hand, 21,400- 21,500 range acts as a significant support, marking the lower end of the range. These insights are crucial for traders to make informed decisions and manage risks effectively in a volatile market.

FCI’s ₹50,000 Crore Borrowing Plan

The Food Corporation of India (FCI) plans to borrow ₹50,000 crore to meet its short-term fund requirements. This borrowing, primarily through a three-month tenure loan, is aimed at managing cash flow mismatches and ensuring smooth procurement and distribution of food grains. Such financial strategies are essential for state-owned entities like FCI to maintain operational efficiency and meet their public service obligations.

CCI Approval for PSPCL’s Acquisition of GVK Energy Unit

The Competition Commission of India (CCI) has approved Punjab State Power Corporation Ltd’s (PSPCL) proposal to acquire a 100% stake in a unit of GVK Energy. This clearance is a significant step in PSPCL’s expansion and diversification strategy, allowing it to enhance its capabilities and reach in the energy sector.

Election Spending and Economic Growth

Spending by political parties for the general election could exceed ₹1 lakh crore, potentially boosting consumption and contributing to economic growth. Economists predict a 0.2-0.3 percentage point increase in growth for the last quarter of FY24 due to this election-related expenditure. This highlights the significant economic impact of major political events, reflecting the interplay between politics and economics.

SOP for Industrial Entrepreneur Memorandum Changes

The government has issued a standard operating procedure (SOP) to facilitate changes or cancellations in the Industrial Entrepreneur Memorandum (IEM). This move is aimed at streamlining the process for businesses and reflects the government’s efforts to create a more business-friendly regulatory environment.

Eased Norms for Moving IT Hardware from SEZs

The government has relaxed restrictions on shifting used IT hardware like computers, monitors, and printers from special economic zones (SEZs) to domestic tariff areas (DTAs). This change is expected to benefit companies in SEZs, providing them greater flexibility in asset management and aligning with broader initiatives to simplify business operations in these zones.

Nafed Collaborates with Private Retailers for Subsidized Grain Sales

In a first, Nafed (National Agricultural Cooperative Marketing Federation of India) has partnered with private retailers to sell government-subsidized food grains in consumer packs. This initiative represents a significant shift in how subsidized grains are distributed, enhancing accessibility for consumers and demonstrating a blend of public welfare objectives with private sector efficiency.

Declining Education Spending by Indian States

An analysis by the Economic Times reveals a concerning trend of declining education spending as a percentage of aggregate expenditure by states and Union Territories in India over the past decade. This reduction could have long-term implications on the quality and accessibility of education, underscoring the need for renewed focus and investment in this crucial sector.

Torrent Power’s Plan to Raise Funds via NCDs

Torrent Power, a leading power generation and distribution company, is planning to raise up to ₹650 crore through the issuance of non-convertible debentures (NCDs). This move indicates the company’s strategy to diversify its funding sources and manage its capital structure efficiently, reflecting broader trends in the energy sector’s financial management.

Allcargo Logistics’ Cost-Cutting Measures Amid Global Slowdown

Allcargo Logistics is aiming to reduce costs by $30 million in the 2023-24 financial year, responding to the ongoing slowdown in the global logistics sector. Simultaneously, the company is investing in digital transformation, including cybersecurity upgrades. This dual approach of cost management and digital investment highlights the strategies companies are adopting to navigate challenging economic conditions while positioning for future growth.

Supreme Court Verdict on Adani-Hindenburg Controversy

The Supreme Court is set to announce its decision on the Adani-Hindenburg dispute. This case involves allegations of stock price manipulation by Adani Group and has attracted significant attention due to its potential implications on investor confidence and market integrity in India.

Windfall Tax Adjustment on Local Crude and Fuel Exports

The Indian government has revised the windfall tax on domestically produced crude oil and eliminated the levy on diesel and ATF exports. This tax adjustment reflects the government’s efforts to balance revenue needs with market dynamics, particularly in the context of fluctuating global oil prices and domestic economic considerations.

IIT Madras’ Goal to Incubate 100 Startups in 2024

The Indian Institute of Technology Madras (IIT-M) is aiming to incubate at least 100 startups across various sectors in 2024. This ambitious goal underscores IIT-M’s commitment to fostering innovation and entrepreneurship, reflecting the growing role of academic institutions in India’s startup ecosystem.

