India’s stock markets plunge on fears over Ukraine crisis
India’s benchmark indices slumped by more than 3 percent, tracking the decline of their global peers, as investors fled from risky assets in the wake of worsening geopolitical tensions between Russia and Ukraine. The Sensex fell steeply by 1,747.08 points, or 3 percent, to 56,405.84, while the Nifty declined 3.06 percent to 16,842.80 points. It was the worst drop since April last year that destroyed Rs 8.47 trillion of investor wealth.
Why it’s important: The worst might not be over for local equities. The fear of war in Ukraine is compounded by the impending rate hike by the US Federal Reserve and soaring inflation in India that remains persistently high. There could be more pain over the horizon.
Retail inflation at over 6 percent breaches Reserve Bank’s tolerance band
Higher food prices drove India’s retail inflation to a seven-month high of 6.01 percent in January, breaching the upper limit of the Reserve Bank of India’s target rate of 2-6 percent for the first time since June 2021. Wholesale price inflation remained in double digits though it eased marginally in the month. Retail inflation based on the Consumer Price Index was 5.66 percent in December and 4.06 percent in January last year.
Why it’s important: Although Reserve Bank governor Shaktikanta Das played down concerns, inflation is likely to remain elevated in the quarter to March due to high crude oil and commodity prices, compounded by an unfavorable base and the tensions in Ukraine.
Vedanta and Foxconn to jointly manufacture semiconductor chips in India
The Anil Agarwal-led Vedanta Group and Hon Hai Technology Group (also known as Foxconn) have formed a joint venture to manufacture semiconductors in India. Vedanta will hold majority stake. The Vedanta Group had said in January that it intends to invest $ 15 billion to make displays and chips in India in the next five years. It had acquired AvanStrate, a Japanese glass substrate manufacturer, in December 2017 from the Carlyle Group.
Why it’s important: This is the first joint venture in the electronics manufacturing space after India announced a performance-linked incentive scheme for chips and displays that seeks investments worth Rs 760 billion in the next 5-6 years. The market will only grow as digitization gathers pace in emerging economies.
Reserve Bank of India in favour of banning cryptocurrencies
Cryptocurrencies carry no intrinsic value and might be worse than Ponzi schemes, T Rabi Sankar, deputy governor of the Reserve Bank of India has said. The central bank’s stance came a few hours after finance minister Nirmala Sitharaman said there was complete agreement between the central government and Reserve Bank on the cryptocurrency issue.
Why it’s important: The Reserve Bank advocating a ban on cryptocurrencies as India remains undecided about regulating them will worry investors and crypto platforms in the country. The introduction of a flat 30 percent tax on gains from crypto transactions is no guarantee that they will not be declared illegal soon.
Nomura says Indian economy back to normal after Covid-19 third wave
The Indian economy is back on track, according to financial services firm Nomura, which cited a 19. 5 percentage point increase in its key tracker on business resumption compared to the pre-pandemic level. The high-frequency Nomura India Business Resumption Index increased to 119. 5 for the week to February 13 from 114. 2 in the preceding seven days. It marks a 17. 7 percentage point recovery from its lowest seen during the pandemic’s second wave.
Why it’s important: The impact of the Omicron wave have been more muted than expected as the business resumption index shows. India’s economic growth may see a sustained recovery if there are no further shocks from the Covid-19 pandemic.
Air India gets new pilot to helm recovery after privatisation
Ilker Ayci, former chairman of Turkish Airlines, has been appointed as chief executive and managing director of Air India, Tata Sons, the new owners of India’s flag carrier, said in a statement. His appointment is subject to regulatory approvals, and he is expected to join Air India by April 1.
Why it’s important: The takeover of Air India by the Tata Group is a successful instance of the government’s asset sale, but that is merely the first step to get the airline firm out of the red. Air India has been posting huge losses since its merger with Indian airlines, and it is now hoped that the privatization will help the iconic brand to trim losses and eventually return to profitability.
LIC is a global giant, draft IPO documents show
The Life Insurance Corporation of India not only dominates the Indian market but also the fifth largest life insurer in the world and tenth in terms of total assets, according to the numbers released by the company in its draft red herring prospectus on Sunday.
Why it’s important: These numbers will help LIC to garner interest of overseas investors as it launched roadshows to rope in big-ticket global investors. Domestic institutional investors are also participating in the roadshows. The government expects the sale of 5 percent stake in LIC will help meet its trimmed asset sale target in the current financial year.
Jio Platforms invests Rs 15 billion in Google-backed Glance
Jio Platforms, the digital arm of Reliance Industries, has agreed to invest $ 200 million (about Rs 15 billion) for around 17 percent stake in Google-backed consumer internet company Glance, which allows users to consume personalized content with a locked smartphone screen. The investment increases the value the Singapore-headquartered internet company at around $ 1. 8 billion.
Why it’s important: The investment is likely to strengthen the bundled offerings of JioPhone Next, a 4G smartphone that Reliance has developed with Google. The new phone is crucial for Reliance Jio to reach 500 million subscribers from 421 million at the end of December.
Reliance Jio forms satellite internet joint venture with Luxembourg firm
Jio Platforms has formed a satellite internet joint venture with SES of Luxembourg that aims to bring data speeds of up to 100 Gbps for consumers and enterprises in India. The new entity, called Jio Space Technology, will compete with Bharti Airtel-OneWeb, Nelco-Telesat, and Elon Musk’s Starlink.
Why it’s important: The satellite internet segment could be the next revenue frontier for telecom operators. In 2021, India’s share in the satellite internet market was valued at around $ 100 million, which is likely to grow in double digits in the coming years.
Liquor firms saw heady growth in second half of 2021
The sales of all varieties of liquor from beer to whisky to vodka grew in the high double digits in the six months to December compared with the same period in 2020. Many companies bettered their pre-Covid volumes in the last quarter of the calendar year.
Why it’s important: The sales in the six months indicate a strong recovery for the industry that was among the worst-hit by the coronavirus pandemic. Indian households could be quaffing more at home, and tipplers are headed in increasing numbers to watering holes as restrictions ease.
