Stock markets fall for third day to two-week low
India’s benchmark indices declined for the third consecutive day as sentiment turned negative on rising bond yields and global oil prices. The Sensex fell below 60,000 point and ended the session at 59,464, a decline of 634 points, or 1.06 percent. The Nifty dropped 181 points, or 1.01 percent, to close at 17,757 points.
Why it’s important: Rising bond yields, higher inflation, and the US Federal Reserve’s moves to raise rates prompted foreign institutional investors to pull money out of emerging markets like India. Spiraling oil prices could impact lead to higher inflation and impact economic growth in India, which could prompt the Reserve Bank to raise interest rates earlier than expected.
Amazon offers financial help to Future Retail
Amazon has offered financial assistance to cash-strapped Future Retail, including a proposed infusion of Rs 70 billion. The two firms are fighting in courts over Future’s planned sale of retail assets to Reliance Industries for nearly Rs 250 billion. However, the ecommerce firm said Future Retail cannot sell its retail stores without Amazon’s consent.
Why it’s important: Future Retail is cash-starved and could be named as a defaulter for missing repayments. It is the first time that Amazon has made such an offer for cash infusion and directors of Future Retail said they will consider it immediately.
Early results indicate muted earnings growth in December quarter
Corporate earnings in the three months ended December 2021 have started on a subdued note, with lower-than-expected growth shown by early-bird companies. The combined net profit of 140 early-bird firms is up an annual 10.4 percent in the October quarter, expanding at its slowest pace in the past five quarters.
Why it’s important: The earnings slowdown is due to IT services exporters such as TCS, Infosys, Wipro and HCL Tech, which dominate the early-bird sample. The combined net profits of 16 IT companies in the sample were up 6.9 percent year-on-year in the fiscal third quarter, down from 14.3 percent in the second quarter. The IT industry faces margin pressure with a sharp rise in employee costs.
Tesla welcome in India if it commits to local manufacturing
The central government wants electric vehicle maker Tesla to make firm commitments to manufacture its cars in the country in line with its Make in India vision. It also wants the company to detail out an investment plan before any discussion on tax sops.
Why it’s important: Tesla founder Elon Musk wants a drastic cut in customs and import duties so that his company can establish a market in India for its electric cars. Many Indian states have said they would like Tesla to set up a factory in their respective regions.
Finance ministry wants time limit on SEBI’s show-cause notices
The finance ministry is considering a proposal to fix a time limit for show-cause notices by the Securities and Exchange Board of India to ensure proceedings are time-bound and cases are not initiated beyond a certain period. The ministry has sought the markets regulator’s inputs, based on which it could introduce an amendment to this effect in the February 1 finance bill.
Why it’s important: If the proposal is carried through, the markets regulator will be restricted from initiating proceedings or sending notices in old, pending matters. Currently, the SEBI Act does not specify any time limit. SEBI is examining the backlog in adjudication and inquiry matters. The ministry has left it to the regulator to suggest the period for the time limit.
Aviation ministry to discuss concerns on 5G rollout
The aviation ministry is likely to hold discussions with industry stakeholders and the telecom department before the India launch of 5G mobile broadband services to deal with concerns over these airwaves potentially affecting airline operations across the country.
Why it’s important: The development follows in the wake of Air India cancelling eight US-bound flights on Wednesday amid widespread disruptions in air travel caused by concerns over the rollout of 5G services in the US and their impact on radar altimeters and autopilot systems. Any delay in the rollout will impact the plans of telecom operators.
Regulators to seek response on director exodus at PTC India Financial Services
The mass exit of independent directors at PTC India Financial Services over issues of corporate governance has led to several regulators preparing to seek a response from the company on the allegations by the outgoing directors. The Securities and Exchange Board of India, the Reserve Bank of India, and the corporate affairs ministry are in the process of writing to the non-bank lender to power projects. BSE and National Stock Exchange has already sought responses.
Why it’s important: Independent directors at PTC India Financial Services, who made up half of the board, resigned on Wednesday, sending the stock slumping by as much as 19 percent when the markets opened on Thursday. Shares of parent PTC India also plummeted by 11 percent.
Razorpay in talks to purchase majority stake in Ezetap Mobile
Razorpay, a prominent gateway provider for online transactions, is in early talks to acquire a majority stake in mobile point-of-sale device provider Ezetap Mobile Solutions. The financial details of the transaction are yet to be made public.
Why it’s important: Ezetap Mobile began as a startup in the fintech space by processing card payments on mobile phones for large businesses. It is now projecting itself as a retail-facing firm. Ezetap plans to expand its product offerings in retail payments by joining hands with kirana-tech firms.
Budget may set target of over 6 percent fiscal deficit
The federal budget due to be presented in Parliament on 1 February may see the fiscal deficit target for 2022-23 to be pegged above 6 percent of gross domestic product as India continues to fight the Covid-19 pandemic for the third year.
Why it’s important: Economic disruption and stress because of the coronavirus pandemic had forced the central government to raise the 2021-22 fiscal deficit target to 6.8 percent from 3 percent required by law. Finance minister Nirmala Sitharaman had earlier said the government wanted to narrow down the deficit to 4.5 percent by financial year 2025-26.
Corporate tax collections likely to exceed budget estimates by 19 percent
After two years of shortfall, corporate tax collections in 2021-22 could cross budgeted targets. The revised estimates for corporation tax in the current fiscal year to March could be around Rs 6.5 trillion, nearly a 19 percent jump over the budget estimates of Rs 5.47 trillion.
Why it’s important: Tax collections, both direct and indirect, have been robust this financial year, indicating a strong economic revival despite the Covid-19 pandemic. Higher revenues will enable the government to raise expenditure. The central government has sought approval for an additional expenditure of Rs 3 trillion.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
