Indian equities crash as crude oil rises to 14-year high
India’s stock market indices plunged by more than 2 percent, the lowest in seven months, as crude oil prices rose to the highest in 14 years. The benchmark Sensex fell 1,491 points, or 2.74 percent, to end at 52,843, its lowest close since July 30. From a peak of 61,766 points in October, Sensex is down by 14.4 percent. The Nifty ended at 15,863 points, or 2.3 percent. Monday’s crash wiped out investor wealth worth Rs 5.69 trillion.
Why it’s important: Investors panicked after the price of Brent Crude rose to as much as $ 139 per barrel, triggering fears that higher inflation could detail India’s nascent economic recovery as it depends heavily on oil imports. High oil prices will impact the country’s current account and fiscal deficits.
Rupee plunges to record low compared with the US dollar
The rupee breached the crucial 77 mark against the US dollar to plummet to a lifetime low as crude oil prices skyrocketed to their highest since the 2008 global financial crisis. The Reserve Bank of India was estimated to have sold up to $ 1.5 billion in the spot market to arrest the fall. Two state-owned banks reportedly sold dollars to prevent the rupee’s rout.
Why it’s important: As the rupee enters uncharted territory, there are now valid concerns that a widening current account gap and surging inflationary expectations will see foreign investors fleeing the Indian stock market to safer havens.
High oil, commodity prices pose policy dilemma for Reserve Bank
The Reserve Bank of India faces a tough decision as commodity and oil prices surge as it would have to strike a balance between stemming inflationary pressures and supporting the nascent economic recovery after the Covid-19 pandemic. The soaring prices are a big setback to the central bank’s expectations that inflation would ease this year.
Why it’s important: Oil marketers will soon have to significantly raise auto fuel prices that will have a cascading effect on the prices of goods and services. Persistently high inflation could derail India’s GDP growth. It is estimated that a 10 percent rise in pump prices will raise retail inflation by at least 0.2-0.25 percent point.
Hospital chains plan to expand through brownfield route
As the coronavirus pandemic recedes and the country’s healthcare growth outlook remains intact, corporate hospitals have started charting out expansion plans, mainly by adding beds to existing facilities and taking over and refurbishing existing sites in key locations. Some hospital chains are also looking out for operate-and-manage contracts in smaller regions.
Why it’s important: spending on healthcare in India is expected to expand at a compounded annual rate of as much as 16-18 percent as affordability improves and there is increasing incidence of non-communicable diseases.
Indian companies need to induct more women directors
Women constitute only 18 percent of directorships on boards of India’s listed companies. There are 2,246 women serving as directors on the boards of 1,921 companies listed on the National Stock Exchange, according to Prime Database. About 60 percent of these women are independent directors.
Why it’s important: Due to changes in corporate laws, gender representation on Indian company boards have improved substantially compared with five years ago, when women constituted only 13 percent of the board members at listed companies. But a lot more needs to be done as there is still a dearth of skilled female directors.
Former NSE chief Chitra Ramkrishna sent to CBI custody for seven days
A Delhi court has sent Chitra Ramkrishna, former managing director and chief executive of the National Stock Exchange, to seven days of Central Bureau of Investigation custody. She was arrested on Sunday. The federal agency also secured an extension of the custody of former group operating officer Anand Subramanian till March 9, whose 10-day custody ended on Sunday. Ramkrishna and Subramanian will be jointly questioned to reveal further details in the co-location case.
Why it’s important: The scandal at India’s largest bourse by trading volumes over unequal access to the exchange’s trading system has shaken the trust of investors. Ramkrishna and Subramanian are implicated in the scam and need to be brought to justice to restore faith in the system.
India-Eurasia trade talks face delay due to war in Ukraine
Russia’s military aggression in Ukraine is likely to delay negotiations for a free trade agreement between India and the Eurasian Economic Union that comprises Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. The negotiations were to start at the beginning of this year. Russia is India’s biggest trading partner among Eurasian nations.
Why it’s important: The free trade pact has the potential to double India’s trade with Eurasian countries that have a combined gross domestic product of $ 5 trillion. Manufacturing, including pharmaceuticals and chemicals, makes up the bulk of India’s trade with the Eurasian countries, followed by food products.
TCS plans overhaul to double revenue to $ 50 billion by 2030
The Tata Consultancy Services plans to overhaul its organizational structure to double its revenues to $ 50 billion before 2030. The software services firm will create four internal teams —a business transformation group, incubation group, enterprise growth and another aimed at new business models. It is expected to present the proposed new structure at its board meeting this week.
Why it’s important: The restructuring at Asia’s largest software outsourcing provider gears up points to emerging trends in the IT services sector as clients are looking to increasingly digitize operation in the post-covid world and the boom in tech startups continues.
TV advertising volumes posted strong recovery in 2021
Advertising volumes on television recorded strong recovery in 2021, according to the latest report by BARC India. Ad volumes on TV jumped 22 percent compared to 2020 and 18 percent compared to 2019. Overall, TV ad volumes touched a record 1. 82 billion seconds in 2021.
Why it’s important: The pandemic year of 2020 was subdued despite high stay-at-home rise in viewership. The big return of brands on television in 2021 indicated an economic recovery that might now be disrupted due to the Ukraine war.
Markets regulator orders Dish TV to reveal AGM results immediately
The Securities and Exchange Board of India has directed Dish TV India to publicly disclose the results of its annual shareholders’ meeting held on 30 December within 24 hours. The regulator also issued show cause notices to the company’s directors, asking why the meeting results were not disclosed.
Why it’s important: The domestic lenders of Dish TV, which own 45 percent stake in the company compared with the promoter stake of just 6 percent, have reportedly voted to oust the present directors and promoter Jawahar Lal Goel. Dish TV held back the results citing legal proceedings at a court.
