Morning Scan: All the big stories to get you started for the day
A round-up of the biggest articles from newspapers.
Technical indicator hints at a rebound in Bank Nifty
Following a 15% fall from a record high level, Bank Nifty is likely to see a comeback if a popular technical indicator is to go by, The Economic Times reported.
Why it’s important: The relative strength indicator or RSI for Bank Nifty is at the 24 level — which is the lowest since March 2020.
Traders use this measure to analyse whether the index or stock is overbought or oversold.
The RSI for Bank Nifty shows the index is oversold at the moment.
The index’s RSI has fallen to this level only three times in the last one and a half years. It has been followed a rally in the banking index.
Experts said a pullback action from this important level is likely.
Govt may own 51% in the proposed operator of gas pipeline capacity
The government will own a 51% equity stake in the planned transport system operator, The Economic Times reported.
Why it’s important: This operator will manage the common carrier capacity of all natural gas pipelines in the country.
The balance 49% stake will be split equally between five petroleum sector state-run enterprises: ONGC, Indian Oil, Gail, Hindustan Petroleum Corp, and Engineers India.
The government had earlier evaluated the idea of vertically splitting Gail, the country’s largest gas marketer and pipeline operator, to meet the industry’s longstanding demand of separating content and carriage.
A well-functioning TSO is expected to bring a level playing field to all natural gas marketers and end advantages the industry perceives Gail to have due to its overwhelming control of the country’s gas pipelines.
‘India may have much more hybrid immunity than other countries’
India is likely to have much more hybrid immunity than other nations against the heavily mutated Omicron, said Anurag Agrawal, chair, WHO’s technical advisory group on SARS-CoV-2 virus evolution, in an interview with The Economic Times.
What the expert says:
India has density-associated risks of fast transmission; on another India has hybrid immunity — infection and recovery followed by vaccination.
With over 2/3rd of the population previously infected, mostly after the huge second wave, and a large vaccination drive afterwards, India is likely to have much more hybrid immunity than other nations.
Such immunity is stronger than natural or vaccine-induced immunity. However, this too may not hold if the immune escape is very high.
India has time right now and getting public health measures in place will mitigate the risks.
The severity should become clearer in a few weeks.
Given the global seeding, we should just assume that it has arrived in India as well, and focus on rapidly identifying and sequencing clusters, as well as possible seeds such as infected travellers from high-risk countries.
Lenders may seek forensic audit of Future Retail’s books
Future Retail Ltd’s lenders are planning to discuss allegations of financial irregularities against the retailer and may initiate a forensic audit of the company’s books, Mint reported.
Why it’s important: Amazon.com Inc. alleged funds diversion in Future Retail, including unfair related-party transactions worth about $ 1 billion; a sudden spike in Future Retail’s debts; and an inordinate delay in payment to creditors due to discrimination by promoters.
The lenders to discuss whether a third-party agency or a forensic auditor could be appointed to scrutinise the allegations.
Amazon cited correspondence by Future Retail’s audit committee to the board, flagging concerns.
The letter said: “The committee members observed that there was a sudden increase in debt from Feb 2020 to 23 March 2020.”
CBIC detects bogus tax credit claims worth ?38,000 cr since last November
The Central Board of Indirect Taxes and Customs has since last November detected Rs 38,000 crore of bogus claims from businesses for the input tax credit, Mint reported.
Why it’s important: It was detected in a technology and data analytics-enabled drive against tax evasion.
The result of the CBIC’s year-long compliance drive points to the potential to boost GST collections.
GST officials are using data from multiple agencies, including data on truck movement collected at toll plazas, to verify claims for tax credits.
The compliance enforcement drive has helped detect instances of invoices being used to report purchases without the goods or services being supplied.
They also found cases of clandestine removal of supplies from factories.
Expect revenues to touch Rs 62,000 crore this year: Amul MD
Amul is focused on driving volumes this year and expects GCMMFs revenue to touch Rs 62,000 crore, compared with Rs 53,000 crore in 2020-21, said RS Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (Amul), in an interview with Business Standard.
What he says:
Amul has increased prices by around 4-5% only once in the last two years, despite higher costs, especially in packaging, energy, and logistics.
This is because the company wants strong volume growth across the products.
So far this year, Amul has clocked 18 per cent value growth and volume growth is at 16 per cent.
Will only take a price hike in ice creams in the next two months of 4-5 per cent.
Amul launched more than 20 products and product variants.
Some products are later sold only via Grade A retail outlets.
Amul is looking at frozen fruit and the vegetable market seriously.
Amul expects the exports to touch Rs 1,000 crore by the end of the year.
With Air India, Tatas get a stake in Cochin airport
Once the Tata group takes over Air India in January, it will also inherit a stake in Cochin International Airport, Business Standard reported.
Why it’s important: The Tatas would become the only airline to have an operational stake in a major Indian airport.
The airport is a strategic hub connecting India to West Asian nations.
The airport is the largest international traffic source for India’s airlines.
It is the third biggest airport in India in terms of international passenger traffic after Delhi and Mumbai.
Air India has a three per cent stake in Cochin International Airport.
According to the disinvestment documents issued by the government, the Cochin airport stake would stay with the buyer.
While Air India had invested Rs 45 crore in Cochin airport, its investment in the venture subsidiaries is pegged at Rs 818 crore.
It has been profitable every year over the last decade with its bottom line consistently growing annually.
In addition to Cochin airport, the Tatas would also be getting smaller stakes in French telecom operator Orange SA, Air Mauritius and a golf club in Paris.
‘Stock markets will be range-bound in 2022’
Ajay Garg , managing director of Equirus, in an interview with Business Standard, said that though it is difficult to predict the markets in a shorter time frame, it would not surprise us to see indices remain range-bound in 2022 as earnings catch up with the current multiples.
What he says: The few sectors that didn’t move up, like capital goods and real estate, will see an uptick.
Large issues like Paytm not doing well do shake investor confidence.
This has been one of the best years for PE/VC exits.
They continue to be enthusiastic about their portfolios and are also looking at fresh deployment.
A lot of action is likely in the debt segment over the next few years depending on how the interest rates play out.
A direct rate hike may be some time away, but normalisation of liquidity and narrowing the reverse repo and repo corridor should get underway in the upcoming policies.
In the event of a rate hike by global central banks, the rupee may see some pressure.