#1. Equities plunge 2.5 percent in two trading days as Fed fears spook markets
India’s stock markets plunged around 1.5 percent on Monday, destroying Rs 3.9 lakh crore of investor wealth, as a stronger dollar, fears of hawkishness at the US Federal Reserve, and tensions over Taiwan prompted investors to sell stocks. In the past two trading sessions, the benchmark indices have declined more than 2.5 percent amid dwindling inflows from foreign portfolio investors.
Why it’s important: The sharp rally in stocks since June seems to have finally ended. Part of the decline can be attributed to profit booking as equities regained most of their lost ground since war broke out in Ukraine.
#2. India overhauls overseas investment framework, easing rules for domestic companies
The central government has announced a revamp of the overseas investment framework, providing a definition for overseas portfolio investment, and allowing such investments in both listed and unlisted space. The government also eased the round-tripping rules by allowing Indian firms to invest in foreign companies that may route the investment back into India provided transparency conditions are met.
Why it’s important: The new framework eases rules for domestic entities wanting to invest in firms or securities abroad. These entities must secure the approval of lenders if they have bad loans on their books.
#3. Advent and Bain Capital to exit engineering outsourcing firm Quest Global
Private equity firms Bain Capital and Advent International are looking to exit Quest Global Services six years after investing in the engineering outsourcing company. The two funds collectively own about 33 percent of the company. Singapore investment firm GIC, which owns 2-3 percent stake, may also join them.
Why it’s important: Quest has been an investment favorite as the pace of outsourcing engineering to rationalize costs gathers steam in the developed markets. The company is already making handsome profits.
#4. General Atlantic and TPG in discussions to invest $ 100 million in Amagi
Private equity firms General Atlantic and TPG are in talks to invest $ 100 million in media technology firm Amagi, valuing the company at around $ 1.4 billion. Some existing employees and early-stage investors will also partially sell their stake to bring on board a new investor.
Why it’s important: Amagi is a profitable unicorn, a rarity among high-growth startups. There is bound to be interest in such firms that have demonstrated better unit economics.
#5. Cryptocurrency investors go abroad to avoid tax on crypto transactions
India’s tax on crypto transactions has become an opportunity for international exchanges such as Binance and KuCoin, as users are transacting in overseas exchanges to avoid paying the 1 percent tax deduction at source imposed in July, according to data from AppTweaks, an app analytics platform.
Why it’s important: Crypto investors seem to be moving to foreign exchanges. Although users incur a one-time transaction fee called a Gas Fee, most view this as a better option than paying TDS every time they execute a trade.
#6. Government wants Chinese companies to export smartphones from India
The electronics and IT ministry has asked Chinese device makers to push exports from India and bolster their supply chain in the country to increase value addition. A few such companies like Oppo are preparing to comply. India has an ambitious target of producing mobile phones worth $ 126 billion in the country by 2025-26, half of which will be for exports.
Why it’s important: Although Chinese phone makers dominate the Indian market, they have till now stayed away from exporting from the country. Aome have their own facilities, but most opt for contract manufacturing. This might change in India’s favor.
#7. Surat-Chennai economic corridor hits environmental hurdle
Ahead of assembly elections in Gujarat, a key segment of the ambitious Surat-Chennai economic corridor has hit a serious environmental roadblock. The nearly Rs 14,000 crore project has run into trouble with the environment ministry’s expert appraisal committee for Infrastructure projects over its proposed 290km Surat-Nashik-Ahmednagar section, which passes through pristine areas of the Western Ghats.
Why it’s important: Environmental clearances have become easier in India under the present regime. The roads ministry is asking for a relaxation for the contentious stretch, which is likely to be granted.
#8. Software services sector’s ability to fund the country’s trade deficit sees decline
Infotech services are India’s single biggest export and a key source of foreign exchange. But there has been a sharp decline in the industry’s ability to fund India’s fast-growing merchandise trade deficit and current account deficit. The net export of software services funded just 30 percent of the country’s merchandise trade deficit in July, down sharply from 68 percent in the year-ago period.
Why it’s important: Slower growth in IT services exports has made India more dependent on capital inflows and worker remittances to fund trade and current account deficits. It means more volatility and heightened pressure on the rupee.
#9. Antitrust regulator to hear charges against Google this week
The investigation by the Competition Commission of India into Google’ payment policy may soon be over because the regulator is set to begin a confidential hearing this week on charges against its contentious policy for Play Store developers. The three-member panel, headed by chairman Ashok Kumar Gupta, is likely to hear the matter daily later this week and is expected to pass an order by September.
Why it’s important: Google might face penalties if the regulator finds that it has been favoring its own app Google Pay over its competitors, which could be deemed unfair and discriminatory.
#10. Government to review tax assessment procedures to forestall aggressive demands
The Central Board of Direct Taxes is reviewing the operation of its faceless tax assessment procedures to ensure field officers do not make aggressive tax demands after an order by the Allahabad High Court forced it to do so.
Why it’s important: There has been a chorus of complaints over the assessment system’s over-reliance on data rather than human interaction. The tax department must allow natural justice to take its own course by instituting safeguards.
