Stock market rebounds strongly as Ukraine crisis recedes
Indian equities rose 3 percent on Tuesday after a crash the previous day as investors were relieved that the Ukraine crisis might be easing. The highest rise in a year was in tandem with a slump in crude oil prices as well. The Sensex gained 3.08 percent, or 1,736.21 points, to 58,142.05 and the Nifty added 3.03 percent to 17,352.45 points. Both the gauges had plunged 3 percent on Monday, the biggest single-day loss in 10 months.
Why it’s important: Although there was a drop of 10 percent in the volatility index on Tuesday, experts have warned against expectations that there would be a sustained recovery in stock prices. Concerns over aggressive rate hikes by the US Federal Reserve will likely to keep the markets jittery.
Corporate profits rise almost 27 percent in fiscal third quarter
Indian companies continued to post healthy profits in the three months to December, according to an analysis of 3,191 listed firms by the Business Standard. Combined net profits of these companies rose as much as 26.9 percent on an annualized basis, while net sales gained 24 percent.
Why it’s important: The growth in earnings was led by cyclical sectors such as banking and finance, metals and mining, and oil and gas producers. Despite the good showing, most firms are struggling with rising operating costs that could squeeze margins. Manufacturers faced higher input costs, lower margins, and subpar revenue growth.
SEBI makes separation voluntary for chairman and MD posts
In an about turn, the Securities and Exchange Board of India made it voluntary for domestic companies to appoint a separate chairperson and managing director or chief executive. The development comes ahead of the April 1 deadline by which the top 500 listed companies by market value had to had two separate and unrelated individuals at the top management posts.
Why it’s important: The relaxation will benefit more than 150 large promoter-led companies, including Reliance Industries, Hindustan Unilever, Bajaj Finserv and Adani Ports. There was a 4 percent incremental improvement in compliance by the top 500 listed firms in the past two years, the market regulator said. Expecting the remaining to comply by the target date would have been a tall order.
State-owned IDBI Bank sale process to be launched next week
The central government is likely to start the process of privatizing IDBI Bank this month as its advisor KPMG has invited large private equity buyout and long-only funds to a roadshow next week. The government is open to selling its entire 94.71 percent stake, including 49.24 percent held by the Life Insurance Corporation of India, which now has management control.
Why it’s important: The privatization of IDBI Bank will be the first instance in India of a so-called voluntary discovery of a buyer through open bidding. This route is typically used to sell troubled banks. Also, LIC must commit to exiting its exposure as a prerequisite for its IPO for which it has submitted draft documents.
SEBI nudges investment banks to make LIC IPO a success
To ensure that the massive initial public offering of the Life Insurance Corporation of India is a success, the markets regulator has nudged investment bankers not to crowd the market over the next few weeks. It is likely that there will be only a few small deals or none 15 days before and after the LIC share sale.
Why it’s important: Investors are worried that LIC’s share sale will suck out substantial liquidity from the market. At the same time, companies planning to access the markets are concerned that the IPO will crowd out their fundraising plans.
Supreme Court tells Future Retail to move high court to resume Reliance deal
The Supreme Court has allowed Future Retail to move the Delhi high court for seeking an approval to resume proceedings of the National Company Law Tribunal for its Rs 247.31 billion sale of retail assets to Reliance Industries. It has earlier prevented the tribunal from taking a final call on the deal between Future Retail and Reliance.
Why it’s important: The deal between Future and Reliance has been stalled by Amazon, which had secured a temporary stay from a Singapore arbitration tribunal. The legal tussle between the American retail giant and the Future Group is over the sale of Future’s retail assets to Reliance Industries.
Overseas investment limit of mutual funds could be raised by 25 percent
Market regulator Securities and Exchange Board of India and banking regulator Reserve Bank of India are discussing a proposal to raise the overseas investment limit for Indian mutual funds by 25 percent because the local funds have nearly reached the current ceiling of $ 7 billion. The Association of Mutual Funds in India has asked both SEBI and the central bank to raise the limit.
Why it’s important: The appetite of Indian investors for global investments is expected to grow stronger in the coming years. Domestic funds have been already investing heavily in the stocks of Amazon, Google, apple, Starbucks, as well as putting in money in other global large funds.
India’s January goods export rose by more than 25 percent
Merchandise exports in January from the country rose 25.28 percent from a year earlier to $ 34.5 billion, buoyed by higher outbound shipments of engineering goods, petroleum products and gems and jewelry, commerce ministry data showed. Although trade deficit widened to $ 17. 42 billion, it was at a five-month low. Imports increased 23. 54 percent to $ 51. 93 billion during the month.
Why it’s important: India’s export performance has been promising with monthly exports remaining above $ 30 billion since the beginning of the current financial year.
Info tech revenues could touch $ 350 billion by 2026
India’s IT industry could touch $ 350 billion in revenues by 2026, the lobby group Nasscom said. The IT is set to clock a revenue of $ 227 billion in the year to March, adding $ 30 billion in incremental revenue and taking overall growth rate to 15.5 percent, which will be the fastest in 11 years. It could achieve $ 350 billion by 2026 if it can maintain a growth rate of between 11 and 14 percent.
Why it’s important: The IT sector has become more resilient after the Covid-19 pandemic. It can now leverage the remote working model to grow sales while keeping operating costs down.
Auto fuel retailers need to hike prices by Rs 5-6 per liter
State-run oil marketers will need to hike the rates of petrol and diesel by as much as Rs 5-6 per liter to match the relentless rise in crude oil prices. Although the prices of auto fuels are supposed to be determined by international rates, it is widely believed that the government-owned companies are holding of hiking rates due to the assembly elections in five states.
Why it’s important: The rise in the prices of petrol and diesel is inevitable as crude oil rates look to breach the $ 100 a barrel mark. Consumers will have to face the music once the state polls are over. The impending hike will affect high inflation as well.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
