ED points to insider trading in NSE case, to share details with SEBI
The Enforcement Directorate’s chargesheet in the National Stock Exchange illegal phone-tapping case points to insider trading during the tenures of Chitra Ramkrishna and Ravi Narain as managing director and chief executive officer. The agency that investigates financial crimes will soon share the details with the Securities and Exchange Board of India for further inquiry.
Why it’s important: The unearthing of irregularities at the National Stock Exchange has shaken trust in the bourse. A speedy investigation and punishing the guilty are necessary to ensure it does not happen again.
An unexpected rally in bonds may boost bank earnings in September quarter
Indian banks had taken a sharp hit because of mark-to-market losses on investments in government securities in the June quarter but would be able to write back some of their losses if the yield on the 10-year government bond continues around the current level till the end of the month. The benchmark bond closed at 7.45 percent at the end of June but has since fallen to 7.22 percent despite a 0.5 percentage point rate hike by the Reserve Bank, and consumer price inflation touching 7 percent in August.
Why it’s important: Bonds yields have fallen despite high inflations, which is unexpected. Banks, however, will not be complaining as this would help them recoup some loses posted in the June quarter.
Banks flag grey areas to Reserve Bank in regard to vostro accounts
Banks have asked the Reserve Bank greater clarity on legal and regulatory grey areas on the proposed rupee vostro accounts. They have also sought clarification on the transfer of government securities acquired from the surplus in these accounts. The other concerns include issues related to invoicing in rupees, and the exchange rate for the conversion of volatile currencies. Vostro accounts are held by banks on behalf of other banks, acting as their custodians.
Why it’s important: Banks are treading cautiously because they are concerned how accumulated rupee amounts in these accounts can be repatriated without attracting penalties in case the banks are from Russia, which is facing Western sanctions.
Higher outgo on subsidies and welfare schemes to raise 2022-23 expenditure
The central government expects a further rise in its 2022-23 expenditure budget because of increased fertilizer and cooking gas subsidies, and a higher requirement under the rural employment guarantee program. A review of the fiscal position to finalize the borrowing calendar for the second half of the financial year estimated the excess expenditure at about Rs 50,000 crore.
Why it’s important: The higher cost of fertilizers and cooking gas due to rising global energy prices and increased outgo on the rural jobs guarantee scheme mean higher government expenditure. However, it might not have to borrow more as savings and buoyant tax collections are expected to bridge the gap.
Developers to pay 6-11 percent commission on in-app purchases on Google Play
App developers and start-ups offering video, audio or books may have to pay 6 percent commission for in-app purchases on Google Play Store due to come into effect from October 31 onwards in India. Other apps, barring those offering gaming content, will pay close to 11 percent commission if they adopt an alternative billing mechanism to Google Play billing system. The commissions will be applicable on non-gaming apps which earn less than $ 1 million in revenues per year.
Why it’s important: This marks a climbdown by Google from the 30 percent commission it wanted to charge, which led to a pushback from local developers and triggered a probe by the antitrust regulator.
Maruti Suzuki expects exports to rise to Rs 20,000 crore in three years
Maruti Suzuki, India’s top passenger carmaker, is aiming to also make half the number of cars exported from the country in the next three years. The Indian arm of Suzuki Motor plans to leverage the global resources of the Japanese parent and alliance partner Toyota Motor to increase its overseas shipments, which in the last fiscal year accounted for a little over 40 percent of the exports from India.
Why it’s important: The higher market share in exports is not unrealistic as India is set to become a major sourcing hub for vehicles for the company. Exports had been growing strongly and the momentum is expected to continue.
Prudence is keyword in current macroeconomic environment, says Flipkart chief
Walmart-owned e-commerce company Flipkart will be more cautious in investing in acquisitions and businesses in an uncertain macroeconomic environment, chief executive officer Kalyan Krishnamurthy has said. The firm will focus more on growing the bets it made in the past 12-18 months, including health and travel, and externalizing its supply chains.
Why it’s important: Consolidating recent gains rather than growing inorganically through acquisitions seems to be a reasonable stance given that the funding environment is expected to remain muted for the next couple of years.
Air India eyes 30 percent domestic market share in five years through transformation plan
The Tata group-owned Air India has prepared a five-year transformation plan, which is expected to take its local market share to 30 percent, up from 8.4 percent in June. IndiGo leads the market with 58.8 percent share. The plan, called Vihaan.AI, revolves around tripling domestic market share with investments in new aircraft, technology, and improvements in customer service. Air India also looking at growing the international routes significantly.
Why it’s important: Taken together with Air Asia India and Vistara, the group’s cumulative domestic market share is already over 20 percent. Taking it to 30 percent might not be a tall order if the company becomes more efficient in private hands.
China returns as India’s top trading partner, beating the US again
China overtook the US to become India’s largest trade partner, with $ 11.49 billion worth of goods traded in July, commerce ministry data showed. Trade with the US stood at $ 11.08 billion in July, amid a demand slowdown and recession fears in the US. The growth in trade with China is largely due to a surge in imports. Exports to the US grew by 0.41 percent to $ 6.78 billion, while imports from China increased by 45 percent to $ 10.2 billion.
Why it’s important: The return of chains as the biggest trading partner underlines India’s growing reliance on its bigger Asian neighbor. A slowdown in the US has also contributed to this.
Fairfax India looks to sell majority stake in Fairchem Organics
Billionaire Prem Watsa-supported Fairfax India Holdings is looking to sell its majority stake in specialty chemicals maker Fairchem Organics. Global companies in the flavors and fragrances segment, such as Firmenich, Givaudan, Symrise and IFF, could be interested in the deal. A transaction may value the listed company at a 25-30 percent premium to its market capitalization.
Why it’s important: The specialty chemicals space has seen a few deals in the past few years. The market for flavors and fragrances in growing in India and its neighborhood, attracting the interest of global majors.
