Reserve Bank of India may raise interest rate by 0.5 percentage point
The Reserve Bank of India may raise the repurchase rate by a steep 0.5 percentage point and increase the cash reserve ratio at the meeting of its monetary policy committee from June 6 to 8, taking the rate at which it lends to commercial banks to 4.9 percent, most economists polled by business newspapers said. This would follow an off-cycle hike in repo rate and cash reserve ratio in early May.
Why it’s important: Consumer price inflation has remained above the Reserve Bank of India’s upper tolerance limit of six percent since January, forcing the central bank to raise the benchmark rate to tame excessive price rise that could derail India’s economic recovery.
EPFO considers raising equity investment limit to 25%
The Employees’ Provident Fund Organization is considering a proposal to raise its investment limit in equities to as much as 25 percent of incremental flows from the existing 15 percent. The finance investment and audit committee met nearly two weeks ago to discuss the matter. The proposal will be taken up at a meeting of the board of trustees in the last week of June. The suggestion will then be sent to the labor and finance ministries for approval.
Why it’s important: The higher exposure to stocks would helping the retirement agency bridge the shortfall in returns as investment in debt securities is struggling to help it reach targets.
Electric vehicles to drive up auto capex by about Rs 70,000 crore in five years
Automakers and ancillary suppliers are set to spend a combined Rs 70,630 crore over the next five years on either entering the electric vehicle segment or stepping up their presence in it. The electric push is expected to yield at least 25 electric vehicles, new ones as well as electrified versions of existing vehicles running on internal combustion engines.
Why it’s important: India, the world’s fifth largest automobile market, is poised to receive one of the biggest capex pushes ever to fuel the transition from internal combustion engines to electric motors and batteries as part of a green drive.
TVS Motor in talks to raise Rs 5,000 crore to expand electric mobility unit
TVS Motor is in advanced talks to raise Rs 4000-5000 crore from private equity firms to fund the expansion plan of the group’s new electric mobility arm as two-wheeler customers increasingly switch to electric scooters.
Why it’s important: TVS Motor is betting on electric vehicles as India sharpens its focus on reducing vehicular pollution in cities and cutting dependence on fossil fuels.
UPI apps to get more time to comply with 30% market share limit
The National Payments Corporation of India, which enables the country’s digital payment and settlement systems, may extend the deadline for its mandate requiring payment apps to hold no more than 30 percent market share. The current deadline is January 2023.
Why it’s important: The corporation could have no choice but to extend the contentious mandate fearing market disruption once it acts on non-compliance. Third-party payment providers such as PhonePe and Google Pay still hold about 47 and 34 percent market share respectively.
Ministerial panel may suggest pruning GST exemption list
An empowered group of ministers established to look into rate rationalization may propose pruning exemptions under the Goods and Services Tax on certain goods and services and correcting the inverted duty structure during the next GST Council meeting. It was earlier slated to consider raising the lowest threshold slab under GST to 7-8 percent from the current 5 percent, besides changing other tax categories.
Why it’s important: Despite the proposals under consideration by the panel, the rate rejig could be delayed till the inflationary pressures on the economy eases.
Nifty could hit 17,200 points if it holds above 16,800
The 50-share Nifty could be headed to 16,800 levels after surpassing a key hurdle of 16,400 last week, technical and derivatives analysts said. The index gained 1.5 percent last week to end at 16,584.30 points. The Nifty could go as far as 17,000-17,200 points if it sustains above 16,800, analysts said. On the lower side, the support is at 16,300-16,500 points.
Why it’s important: Much will depend on this week’s monetary policy syance of the Reserve Bank of India and inflation data in the United States.
Startup founders and chief executives reap windfall before initial public offering
Although some startups have not done well on stock listing, management leaders have taken home hefty packages. Top executives at One97 Communications, which owns Paytm, were rewarded with a 50 percent rise in remuneration in the year of filing draft documents. Bosses at Zomato tucked in a 404.2 percent increase. The leaders at PB Fintech earned a 182.9 percent increase in remuneration in the year of listing.
Why it’s important: Key management personnel in Indian startups are a happy lot due to the sharp increase in earnings. The employees in these organizations were not as lucky, as they earned an average of 21.4 percent more in the year of filing listing documents.
Prices stay high despite government measures to tame inflation
A raft of measures by the government over the past month to cool prices has been a mixed bag so far. While fuel prices have dropped significantly, food prices were more stubborn, still hovering above where they were a month ago, according to an analysis by Mint.
Why it’s important: The impact of government measures would be felt on food prices with a lag, experts said. A drop in fuel prices may offer relief, but oil marketers may soon hike them as a freeze for the past two months has widened the gap between cost and sale price.
Aditya Birla group lines up Rs 77,000 crore to expand capacity
With metals major Hindalco leading the pack, the Aditya Birla group would be investing a massive Rs 77,000 crore in creating new capacities and entering new sectors such as paints. This would be the group´s largest investment since it acquired Novelis, a US-based aluminum can maker, in 2007.
Why it’s important: Capital investment by Indian conglomerates indicates that they anticipate a rise in demand, presaging a robust economic recovery in the middle term.