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

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Microsoft has become the first global technology company to join the Open Network for Digital Commerce, a government initiative. Microsoft intends to introduce social e-commerce through its app in the Indian market later this year. ONDC is expected to open to the public in Bengaluru over the next fortnight as it enters the next phase of the pilot for further fine-tuning before rollout in other cities.

Why it’s important: India’s e-commerce industry has tremendous growth potential and initiatives like ONDC can be a gamechanger. More big tech firms are expected to join the network.

Japan’s SoftBank and NewQuest Capital Partners are among investors looking to sell shares of IPO-bound FirstCry in the secondary market, valuing the baby products retailer in the range of $3. 5-4 billion. SoftBank, the biggest investor in the company with a 29 percent stake, wants to reduce its shareholding to less than 25 percent.

Why it’s important: The proposed stake ale is similar to a pre-IPO deal that will set the price for the company. FirstCry would like to bring onboard a few domestic funds before launching its public offer.

India’s trade deficit with the United Arab Emirates jumped four times to $3.92 billion in May and June, the first two months since a bilateral free trade agreement came into effect. The gap was driven by a rise in crude oil and gold imports. Exports rose 17.5 percent to $5.4 billion and imports grew 67 percent to $9.3 billion.

Why it’s important: The widening trade gap is not a major concern as India largely imports raw materials from the West Asian nation. The trade accord is expected to offer long-term benefits to India.

Led by spruced-up mobile apps, pre-approved loan limits and quicker sanctions and disbursal, public sector banks are seeing a surge in demand for personal loans as consumption in India gathers pace. These loans, though unsecured and riskier than those backed by collateral, offer better returns.

Why it’s important: The availability of digital pre-approved loans by state-run lenders similar to private lenders has helped the surge in personal loan disbursals. The sharp growth in personal loans could indicate pent-up demand.

The primary market will offer important cues to IPO-bound companies and investors this week. After a dry patch of more than two months, the first IPO will hit the market on 12 August, with Chennai-based engineering firm Syrma SGS Technology set to raise money from the public. The benchmark Sensex rose 9 percent in July as foreign portfolio investors turned net buyers of local equities after nine months.

Why it’s important: The IPO of Life Insurance Corporation of India, the biggest in India, was lackluster. Many market experts are still skeptical of a return of animal spirits and whether there will be much enthusiasm for public offers.

The central government’s move to impose 18 percent GST on services rendered by the Securities and Exchange Board of India has rattled foreign portfolio investors, who fear the decision could result in GST on export of services, which is currently a zero-rated supply. The market regulator has said all market infrastructure institutions, including stock exchanges and persons dealing in the securities market, will have to pay GST on the fees charged by it.

Why it’s important: Till now, goods or services exported was exempted from GST either at the input stage or at the final product stage. The latest change may fetch about Rs 13 crore from foreign investors, according to rough estimates.

Three years after acquiring Avanse Financial Services from Wadhawan Global Capital and Dewan Housing Finance, Warburg Pincus plans to sell a 25-30 percent stake in the education financing company to raise Rs 1,950-2,500 crore. Warburg owns about 80 percent of Avanse, while the International Finance Corporation holds the remaining.

Why it’s important: Warburg intends to unlock value at the non-banking finance company, which has funded more than a quarter million students across 22,000 courses in over 3,000 institutions across India and over 50 nations.

The average foreign portfolio investor stake in BSE 200 companies fallen from a high of 25.5 percent at the end of March 2021 quarter to 22.2 percent at the end of June this year. The combined market capitalization of BSE 200 firms declined to Rs 190 trillion at the end of June from a record high of around Rs 211 trillion at the end of the September 2021 quarter.

Why it’s important: Market capitalization of listed Indian firms depend largely on foreign portfolio investors. As a result, when foreign investors turn net buyers, the broader market rallies, or vice versa.

Top engineering and business schools are taking a close look at the startups turning up for campus recruitments following layoffs in the sector, placement heads at multiple institutions have said. The schools are doing background checks on the startups and setting conditions for allowing them into campuses.

Why it’s important: Fears of a funding winter has seen many start-ups rationalizing costs by retrenching staff. They might find hiring tougher just to reach staffing milestones.

SoftBank Group’s chief Masayoshi Son has said he plans widespread cost cutting at the Japanese conglomerate and its Vision Fund investment arm after a record $23.4 billion loss on plunging portfolio valuations and foreign currency losses.

Why it’s important: The worldwide battering of tech stocks and China’s crackdown on technology companies in the recent past has hit SoftBank hard. The record losses are expected to lead to significant belt tightening.