BARC’s Expansion of TV Viewership Meters

Broadcast Audience Research Council (BARC) India, the sole TV viewership measurement body in the country, has increased its meter count to 59,000 and plans to expand further. This enhancement aims to provide a more accurate and comprehensive measurement of Indian TV audiences, which is crucial for the media and advertising industries. It reflects an ongoing effort to improve data quality and representation in television viewership tracking.

Impact of a Single Word in Benami Law

A seemingly minor change in India’s stringent ‘Benami’ law, which deals with transactions in a fictitious name, can have significant implications. The inclusion of a single word could potentially unearth old and ongoing illegal transactions, highlighting the law’s capacity to impact historical and current financial dealings.

Coal India’s Supply Increase to Non-Regulated Sector

Coal India Ltd (CIL) reported a 31% increase in its supply to the non-regulated sector in the April-December period of the current fiscal year. The company supplied 98 million tonnes during this period, up from 75 million tonnes in the same period last year. This growth reflects Coal India’s expanding role in meeting the energy demands of various industries beyond the regulated power sector.

Truckers’ Body Calls for End to Strike

Following assurances on law implementation, the All India Motor Transport Congress (AIMTC) called for an end to the truckers’ strike. The Centre assured that penal provisions for hit-and-run cases under the Bharatiya Nyaya Sanhita, 2023, would be invoked only after consultations with stakeholders. This development highlights the government’s responsiveness to industry concerns and the importance of stakeholder engagement in policy implementation.

Rising Prices of Fruits and Vegetables Due to Supply Disruption

Protests by truckers in various states led to a supply disruption of vegetables and fruits in Delhi’s wholesale markets, resulting in price increases. The supply to major markets like Azadpur Mandi and Ghazipur Mandi was significantly affected. This situation underscores the vulnerability of supply chains to disruptions and the immediate impact on commodity prices.

Akasa Air’s Potential Boeing 737 MAX Jets Order

Budget carrier Akasa Air is reportedly nearing a deal to order around 150 Boeing 737 MAX narrowbody planes. This move reflects the airline’s ambitious expansion plans in India’s rapidly growing aviation market and the increasing demand for air travel in the region.

Fuel Shortages Due to Truckers’ Strike

Approximately 2,000 petrol pumps, primarily in western and northern India, faced fuel shortages as a result of a strike by some truckers’ associations. While state-owned oil companies had anticipated the strike and stocked up most petrol pumps, the prolonged strike led to shortages in certain regions. This incident highlights the critical role of logistics and supply chain management in maintaining essential services.

GST Notices to HUL in Five States

Hindustan Unilever (HUL) reported receiving GST (goods and services tax) demands and penalties totaling ₹447.5 crore from authorities in five states. The issues include disallowance of GST credit and salaries, including allowances, paid to expatriates. This case reflects the complexities and challenges companies face in navigating the multi-faceted tax landscape in India.

Weak Rural Demand Affecting Consumer Goods Sales

The consumer goods sector in India faces challenges with continued weak demand in rural areas, particularly for daily household products and groceries. This trend, observed in the October-December quarter, could potentially impact the volume growth of the overall sector. It highlights the importance of rural markets in the consumer goods industry and the need for targeted strategies to stimulate demand in these areas.

Potential for Telecom Tariff Increases in India

Industry executives and analysts suggest that there is significant room for Indian telecom companies to raise tariffs, given that current rates are among the lowest in the world relative to per capita gross national income (GNIpc). This perspective indicates that tariff increases could occur over the next 4-5 years, reflecting the evolving dynamics in the telecom sector and the need for sustainable pricing models.

Rising Hotel Rates in India

Hotel rates in India are projected to increase by 7-10% in 2024, despite uncertainties such as the general election. This forecast by industry executives suggests a strong recovery and growth in the hospitality sector, driven by increasing demand and a positive outlook for the tourism industry.

Omron’s Growth Expectations in India’s BPM Market

Omron Healthcare, a global leader in home blood pressure monitoring devices, anticipates significant growth in the Indian market. This expectation is based on the rising prevalence of hypertension in India due to aging population and lifestyle changes, highlighting the increasing demand for health monitoring devices in the country.

Quality Concerns in Medicines Produced by Small Indian Companies

A government report indicates that over 15% of medicines produced by small companies in India fail to meet quality standards, a rate significantly higher than the national average of about 2%. This finding raises concerns about the quality of pharmaceutical products in the market, especially those manufactured by smaller entities, and underscores the need for stringent quality control and regulatory oversight.

