#1. Rising crude prices, stronger dollar and higher US rates pose macroeconomic challenge
Rising crude oil prices, a strengthening dollar, and hardening US interest rates could pose a significant macroeconomic challenge to emerging markets, including India, according to economists. The US 10-year treasury yield has touched a 16-year high. Brent crude has remained over $90 a barrel since September and the US dollar index DXY rallied nearly 3 percent last month.
Why it’s important: The rare trinity could worsen already high inflation across many countries by making merchandise and fuel imports costlier and disrupt capital flows, imposing hardship on nations stressed by debt and current account deficits.
#2. Securities transaction tax revenue set to exceed budget estimates on increased trading
The central government’s collections from the securities transaction tax are likely to exceed its budget projection for the year to March, with revenue already breaching 50 percent of the annual estimate. The Centre has collected around Rs 14,000 crore in the first half of the financial year, provisional figures reveal, which exceeds half of the full-year target of Rs 27,625 crore set for 2023-24.
Why it’s important: Buoyant equity markers, increased rates of sales of derivatives and addition of new investors have led to a robust rise in trading activity. The transaction tax has emerged as a significant contributor to the government’s revenue kitty.
#3. Volatile rupee drives currency derivatives to record high on National Stock Exchange
Currency derivative volumes on the National Stock Exchange have risen to a new record in the first half of the current fiscal year. The average daily turnover of currency futures and options contracts traded on India’s largest exchange hit Rs 1.59 trillion, up as much as 22.3 percent a year ago. The rupee closed at 83.04 to a dollar on September 29 compared with 82.18 at the end of March. It had risen 81.77 and fallen to 83.27 during this period.
Why it’s important: The volatility in the value of the local currency has increased trader interest even as the dollar has been strengthening steadily since July. Volatility could increase even further as a stronger dollar puts additional pressure on the rupee.
#4. Godrej Group in advance stages to craft a division of diverse businesses
The Rs 1.76 lakh crore Godrej Group is reported to be in in advanced stages of negotiations to engineer a formal division of its businesses. The two factions of the Godrej family — Godrej Industries & Associates led by Adi Godrej and brother Nadir, and Godrej & Boyce Manufacturing Company involving cousins Jamshyd Godrej and Smitha Godrej Crishna — are likely to soon finalize soon a split of business verticals that include engineering, appliances, security solutions, farm products, real estate, and consumer products.
Why it’s important: Untangling equity cross holdings and dividing hundreds of acres of prime land is not an easy task. The use of the Godrej brand and associated royalties also need to be ironed out.
#5. JSW Cement begins talks to acquire India business of Heidelberg Materials
JSW Cement is in initial talks with Germany’s Heidelberg Materials to acquire the latter’s 13.4 million ton per annum cement businesses in India. The discussions began after the JSW Group made an unsolicited offer to acquire Heidelberg’s local entities that primarily have capacities in peninsular India.
Why it’s important: India has a highly regional and freight-intensive cement industry where manufacturing proximity to consumption markets often determines profitability. This unique feature possibly propels JSW’s bid to Heidelberg, which has a strong presence in south India.
#6. Promoters of VIP Industries mull stake sale in deal that could be worth $1 billion
The promoters of VIP Industries are considering selling their stake in India’s largest luggage and travel accessories maker. The deal, including a potential open offer, could be valued at $1 billion and see the promoters exit the business entirely. The The Dilip Piramal-led promoter group, which owns a little over 50 percent of VIP Industries, the owner of brands such as VIP, Carlton and Skybags, have hired InCred Capital to manage the sale.
Why it’s important: VIP has a commanding lead in market share of organized luggage segment, which is poised for rapid growth as higher disposable incomes see more Indians indulging in leisure travel.
#7. Viatris sells non-core businesses to IQuest and Insud for $1.2 billion
Viatris Inc, the result of the merger between Mylan NV and Pfizer’s Upjohn unit in 2020, sold two of its businesses in India for $1.2 billion. It sold the Indian active pharmaceutical ingredients business to IQuest Enterprises owned by Matrix Laboratories founder Nimmagadda Prasad. Viatris also sold its women’s healthcare business to Insud Pharma of Spain.
Why it’s important: The sale was part of a global exercise of Viatris to exit non-core businesses. The deal also marks Prasad’s re-entry into the API business he sold to Mylan in 2006.
#8. Deadlock continues between Europe and India over clearinghouse supervision
Financial market regulators in India and the European Union remained deadlocked over supervising clearinghouses in India, with the European Securities and Markets Authority declining to offer concessions to its Indian counterpart. The dispute is unresolved five months past the deadline for a revised agreement.
Why it’s important: This threatens to hamstring a clutch of European banks operating in India such as Deutsche Bank, Société Générale and BNP Paribas, providing an edge to rivals from other jurisdictions.
#9. Government working to provide rail connectivity to three key airports under construction
The aviation and railway ministries are collaborating to hasten railway connectivity under the PM GatiShakti scheme to new airports coming up in Noida, Navi Mumbai and Dholera. The plan involves fast-tracking the Delhi-Jewar segment of the Delhi-Varanasi high-speed rail project to connect Noida airport, building a railway station and tracks beneath Navi Mumbai airport by December next, and creating a station and railway line close to Dholera airport.
Why it’s important: Multimodal connectivity holds the key to success for all new airports as mobility increases across consumer segments in India. The respective state governments would welcome the move to expedite rail connectivity.
#10. Political parties ask ad agencies to craft compelling campaigns for 2024 general election
Major political parties, including the Bharatiya Janata Party, Congress, and Aam Aadmi Party, are looking for pitches by advertising agencies to create targeted campaigns for the 2024 general election. Leading ad agencies have started setting up micro teams to make blueprints for these parties, identifying influencers for communicating on social media and developing strategies to target voters.
Why it’s important: The ruling BJP holds a clear advantage on public outreach ahead of the crucial polling season. Opposition parties are also sure to raise their campaigning pitch in the coming months.
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