LIC share sale gets fully subscribed on second day
The initial public offering of Life Insurance Corp. of India was fully subscribed on the second day of the share sale. The sale is on till 9 May and subscriptions will be open even on Saturday. It now needs a minimum subscription of 90 percent in the institutional investor category to close successfully. LIC will list on the stock exchanges on 17 May.
Why it’s important: Attractive pricing and discounts to policyholders and retail investors have boosted demand. The strong demand from policyholders and retail investors is like anchor subscription, where domestic institutional investors strongly supported the IPO.
Banks start hiking interest rates after Reserve Bank’s move
ICICI Bank, Bank of Baroda and Bank of India have raised interest rates on new loans by 0.4 percentage point, a day after the Reserve Bank of India announced a similar but surprise increase in the benchmark repurchase rate to tame high inflation. Other lenders are expected to follow suit.
Why it’s important: The rate hikes will affect borrowers and could dampen demand for non-discretionary goods. The interest rate cycle has turned, and home and car loans will be costlier. If inflation continues to be above the banking regulator’s comfort level of 6 percent, there will be more rate hikes.
WHO says India’s Covid toll highest in world, government rejects findings
The World Health Organization said the number of Covid-19 deaths in India was at least 4.7 million, the highest in the world and a third of the global death. The deaths could be directly due to the disease or indirectly caused by the pandemic’s impact on health systems and society. The government strongly rejected the report.
Why it’s important: The WHO estimate of coronavirus deaths in India is 10 times the official count of 481,486 between January 1, 2020, and December 31, 2021. The data stresses the need for more investments in health systems that can sustain essential services during crises.
Higher inflation fears forced Reserve Bank’s off-cycle meeting to hike rates
Nearly 7 percent consumer price inflation in March, expectations of similar high in April, and probably the entire June quarter, led to the off-cycle meeting of the monetary policy committee of the Reserve Bank as it realized the urgency to act fast, or face the grim prospect of failing to meet their mandate.
Why it’s important: There will be more rate hikes in the offing if inflation remains higher than the banking regulator’s comfort level of 6 percent. It has already reversed its accommodative stance.
Mahindra to restructure flagship automotive business into three units
The Mahindra group has started a restructuring process to trifurcate its automobiles business that contributes 55 percent to the group revenue. It will involve separating the electric vehicle, tractor, and passenger vehicle businesses into three independent companies via a demerger. Currently, these are housed under Mahindra and Mahindra as separate divisions.
Why it’s important: Mahindra expects the demerger to unlock value for the separate units. Part of the reason could be riding the electric vehicle wave. It follows a similar move by Tata Motors.
Apple stops accepting payments by credit cards issued by Indian banks
Tech giant Apple has stopped accepting payments via debit and credit cards in India. It stopped accepting cards for subscriptions, and purchases using credit cards issued by banks in India. The company had last month allowed users to make payments using Apple’s ID account using UPI and net banking.
Why it’s important: The stoppage is a result of the new auto-debit rules by the Reserve Bank of India that came into force last year and is disrupting recurring online transactions.
Logistics unicorn Delhivery to launch Rs 52.35 billion IPO next week
Delhivery plans to raise Rs 52.35 billion next week through an initial public offering. It will open for subscription on 11 May. The price band has been set at Rs 462-487 per share, valuing the company at Rs 352.83 billion at the upper end of the band. The issue size has been cut by a third from the initial plan.
Why it’s important: This is a sign of IPO activity picking up in India after companies slowed their plans to avoid a clash with LIC’s mega IPO and volatility in the equity markets.
Services activity in India posts a five-month high in April
Activity in India’s services sector recovered to a five-month high in April. The S&P Global Purchasing Managers’ Index for services rose to 57.9 points in April from 53.6 points in March, as firms recorded the fastest growth in sales and business activity since November. A reading of above 50 indicates expansion.
Why it’s important: The rise signals a strong rebound in orders as pandemic-related disruptions have eased. However, companies reported higher inflationary pressures because of the Ukraine war.
Indian market shines for global consumer-facing companies
Nearly a dozen global consumer-facing firms have said their India business reported strong growth in the March quarter, surpassing pre-Covid levels with a high double-digit pace for some, despite the Omicron wave. For several of these companies including Unilever, Visa, Whirlpool and Pernod, India is among the top performing regions, management executives said in recent earnings calls.
Why it’s important: India is on the way to be among the top three largest global markets. Growth in Indian market has been in the high double digits for many companies despite the pandemic disruption.
Master developers to foot 70 percent of bill to build mega textile parks
Private master developers will need to foot 70 percent of the cost incurred in developing an integrated value chain in a mega textile park, textiles secretary Upendra Prasad Singh said. The availability of a real estate master developer would be a key condition for clearing such proposals.
Why it’s important: The textile sector is among the top focus areas in the free trade agreements that India is negotiating with various countries. That would mean increased business opportunities and need to ramp up domestic capacity.
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