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


Government pares market borrowing plans by Rs 10,000 crore on robust revenues

The government has marginally cut its planned market borrowing for the current financial year as revenues remained robust. The central government will borrow Rs 5.92 lakh crore in the second half of 2022-23, which is Rs 10,000 crore lower than intended. The borrowing will include the first-ever green bonds worth Rs 16,000 crore. The lower than budgeted borrowing plan is expected to provide some comfort to the jittery bond market ahead of the Reserve Bank of India’s monetary policy announcement on Friday.

Why it’s important: The cut in market borrowing indicates that the government’s fiscal situation is comfortable despite higher expenditure on food and fertilizer subsidies. It also means the government expects the fiscal deficit to be contained to its targeted 6.4 percent of GDP.

Current account deficit rises to 2.8 percent in fiscal first quarter, trade deficit jumps

India’s current account deficit in the three months ended June was at $ 23.9 billion, or 2.8 percent of GDP, which was much higher than the $ 13.4 billion, or 1.5 percent in January-March, according to Reserve Bank of India data. During April-August, India’s trade deficit rose to $ 125.22 billion versus $ 53.78 billion the same time last year. So far in 2022, the rupee has depreciated 9.2 percent against the dollar.

Why it’s important: The widening current account deficit underscores the deficit in merchandise trade, mainly because India faced upward pressure on its import bill in 2022 because of the Ukraine war that led to a sharp rise in prices of commodities across the globe. However, remittances and services exports are showing momentum.

Indian equities decline for seventh consecutive day, foreign investors pull out $ 2 billion

The benchmark Sensex and the Nifty fell for a seventh day, their longest losing streak in seven months ahead of a key rate-setting meeting of the Reserve Bank of India, as the selloff in the global markets continued. The central bank is expected to raise the policy rate by 0.5 percentage point. The Sensex has dropped by 5.5 percent in the past seven trading days, mainly due to sustained selling by foreign funds, which have withdrawn over $ 2 billion from the domestic markets. Their monthly buying tally has turned negative in September after two months of positive flows.

Why it’s important: The US Fed’s aggressive rate tightening cycle and a strengthening dollar has led to a flight of capital away from emerging markets. India is not immune from the global headwinds.

Rupee volatility drives currency derivatives to record on National Stock Exchange

Investors ranging from banks and institutions to day traders have sent trading volumes of currency derivatives on the National Stock Exchange to a record in September as the rupee suffered its worst monthly decline against the dollar in three years due to the aggressive monetary tightening cycle by the US Federal Reserve. The average daily turnover of currency derivatives in both futures and options clocked a record Rs 1.64 trillion in September as the rupee weakened 3 percent to 81.86 a dollar, its sharpest monthly slump since March 2020, when the currency has plummeted 4.85 percent.

Why it’s important: The recent volatility in the local currency contributed to raising the average daily turnover of currency derivatives because they offer an additional hedging mechanism to corporates, foreign portfolio investors and banks. The volumes will remain elevated as long as the dollar keeps strengthening.

Prices of daily essentials of households increased up to 22 percent in 2022

Prices of daily groceries from oil to rice and hair oils have risen between 10 percent and 22 percent since January as commodity rates remained higher, according to retail analytics platform Bizom. This has impacted volume sales, particularly in rural markets, dragging down growth. Price hikes in non-food categories were as steep, with soaps and detergent prices up by 1-3 percent.

Why it’s important: Unless commodity prices moderate and inflation is contained, the demand situation in the country will remain precarious, particularly in rural markets, and festive spenings might not be able to offset that.

Reserve Bank likely to lower economic growth estimates for 2022-23

The Reserve Bank of India will likely cut its estimate for 202-23 GDP growth from the 7.2 percent set in April. The downgrade will also be due to the lower-than-expected GDP growth in the April-June quarter. India’s economy grew 13.5 percent in the June quarter, sharply below the central bank’s forecast of 16.2 percent. This was not the first instance the official GDP figures came in lower than projections. Out of the past 16 quarters, GDP growth has fallen short of RBI’s prediction 11 times, according to a Mint analysis.

Why it’s important: Volatile global macroeconomic headwinds, high inflationary pressures and monetary policy tightening across the world have prompted several agencies to already downgrade India’s growth estimates.

India should curb non-essential imports to slow rupee’s decline, India Inc says

Corporate leaders in India are expecting the government to take immediate remedial steps to stem the rupee’s slide against the dollar, according to a Business Standard dipstick survey of chief executive officers. This follows an over 9 percent fall in the local currency’s value against the dollar since early this year. Nearly 67 percent of the 15 CEOs polled said a tumbling rupee has affected operations since raw material costs have risen.

Why it’s important: India Inc believes that the government needs to impose limits on the import of non-essential goods and hasten dollar remittances for exporters, besides easing norms for foreign investment. A weaker rupee hurts the business interests of most corporations.

SoftBank group rationalizes about 150 personnel at Vision Fund and global arm

Japan’s SoftBank Group Corp is cutting around 150 staff globally at its Vision Fund unit and SoftBank Group International, as CEO Masayoshi Son retrenches following huge losses on his tech bets. Notices are going out to employees, which will affect around 30 percent of employees across the two businesses.

Why it’s important: SoftBank has been cutting costs after Vision Fund recorded a record $ 50 billion loss in the six months ended June, caught out badly by rising interest rates and political instability in Europe.

Auto top brass head to India to lay out electric vehicle roadmap

With the Indian car and truck market rising toward a new peak, more than half a dozen global top auto executives are coming to India to help shape a new future game plan with a key focus on electric vehicles. They include top executives of Skoda Auto, Nissan, and Daimler Truck. The entire Skoda Auto board led by CEO Klaus Zellmer is set to visit the country in October. Martin Daum, chairman of Daimler Truck, and Karl Deppen, head of Daimler Truck Asia, will visit Chennai to celebrate 10 years of Bharat Benz in the country. Nissan Motor’s second in command, global COO Ashwani Gupta, is expected to travel to India next month, after close to a dozen top officials of Renault Nissan Alliance visited in September.

Why it’s important: The growth in electric vehicle is expected to explode in the coming years and every automaker wants a piece of the action. India’s incentives are also attractive to most of them.

TCS likely to enter into $ 2 billion 4G deal with BSNL

Tata Consultancy Services and Bharat Sanchar Nigam are in the final stages of closing an estimated $ 2-billion deal (around Rs 16,000 crore) to launch the state-run telco’s 4G network. The two companies have bridged differences over pricing and other commercial terms, paving the way for the Tata group-led consortium to emerge as India’s first indigenous telecom network solutions provider in a market dominated by global firms.

Why it’s important: A successful rollout of BSNL’s 4G network could propel India into the elite club of countries like the US, Sweden, South Korea and China that have developed telecom network technology.