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


India Inc goes back to work from home

As the third wave of the coronavirus pandemic sweeps through the country, companies that had adopted a hybrid work model, especially in metro cities like Mumbai, Delhi, and Kolkata, are either reverting to work from home, or if that is not entirely possible, calling only skeletal staff to office. Many of them are enforcing stringent safety protocols and allowing only essential travel.

Why it’s important: Covid-19 infections are spreading at a fast pace, especially in the metro cities. The Omicron variant seems to infect even fully vaccinated people. In such circumstances, it makes sense for companies to reduce exposure of staff to the extent possible.

Markets post first decline in 2022 on Covid scare, hawkish Fed stance

The Sensex and Nifty snapped their four-day rising streak on negative global cues and a surge in Covid-19 cases. The Sensex fell 621 points to end trading at 59,601, while the Nifty declined 179 points to close at 17,746.

Why it’s important: The exponential rise in the covid-19 caseload has spooked investors as it could impact the economy adversely. There was also selling pressure from foreign institutional investors as the minutes of meetings at the US Federal Reserve showed there may soon be an increase in the policy rate.

Third wave poses new risk to asset quality and profitability of banks

The latest coronavirus wave poses a risk to asset quality of banks as many restructured loans with a moratorium of 12 months will be out of this dispensation in the March 2022 quarter, according to ratings agency ICRA.

Why it’s important: The third pandemic wave is expected to revive demands for another restructuring of loans, including borrowings that have already been restructured. Visibility on the performance of restructured loan books could be pushed back to financial year 2023-24 if the moratorium of existing restructured loans is extended.

Government approves Rs 120 billion plan to set up clean energy infrastructure

The Cabinet Committee on Economic Affairs has cleared a Rs 120 billion plan to establish infrastructure to transmit renewable power from projects. The clean energy corridor will supply 20 gigawatts of renewable energy to the national grid from Gujarat, Himachal Pradesh, Karnataka, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh.

Why it’s important: The building of green energy infrastructure will improve the output from renewable energy towards meeting India’s aim to meet half of the country’s power requirements from renewable sources by 2030, in line with the commitments made at the United Nations climate summit in Glasgow.

Reliance launches India’s biggest overseas bond sale

Reliance Industries has launched its massive bond sale as it sought to raise $ 3-5 billion from foreign investors. It will be the largest-ever bond sale by an Indian firm tapping overseas money, and the first fundraising from the country in 2022.

Why it’s important: Reliance has already received bids worth about $ 11-12 billion, known as order book size. The proceeds will be used to refinance existing loans and debt raised from international investors earlier. Bonds worth $ 1.5 billion at a 5.4% coupon rate are maturing in February. Besides, loans are due for repayment in the next three-four months.

Banks write off twice the amount recovered in past five years

The country’s commercial banks have written off Rs 9.54 trillion worth of bad loans in the past five years, of which more than Rs 7 trillion was by state-owned lenders, Reserve Bank of India data showed. The written off amount banks was more than double the sum recovered during the period.

Why it’s important: Writing off loans is one of the main reasons for banks to report lower non-performing assets. Public sector banks have written off double the amount the central government has infused as capital in the past seven years. Since 2014, the government has provided Rs 3.43 trillion to recapitalize state-run banks.

Reliance buys 25.8 percent stake in Dunzo for $ 200 million

Reliance Retail has invested $ 200 million (about Rs 1.5 billion) in Bengaluru-headquartered Dunzo. It will own 25.8 percent stake in the online delivery platform because of the purchase.

Why it’s important: Reliance is looking to gain a foothold in the country’s rapidly growing market of quick delivery.

Government want relaxation in promoter shareholding ceiling for sale of IDBI Bank

The central government has asked the Reserve Bank of India to relax the 26 percent cap in promoter shareholding for the new buyer of state-owned IDBI Bank. The government currently holds 45.5 percent stake in the beleaguered lender.

Why it’s important: The sale of stake in IDBI Bank is part of the government divestment program. It will not be the first time that the Reserve Bank will consider relaxing the promoter cap because in 2018 it had allowed Life Insurance Corporation to 51 per cent stake.

Finance ministry releases another installment of revenue deficit grant to states

The finance ministry has released monthly revenue deficit grant to 17 states, its 10th installment totaling about Rs 99 billion. So far, it has released Rs 987 billion to 17 states as post devolution revenue deficit grant in the current financial year.

Why it’s important: The grants are released according to the recommendations of the 15th Finance Commission in monthly installments to meet the gap in revenue accounts of states post devolution. They will help shore up the state of finances in the relevant states.

Badly hit sectors may get loan guarantee in budget proposals

Finance Minister Nirmala Sitharaman is likely to announce the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and other loan guarantee programs for micro, small and medium enterprises, hospitality and tourism sector, and health infrastructure beyond March 31 in her budget speech scheduled on February 1.

Why it’s important: The ECLGS will most likely be targeted at sectors that have faced the brunt of the economic impact of the Covid-19 waves in the country. The ECLGS scheme for MSMEs saved 1.35 million units, protected around 15 million jobs, and prevented 14 percent of outstanding MSME loans from turning bad, according to a report by the State Bank of India.

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