Stocks continue their rally despite US Fed interest rate hike
Indian stock markets rose almost 2 percent for the second straight day despite the US Federal Reserve starting its rate hike cycle. The benchmark Sensex and the 50-share Nifty increased by 1.84 percent each, gaining some 9 percent in nine trading sessions.
Why it’s important: It was expected that once the US Fed raises the benchmark interest of near zero, foreign investors would withdraw funds from emerging markets such as India. However, investors seem to have taken heart that there’s now a clear trajectory to the rate hike. The talks between Russia and Ukraine have also provided a positive cue.
Oil marketers unlikely to increase fuel prices as crude eases to near $ 100
The cooling of crude oil prices to around $ 100 a barrel after rising to almost $ 140 per barrel after the war in easter Europe could provide a relief to consumers in India as government officials have said the state-run oil marketing companies will now not hike to prices of auto fuels if crude prices are below $ 100, or even a little higher.
Why it’s important: As prices of Brent Crude soared earlier this month, there were fears that prices of petrol and diesel would rise substantially, fueling an already high inflation and forcing the government to cut excise duties to cushion the rise that would have impacted revenues. The easing of crude prices come as a major relief to policymakers and consumers alike.
Amazon may request lenders to declare Future Retail as willful defaulter
Amazon may ask the Reserve Bank of India to get lenders to declare Future Retail as a willful defaulter as it has failed to repay loans worth some Rs 150 billion. The US retail giant wants to pressurize banks to act against Future Retail after it defaulted on payments despite a loan recast last year.
Why it’s important: The latest development in the wrangle between Amazon and the Future Group comes after Reliance Industries took possession of hundreds of Future’s supermarkets over non-payment of rents that followed follows Amazon’s blocking of Future Group’s deal to sell its retail assets to Reliance for Rs 247.13 billion. The takeover of stores seems to have sent Amazon on the backfoot.
Direct tax revenues at Rs 13.6 trillion beats government estimate
The Indian government has collected over ? 1 trillion more in direct taxes than what it had projected in the revised estimates for 2021-22 although there’s about a fortnight is left for the financial year to be over. The government collected about Rs 13.6 trillion from direct taxes against the predicted Rs 12.50 trillion. Direct tax receipts were 48.41 percent on an annualized basis.
Why it’s important: This higher-than-expected collection is an indication of economic recovery and better tax administration in the country. It will go a long way in providing the government some elbow room as expenditure is rising and the government is likely to short of its asset sale target.
Reserve Bank sees risk to Indian economy due to geopolitical crisis
The global turmoil triggered by the Ukraine war has seen oil and commodities prices skyrocketing and heightened macroeconomic and financial risks the Reserve Bank of India said in its monthly state of the economy report. This could see the domestic economy suffer from spillovers as it tries to recover from the covid-19 pandemic, the central bank said.
Why it’s important: The geopolitical risks have come at a time when inflation is above the Reserve Bank’s tolerance band. The monetary regulator is even then holding on to its easy money policy but inflation inching higher may force its hand to raise interest rates that might hurt the nascent economic recovery.
Rupee on comeback trail after sinking to record low
The rupee has staged a significant recovery after hitting an all-time low on March 7. It has risen 1.5 percent compared with the US dollar in the past 10 days to become the best-performing currency in Asia. A decline in crude oil prices from multiyear highs, couple with the Reserve Bank of India’s intervention, has been cited as the reason. The rupee is also in a better position among emerging market currencies because of more than $ 630 billion foreign exchange reserves in India.
Why it’s important: A rapid rise in crude oil prices had weakened the rupee. Higher oil prices widen India’s current account deficit because it is heavily dependent on oil imports. However, positive cues such as talks between Russia and Ukraine and hopes of an Iran nuclear deal have eased the situation somewhat. Also, the central bank’s market interventions have kept speculators at bay.
Moody’s pares India’s GDP growth to 9.1 percent in 2022
Moody’s Investors Service has reduced India’s growth forecast for 2022 to 9.1 percent from the earlier projected 9.5 percent, sounding a note of caution that high fuel and commodity prices due to the war in eastern Europe could impact the central government’s capital spending ability. The ratings agency also pared the 2023 growth forecast to 5.4 percent from the 5.5 percent it had estimated earlier.
Why it’s important: Even as India began an economic recovery after the coronavirus pandemic, hostilities between Russia and Ukraine sent crude oil and commodities prices northward, increasing macroeconomic uncertainty and potentially upending the government’s capital expenditure plans.
Ankit Gupta named chief executive as Oyo heads for an IPO
Oyo has named Ankit Gupta as chief executive of its India business. The affordable lodgings firm has also elevated Rohit Kapoor to the company’s marketing head. It announced Ankit Tandon will be chief executive of its Southeast Asia business. The changes in the top management come at time when the company is awaiting approval for its IPO from the market regulator six months after filing draft documents.
Why it’s important: Oyo wants to raise around Rs 84.3 billion from its proposed IPO. However, there has been a Bloomberg report that the firm could slash its IPO size by half or even trash its listing plans due to adverse market conditions. Oyo has denied such a development.
Reliance, Ola like to be selected to battery incentive scheme
Reliance Industries and Softbank Group-backed Ola Electric will receive incentives under the Rs 180 billion production-linked incentive scheme to boost domestic battery cell production after winning a tender. The winning bidders also include Hyundai Global Motors and jeweler Rajesh Exports.
Why it’s important: India is taking steps to transition away from plant-warming fossil fuels. The energy transition entails moving to renewables and electric powered vehicles. Batteries play an important role in that and companies have sensed an opportunity as the government is offering huge incentives to grow the business.
Brookfield to acquire Jindal Poly Films stake for $ 263 million
Canada’s Brookfield Asset Management will buy a minority stake in the packaging film business of Jindal Poly Films for Rs 20 billion. Brookfield Special Investments, along with institutional partners, will acquire a 25 percent stake in a new unit that will house Jindal Poly’s packaging films business.
Why it’s important: The deal would be one of the largest private equity investments in India’s packaging industry. India’s packaging sector has been seeing strong interest from foreign investors in recent times.
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