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

1. Revised GDP growth number in India could be below 5 per cent in December quarter

India’s economic growth could be lower than 5 per cent in the December quarter on a normalizing base compared with 5.4 per cent a year ago, although many high frequency indicators show a sequential improvement in performance. A survey of 41 professional forecasters by the Reserve Bank of India earlier this month pegged median GDP growth at 4.6 per cent for the three months to December. The central bank itself has projected December quarter GDP growth at 4.4 per cent. The National Statistical Office will revise GDP data of the past years on Tuesday. As the base year numbers of 2021-22 change, quarterly as well as annual growth estimates for 2022-23 are likely to be revised as well.

Why it’s important: The Indian economy continues to do well in the services and farm sectors, but manufacturing has shown some weakness. Global headwinds and stubborn inflation are impacting the growth rate as well. Not much relief is seen in the coming months.

2. International Monetary Fund sees global growth bottoming out, inflation easing

The global economy may have turned a corner, with signs of growth bottoming out and inflation trimming down, according to International Monetary Fund managing director Kristalina Georgieva. The focus on reforms in India over the last few years, especially on tax harmonization, had helped it become a bright spot, she said. The global economic situation looks “less bad,” Georgieva said in an interview. However, there is concern that growth this year will decelerate, although the signs on inflation are positive, she said.

Why it’s important: The IMF has predicted a global growth of 2.9 per cent in 2023, down from 3.4 per cent in 2022. The monetary tightening cycle in the US and other wealthy nations poses a risk to emerging economies like India.

3. Reserve Bank keeping close watch on loans to embattled Adani Group

The Reserve Bank of India is keeping a close eye on loans provided to the Adani group, with regulatory officials directing lenders to provide weekly updates on their financial exposure to the group’s enterprises. Last month, the Reserve Bank asked banks to share data on exposure to the Adani group. Officials are seeking the data because they want to monitor the exposures of lenders continuously and not caught off-guard if there are any changes in repayment behavior. RBI does not typically monitor specific accounts, making the decision unusual. Repayments by the Adani firms are currently regular.

Why it’s important: Adani Group stocks have been badly hammered after US short seller Hindenburg Research alleged accounting fraud and stock price manipulation. Although the conglomerate has denied the allegations, the market rout has led to increased scrutiny of its debt obligations.

4. Adani starts discussions to raise $400 million in debt against Australian coal port

The Adani Group has begun discussions with international credit funds to raise up to $400 million in debt against assets of a key coal port in Australia that makes up a large portion of the conglomerate’s coal exports from the controversial Carmichael mine. Adani family trust-controlled North Queensland Export Terminal is now being considered to help raise funds for the Group, which has lost nearly $150 billion in market value since Hindenburg alleged accounting fraud and stock price manipulation by the conglomerate.

Why it’s important: Adani Group promoters own 100 per cent equity in the Australian port. Adani is trying to stem the negative impact from the Hindenburg claims and the debt raise from the port asset could go a long way to restore its credit profile.

5. BSNL nears deal closure with TCS consortium worth Rs 24,500 crore for 4G equipment

A consortium led by Tata Consultancy Services has reached the final stages of closure in its deal with Bharat Sanchar Nigam Ltd. The deal size is estimated at $2.9 billion (around Rs 24,500 crore). BSNL has received the required clearance from its board and the state-owned firm now requires the government’s approval, which may come in the first half of March. The consortium, which includes the Centre for Development of Telematics and Tejas Networks, will provide 4G equipment for 100,000 new telecom towers. This includes network gear and third-party items costing about Rs 13,000 crore.

Why it’s important: BSNL’s plans to bring 4G service come years after the three private telecom service providers rolled it out. The rollout depends on the new towers being planned. Whether the catchup brings the state-operated companies new subscribers remains to be seen.

6. Ethnic wear retailer Fabindia withdraws IPO documents due to market volatility

Fabindia, a retailer of Indian ethnic wear, has withdrawn its initial share sale documents for its Rs 4,000 crore initial public offering amid market uncertainty. The decision to withdraw was taken as the current market conditions were not conducive for listing, the company said, adding that Fabindia will explore other liquidity options, including filing for an IPO in the future, depending on its need for growth capital and market conditions.

Why it’s important: Fabindia filed IPO documents in January last year and received approval in April, which is valid for one year. Roiling markets have forced many companies to withdraw draft IPO papers in recent months as valuation expectations have failed to match investor perceptions.

7. Government may ask Hindustan Zinc to explore share swap, rights issue

Hindustan Zinc Ltd, majority owned by Vedanta Resources, should explore alternative financial strategies other than handing out cash for the proposed $2.98 billion acquisition of Vedanta’s zinc assets, a government official has said. The government may ask Hindustan Zinc to consider share swaps, warrants or rights issues to purchase these assets rather than using cash reserves.

Why it’s important: The central government, which is a minority shareholder in Hindustan Zinc, has objected to the cash transaction by the company to acquire Vedanta’s zinc assets. It is, however, considering divesting its 29.5 per cent stake.

8. Greenko energy prepays $500 million of global bonds using own cash flow

Greenko Energy Holdings has prepaid $500 million of global bonds scheduled for repayment in August 2023 by using its own cash flow. The move brings the company’s total repayment of global bonds to $935 million. The bonds were sold by Greenko Investment Company. The prepayment comes against the backdrop of Greenko earlier this week repaying $435 million of corporate bonds issued by its subsidiary Greenko Mauritius by taking a fresh loan of $425 million.

Why it’s important: Greenko has a solid portfolio of clean energy assets with clear cash flows. The prepayments could be a precursor for the firm to expand its business through further fundraising.

9. SoftBank and Any Group may sale stake in Paytm through secondary stock deal

Masayoshi Son’s SoftBank and China’s Ant group, an affiliate of Alibaba, who are large investors in One 97 Communications, which runs digital payments firm Paytm, have discussed selling shares in the company through a secondary stock deal. These shareholders had earlier approached Sunil Mittal of Bharti Enterprises and another Indian conglomerate with an offer to buy their stakes. But these talks didn’t make much headway and Bharti is not engaged in conversations on this issue. Paytm’s management, including its founder and CEO Vijay Shekhar Sharma, are seen as opposed to a strategic investor coming on board.

Why it’s important: Ant and SoftBank are likely to offload shares gradually in the market as part of their plan to exit Paytm, which may face increasing competition as conglomerates like Reliance eye a share of the digital payments pie in India.

10. Indian banks may need to reserve more capital to account for market risks

The Reserve Bank of India’s recently released draft guidelines on minimum capital requirements provide more flexibility to local banks for treatment of certain instruments, but the lenders may need 15-20 per cent more in capital for market risk. On February 17, the central bank released draft guidelines on minimum capital requirements for market risk based on Basel III standards. It has sought stakeholder comments on the draft by April 15.

Why it’s important: The draft rules draw a clear line between instruments to be traded in the trading book and the banking book. It could mean more capital requirement for the lenders.