Godrej Properties’ Land Acquisition in Bengaluru

Godrej Properties has acquired over four acres of land in the prime locality of Yeshwanthpur, Bengaluru. The company plans to develop a premium residential project with a potential revenue of ₹1,000 crore. This acquisition reflects the company’s growth strategy in the real estate sector and highlights the continuing demand for premium residential properties in major Indian cities.

Amazon Ads’ Projection for SMBs Using Streaming TV

Amazon Ads predicts that small and medium businesses (SMBs) will increasingly utilize streaming TV for their marketing objectives in 2024. This shift indicates a broader trend in advertising strategies, where digital and streaming platforms are becoming more prominent for businesses of all sizes, offering new opportunities for targeted and effective marketing campaigns.

BCCI Seeks Partners for Women’s Premier League

The Board of Control for Cricket in India (BCCI) is actively seeking official partnership rights for the Women’s Premier League (WPL). This initiative demonstrates the growing importance of women’s sports, particularly cricket, in India and the potential commercial opportunities it presents. The BCCI’s move to enhance the WPL’s profile could significantly impact the landscape of women’s cricket, both domestically and internationally.

Retailers Concerned Over Samsung’s Upgrade Offer

Mobile phone retailers have expressed concerns over an ongoing device exchange offer by Samsung, citing potential risks in regulatory compliance. This issue highlights the complexities involved in promotional strategies in the highly competitive smartphone market. Retailers’ apprehensions underscore the need for clear and compliant promotional practices to maintain trust and ensure smooth operations.

Leadership Changes in Airtel Africa and Kia India

  • Airtel Africa appointed Sunil Taldar as its new CEO, following the retirement of Olesegun “Segun” Ogunsanya. This leadership change is significant for Airtel Africa’s strategic direction and operational focus in the competitive African telecom market.
  • Korean automobile giant Kia announced Gwanggu Lee as the new managing director and chief executive of its India operations. This appointment could influence Kia’s strategy and growth in the dynamic Indian automotive market.

Nivea India and Hershey’s New Leadership Appointments

  • Nivea India appointed Geetika Mehta as its new managing director. With over two decades of experience in the FMCG sector, Mehta’s leadership is expected to drive Nivea’s brand and business strategy in the competitive Indian market.
  • The Hershey Company named Luigi Mirri as the general manager for India. Mirri’s expanded responsibilities in the APAC region and India reflect Hershey’s strategic focus on these rapidly growing markets.

Creativity and Artificial Intelligence

Neil Heymann emphasizes the importance of collaboration between creative professionals and artificial intelligence (AI) technologies. He suggests that maximizing AI’s potential in creative fields requires viewing the technology as a team player, working in tandem with human creativity. This perspective highlights the evolving role of AI in enhancing and augmenting creative processes.

Generation Z’s Attitude Towards Knockoff Goods

There’s a growing trend among Generation Z to openly acknowledge buying and wearing knockoff goods, or “dupes.” This shift in attitude offers insight into the Gen Z mindset, reflecting a more transparent approach to consumerism and potentially influencing future trends in fashion and retail.

Magicbricks’ Campaign for Homeowners in 2024

Magicbricks, a real estate platform, launched a new campaign to help homeowners fulfill their New Year resolutions in 2024. This campaign addresses the common issue of procrastination and aims to assist individuals in achieving their property-related goals, reflecting the platform’s customer-centric approach.

IT Sector’s Slowest Revenue Growth Forecast

India’s top technology companies are expected to report their slowest quarterly revenue growth in a decade for the quarter ending December. However, inherent differences in client concentration and domain strength suggest a K-shaped growth path for the industry. This forecast highlights the challenges and varied growth trajectories within the IT sector amid global economic uncertainties.

Catamaran Ventures’ Outlook on Startup Valuations

Deepak Padaki, president of Catamaran Ventures, anticipates further reductions in startup valuations in 2024, possibly by nearly a third. This projection is based on the ongoing funding winter and increasing competition for capital. Startups are advised to brace for these challenges, which could significantly impact their funding strategies and valuations.

Milestone in UPI Transactions

Unified Payments Interface (UPI) transactions in India crossed the 100-billion mark in 2023, a significant milestone showcasing the widespread adoption and success of this digital payment system. This achievement underscores the rapid growth of digital payments in India and their integration into everyday financial transactions.

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