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

Supreme Court in 4-1 verdict finds no flaws in 2016 demonetization decision

The Supreme Court has upheld the central government’s decision to cancel Rs 500 and Rs 1,000 currency notes at four hours’ notice on November 8, 2016. A five-member constitution bench headed by justice Abdul Nazeer found no flaws in the decision-making processin a 4-1 ruling. The government was empowered to take the decision and due process was followed, the top court said.The court, which declined to be drawn into ruling on the economic merits of the policy, citing its lack of expertise, said enough time was given to people to exchange the currency.

Why it’s important: In her dissenting judgement, justice BV Nagarathna said the move was unlawful and should have been preceded by a parliamentary debate. The majority judgement, however, said demonetization satisfied the test of proportionality.

Stock markets ring in new year with rising indices in first trading session

Indian gauges logged gains on the first trading day of 2023, riding on a combination of buying in index majors, steady European markets, and a boost in sentiment after the release of macroeconomic data.Both the indices clocked nearly 0.5 per cent gains with the Sensex rising 327 points to end the session at 61,168, while the 50-share Nifty ended at 18,197, a gain of 92 points.

Why it’s important: Both the indices have ended with gains in the first session of each year since 2019. Stocks typically rise during the last five and first two sessions of a calendar year.

Manufacturing activity in India rises to a 26-month high, signaling resilient demand

India’s manufacturing activity rebounded to a 26-month high in December, led by strong expansion in new orders and production, according to the S&P Global India Manufacturing Purchasing Managers Index.As production increased, hiring also picked up, and factory output grew at its fastest rate since November 2021. Manufacturing PMI rose sharply to 57.8 in December from 55.7 in November. However, new overseas orders rose at the slowest pace in five months amid a demand slowdown in key export markets.

Why it’s important: Business outlook and confidence have improved as input costs pressures have eased. The increased activity also indicates resilient demand despite global challenges.

Government to deliberate merits of letting large defaulters continue holding reins

The central government will examine recommendations to let shareholders of large defaulters retain control of the businesses while exploring fresh investments and corporate restructuring with its lenders outside bankruptcy tribunals. The insolvency law committee of the corporate affairs ministry will examine this proposal in detail.The proposal to let the existing management retain control contrasts the original bankruptcy code structure of creditors taking control after the admission of the bankruptcy petition.

Why it’s important: If the new suggestions are accepted, it will mark a major shift from the current practice of shareholders of defaulting companies ceding management control to an administrator appointed by a committee of creditors.

Technology firms slow down hiring in face of impending economic recession in the West

India’s technology companies are sharply reducing their hiring mandates, with industry estimates pointing to a nearly 90 per cent drop in December from a peak of over 110,000 monthly active openings a year ago. This sharp correction comes as India’s $220-billion software services industry prepares for an uncertain economic scenario, top recruiters said.The sharp deceleration in hiring, which began with a nearly 50 per cent dip in June, is being seen across both large and small IT services companies, although demand for specific skills remains high.

Why it’s important: The shrinking mandate has been gathering pace in the second half of 2022 as high inflation and recessionary concerns deepened across the US and European markets.

Reserve Bank report points to lapses at ICICI Bank under Chanda Kochhar

At a time when former CEO Chanda Kochhar is under judicial custody in a kickbacks-for-loans case, it has emerged that adverse observations were made in a risk assessment report by the Reserve Bank of India with regard to a Rs 335 crore loan sanctioned by ICICI Bank in 2014.Kochhar was the managing director and CEO of the bank at the time.The 2018 risk assessment report also indicated that during Kochhar’s tenure as CEO, multiple disbursements were approved by the bank for letter of credit-backed bill discounting despite discrepancies in the underlying trade documents.

Why it’s important: Once valorized in banking circles, it now seems Chanda Kochhar’s tenure as chief of ICICI Bank was tainted by murky deals. This calls for higher accountability at private lenders.

Swiggy loses double at Rs 3,600 crore, costs rise to nearly Rs 10,000 crore

Food delivery firmSwiggy’s losses widened 2.24 times to Rs 3,628.9 crore in the last financial year, as its expenses surged 227 per cent. It came at a time when the company’s revenue jumped more than twofold to Rs 5,704.9 crore in 2021-22, according to company research platform Tofler.Swiggy, the unlisted competitor of Zomato, spent 300 per cent more on advertisement and promotions.Outsourcing cost surged as well.

Why it’s important: The race to garner higher market share comes at an exorbitant cost. Whether the food delivery firm can continue the high cash burn remains to be seen.

Online money gaming to soon have mandatory registration and self-regulation

The Union government has proposed to bring online real money gaming platforms under the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which also regulates social media platforms. The government has also suggested creating a self-regulatory organization, self-regulatory framework, mandatory KYC verification of players, the appointment of compliance and nodal officers, and having a physical address in India.The ministry of electronics and IT has released a draft for public consultation. The final amendment to the rules after industry consultation will be notified by April.

Why it’s important: The new rules could hurt foreign betting firms while boosting the business of Indian fantasy sports and other gaming companies.

Demand for consumer goods rises sequentially in December

Demand for groceries, personal care items and discretionary products such as apparel, smartphones, refrigerators, and televisions improved in December. The value of FMCG goods sold in December rose 1.4 per cent from the last month, according to Bizom that analyses data based on orders at grocery stores. Electronics categories grew 8-10 per cent sequentially, according to industry executives.

Why it’s important: This indicates a recovery after sales fell sequentially or remained flat for the past several months. Consumer firms will hope this trend sustains in the near term.

Electric two-wheeler sales rise 300 per cent to hit 600,000 in 2022

India’s electric two-wheeler market crossed the 600,000 sales target and achieved a market penetration of 4 per cent in 2022, according to the government’s VAHAN data. In 2022, 624,192 two-wheelers were registered in the country, up 300 per cent over 2021, when only 153,523 units were registered, and electric vehicle penetration was just 1 per cent.The sales target of half a million was achieved on the back of high sales from Ola Electric, Okinawa Scooters, Hero Electric, and Ampere EV by Greaves.

Why it’s important: The rapid rise in the sale in electric two-wheelers despite safety concerns indicate robust demand that will help the country to quickly shift to electric mobility in the coming years.