A round-up of the biggest articles from newspapers
Reserve Bank estimated to have bought $ 8 billion from market in less than a month
The Reserve Bank of India may have bought more than $ 8 billion from the market in less than a month, boosting its foreign currency stockpile and enhancing rupee liquidity by as much as Rs 67,000 crore since the Diwali week. India’s forex reserves, which fell by about $ 100 billion since February, have begun climbing. Reserves rose fastest in more than 14 months to October 28. Indications are that after some contraction in the next seven days, they have risen again in the week to November 11.
Why it’s important: The central bank’s strategy to buy dollars is helping The Reserve Bank ease domestic liquidity, leading to a greater degree of comfort on short-term interest rates after they had risen over concerns of tighter money supply.
Share of financial services in corporate profits hits record high of 41.5 per cent in second quarter
The financial services sector, including banks, continued to prosper even as the rest of corporate India faces earnings headwinds from higher commodity prices and rising inflation. The share of banks, financial services, insurance, and stockbroking in overall corporate profits reached a record high of 41.5 per cent during the September quarter, nearly double its historical 10-year average share of 21.8 per cent, excluding the June 2020 quarter, when the share of BFSI jumped to nearly 60 per cent because other sectors saw a sharp fall in profits or reported loss following lockdowns during the pandemic.
Why it’s important: The earnings boom in the financial services segment has come at a time when non-financial companies have seen their profits squeezed from higher interest rates and commodity prices, with banks being the biggest gainers. The trend may reverse in the upcoming quarters.
Central government approves Rs 60,000 capital spending to states
The central government has sanctioned Rs 60,000 crore of long-term capital expenditure funds to states in the current financial year. The scheme will give Rs 1 lakh crore of 50-year interest-free loans to states, over the normal borrowing they are allowed, so that they get more financial resources for building productive assets, also adding jobs.
Why it’s important: This marks a strong beginning to the scheme announced earlier this year to build roads, ports, bridges, airports, and highways across the country. It will add momentum to India’s growth story.
National Payments Corporation to host sovereign digital rupee
The Reserve Bank of India’s proposed rollout of the retail central bank-backed digital currency will be interoperable with the present forms of payment systems. The platform for CBDC is being hosted by the National Payments Corporation of India and will be similar to the current UPI platform. The central bank wants each bank to test the retail CBDC with 10,000 to 50,000 users for the pilot project. State Bank of India, Bank of Baroda, Union Bank of India, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Yes Bank and IDFC First Bank are participating in the trial project.
Why it’s important: Once the pilots are successful, retail transactions in digital rupee will be extended to the entire banking system. This would start another ear in digital banking services.
India’s auditing regulator to look into financial disclosures made by Byju’s
The Institute of Chartered Accountants of India will look at the financial disclosures of edtech firm Byju’s, the institute’s president Debashis Mitra has said. The Financial Reporting Review Board of the ICAI is expected to meet next week to take a view on the matter. Byju’s booked a loss of Rs 4,588 crore in financial year 2020-21, 19 times more than the preceding year, according to its latest financial report, which was released with a long delay last month.
Why it’s important: The edtech start-up is under the scanner because of a 22-month delay in submitting financial reports.
Supreme Court will not allow Future Group to stall Amazon arbitration
Chief Justice of India DY Chandrachud told the Future Group that the apex court would not allow the Kishore Biyani-led group to impede the ongoing arbitration proceedings with Amazon, which has alleged that the Indian retailer was constantly trying to stall arbitration proceedings. The US e-commerce giant is seeking damages from Future Group related to its Rs 1,400 crore investment in a Future Group company.
Why it’s important: Amazon has been fighting a legal battle with the Future Group for more than two years in various courts. A quick resolution in the matter will help set up a useful precedence in corporate disputes.
Godrej Group to explore synergies in chemicals business to maximize output
The Godrej Group has set up a council to explore synergies, maximize output and review opportunities for its chemicals businesses across group companies, Nadir Godrej, chairman of Godrej Industries, said in an interview. The council’s mandate also includes assessing research and development opportunities for the chemicals business.
Why it’s important: Chemicals is one of the oldest businesses for the 125-year-old Godrej Group, and a consolidation of its various arms would lead to better business efficiency.
Vikram-S, India’s first private rocket, set for blast off on Friday
India’s private sector is all set to enter space, ending the monopoly of the Indian Space Research Organization. Skyroot Aerospace is set to launch its maiden privately developed rocket, Vikram-S, into space, on Friday, the first home-grown startup to do so from the ISRO’s launch pad in Sriharikota. The rocket will carry three commercial payloads.
Why it’s important: If the sub-orbital test launch of Skyroot is successful, it will prove that their technology works. It will be a landmark in India space industry that a private firm is capable of launching space rockets.
Amazon says layoffs part of annual operating performance review
E-commerce giant Amazon has said the current layoffs were part of the annual operating planning review process. In India, 200-300 staffers could be laid off, and attempts would be made to absorb as many of them as possible within different business units of the company. Only those for whom it is unable to find a good fit would be asked to go.
Why it’s important: Each business arm of Amazon is evaluating its employee base. There are concerns that staff at its retail segments may be asked to leave.
Investing in derivatives on free financial advice on social media could prove disastrous
Egged on by a group of social media financial influencers, thousands of Indians are flocking to derivatives, which have stayed under the radar of retail investors so far. After dabbling in mutual funds, stocks and cryptos, many financial influencers now offer free advice to anyone with a laptop and an internet connection, sometimes with disastrous consequences.
Why it’s important: Retail investors expecting quick returns from options trading after following success stories on social media may find the reality is quite different. It’s better to err on the side of caution.
