Morning Scan: All the big stories to get you started for the day


Reserve Bank raises benchmark policy rate by 0.4 percent

The monetary policy committee of the Reserve Bank of India in an emergency meeting raised the policy repurchase rate by 40 basis points, the first interest rate hike in 45 months. One basis point is a hundredth of a percentage point. It was followed by a 50 basis points hike in the cash reserve ratio to 4.5 percent, which will drain out Rs 870 billion liquidity from the banking system. The yield on the 10-year government bond shot up 26 basis points.

Why it’s important: Persistently high inflation above comfort levels has forced the central bank’s hand. Analysts are expecting another round of hikes in June. Most loans will now be costlier.

Markets roiled by rate hike, indices slump over 2 percent

India’s benchmark gauges registered their biggest decline in two months as banking and finance stocks tanked after the Reserve Bank of India hiked the repo rate by 40 basis points in a surprise move. The benchmark Sensex fell 1,307 points, or 2.3 percent, to end at 55,669, while the 50-share Nifty declined 2.3 percent to close at 16,677 points. This was the biggest fall since March 7.

Why it’s important: Although it was expected that the Reserve Bank will at some point raise benchmark interest rates to cool inflation, the suddenness of the move caught the markets unawares. More volatility is expected.

US Federal Reserve raises interest rate by half a percentage point

The US Federal Reserve intensified its fight against the worst inflation in that country in 40 years by raising its benchmark short-term interest rate by a half-percentage point, its most aggressive move since 2000, and signaling further large rate hikes to come. The Fed also announced it will start reducing its $ 9 trillion balance sheet, which consists mainly of treasury and mortgage bonds.

Why it’s important: The interest rate cycle has turned globally on inflationary pressures. The Fed rate hike will impact emerging markets as overseas capital is expected to take flight from stock markets in search of greener pastures.

India may launch national single window system for regulatory approvals

Prime Minister Narendra Modi may formally launch a National Single Window System, a digital platform where firms can obtain regulatory approvals, on 15 August. At least 3,400 central and state-level approvals are already available on the system, and work is underway to add more on a priority basis.

Why it’s important: The system will serve as a unitary interface between the government and enterprises, boosting India’s efforts to improve the ease of doing business. The move will help attract more foreign direct investment.

Supreme Court upholds tax reassessment notices issued from April 2021

The Supreme Court invoked its extraordinary powers under Article 142 of the Constitution to uphold all reassessment notices issued after March 31, 2021, by the income tax department reopening assessments going back six years. The apex court order will apply to all pending writs at different high courts.

Why it’s important: The ruling is a relief to the income tax department, but a setback for thousands of taxpayers, including businesses and individuals, who will now have to prepare for reassessment proceedings if they had been served a notice.

LIC’s share sale gets enthusiastic response, subscribed 67 percent on first day

The Life Insurance Corporation of India’s initial public offering, which is now open for subscription, was subscribed 67 percent at the end of Day 1, driven by high interest from policyholders, employees, and the retail segment. The issue will remain open till May 9.

Why it’s important: The application window for the share sale will remain open for subscription even on the weekend, given the large amount the government is looking to raise from the market.

Drugmaker Pfizer opens its first R&D in Asia in Chennai

Pfizer has opened a global research center in Chennai, which will develop and support drugs for the firm’s factories worldwide. The facility, located at the Indian Institute of Technology Madras Research Park, is Pfizer’s first such center in Asia and will employ more than 250 scientists and technicians.

Why it’s important: There is a growing need for pharmaceutical firms to provide innovative solutions, and India offers a large pool of researchers and scientists, and expertise in generic drugs.

Global funds in race to acquire ASG Eye Hospitals

Top buyout funds General Atlantic, TA Associates and KKR are the contenders to acquire a big stake in ASG Eye Hospitals, the largest eye care hospital chain in India. The new investor is likely to acquire about 49 percent stake in ASG for Rs 11 billion, or $ 150 million.

Why it’s important: Private healthcare is a booming industry in India, and longer life expectancy, especially among the country’s middle class, has increased the need for eyecare substantially. The segment is expected to grow rapidly as the population ages.

Government moves against profiteering complaints during pandemic

The National Anti-Profiteering Authority has begun processing a slew of complaints against pharmacies, drug retailers and hospitals for failing to pass on goods and services tax cuts on lifesaving drugs and equipment to consumers during the Covid-19 pandemic.

Why it’s important: The move, which comes a year after some firms reportedly fleeced consumers during India’s devastating second pandemic wave, holds considerable significance for consumers as it is the first time such complaints are being heard under an institutional mechanism.

Mumbai airport operator raises $ 750 million from Apollo Global

The Adani group-owned Mumbai International Airport has raised $ 750 million (around Rs 57.15 billion) debt from asset manager Apollo Global to refinance existing loans and fund capital expenditure.

Why it’s important: Domestic and international air traffic is recovering after the lifting of pandemic curbs from the end of March. Mumbai airport needs funds to upgrade amenities, and repair and maintain airport facilities.

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