Morning Scan: All the big stories to get you started for the day


Investors wealthier by over Rs 6.57 trillion as market rallies in 2022

Investors became richer by as much as Rs 65.7 trillion as India’s stock markets continued the rally for the second day of trading into the new year. The benchmark Sensex has jumped 611.55 points, or 1.09 percent, to 56,930.56, in two trading sessions.

Why it’s important: The gains in the domestic stock market follows a global rebound as investors poured in money to buy shares. The sharp increase was broad-based. However, mid and small caps outperformed as investors seized the bargain opportunity to buy beaten-down stocks.

Omicron wave may impact economic growth in March quarter

With many states imposing Covid-related restrictions, economic activity is likely to get impacted in the three months to March. Growth might be lower by up to 0.30 percent from the earlier estimated 6.1 percent in the March quarter, according to economists of HDFC Bank.

Why it’s important: Experience from previous pandemic waves shows that many restrictions are imposed on mobility as coronavirus cases rise, which has an impact on economic activity. It’s too early to say whether the fragile economic recovery will get derailed.

Reserve Bank may delay rate hikes as Covid-19 cases rise steeply

The Reserve Bank of India may defer plans to increase policy rates to the next financial year starting April to avoid a potential hit on the economy, as the rapid spread of the Omicron variant has already led to pandemic curbs in several states that will crimp economic activity.

Why it’s important: In view of the impending third wave of the pandemic, analysts are expecting another hit to economic growth that will force a rethink on rate hikes by India’s central bank unless there is a significant negative surprise on inflation, which seems unlikely. Recent core sector output data have also indicated a slowing momentum. The Indian economy faces headwinds from global developments and the Omicron variant, the Reserve Bank said in December.

Court rejects Future Group plea to quash Amazon arbitration

The Delhi High Court dismissed the Future Group’s petition seeking a direction to a Singapore tribunal to deal with its termination applications in relation to its 2019 deal with Amazon. The tribunal had in an interim order stalled the sale of Future Retail’s assets to Reliance Industries.

Why it’s important: US retail giant Amazon and the Future Group have been locked in bitter legal battles. Amazon has used the terms of its Rs 14.3 billion investment in a Future unit in 2019 to block the Indian retailer’s attempt to sell assets to rival Reliance Industries, alleging breach of certain contracts.

Yield on government bond rises to 2-year high

The yield on the benchmark 10-year government bonds rose nearly 6 basis points to a 24-month high of around 6.52 percent, making it the biggest single-day increase in interest rates in the past four months as investors asked for higher yields due to India’s growing fiscal deficit and high inflation. The market closed with yield at 6.46 percent.

Why it’s important: There has been upward pressure on bond yields in India for many months because of an increase in the bank credit-to-deposit ratio, persistently higher inflation, and rise in bond yields in the United States.

Reliance Jio plans huge rupee bond sale of Rs 50 billion

Mukesh Ambani’s Reliance Jio Infocomm, India’s largest mobile phone operator, is planning its biggest ever rupee bond sale. The firm is seeking commitments for as much as Rs 50 billion of notes maturing in five years at a coupon of 6.20%.

Why it’s important: Jio is readying to roll out 5G services in the country in 2022 after buying bandwidth worth almost $ 8 billion in March 2021. It was the top bidder in the latest spectrum auctions, underscoring its intention of retaining an edge over rivals Airtel and Vodafone. It will use the proceeds of the bond issue to refinance financial liabilities.

Flipkart’s India arms see healthy revenue growth

Two important subsidiaries of Walmart-owned Flipkart’s India business — wholesale arm Flipkart India and marketplace unit Flipkart Internet — reported revenue growth of 25 percent and 32 percent, respectively, in financial year 2021, according to regulatory filings.

Why it’s important: E-commerce firms have gained significantly in the wake of mobility restrictions due to the Covid-19 outbreak in 2020. The online selling industry will continue to grow at a fast pace as the pandemic will further hasten digital adoption.

RBI cancels authorization of Muthoot Vehicle & Asset Finance and Eko India Financial Services

Due to non-compliance with regulatory norms, the Reserve Bank has withdrawn the certificates of authorization of two payment system operators — Muthoot Vehicle and Asset Finance, and Eko India Financial Services.

Why it’s important: These two firms can no longer transact the business of issuing and operating prepaid payment instruments such as smart cards and online wallets. The companies will have to settle all claims from this business within three years.

Drug firms wage price war on Covid treatment pill

With oral Covid pill Molnupiravir set to hit retail shops this week, several pharma firms launching launching Merck’s antiviral drug have started a price war. Mankind Pharma has priced its version at Rs 1,400 for the full course of 40 capsules at eight capsules a day for five days, followed by Dr Reddy’s Laboratories launching the medicine at the same price. Sun Pharma has launched its brand at a treatment cost of Rs 1,520. Cipla has priced its brand at Rs 2,000 per course.

Why it’s important: Pharma firms are saying that affordability and not profits hold the key to gaining market share. Analysts are saying the prices may go down further once the Omicron wave subsides.

Airtel withdraws plan of corporate restructuring

Bharti Airtel has withdrawn plans to change its corporate structure to house all digital assets under the listed entity. It said the firm is well placed with a robust balance sheet and network ready to roll out 5G for further investments in growth opportunities in the country.

Why it’s important: The withdrawal was triggered by the government’s recent reforms package, which provides some relief to the telecom sector. It also simplified the licensing framework, strengthening investor confidence in the sector.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.