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

Morning Scan

Investors in equities must be cautious about claims of stock performance touted on social media, and the market regulator wants to create an agency that will evaluate such claims, Securities and Exchange Board of India chairperson Madhabi Puri Buch said. Some advisers were even providing illegal portfolio management services to clients, Buch said.

Why it’s important: It is worrying that more than a third of these so-called financial influencers offering investment advice to retail investors are not registered with the market regulator. An overseer to evaluate performance claims would be welcome.

The Reserve Bank of India intervened in the forex market through dollar sales to help the rupee from falling to a record low. State-run banks sold $500 million on behalf of the central banks, according to estimates by dealers. Amid elevated US treasury yields and a stronger dollar, the rupee settled at 83.24. The local currency fell to 83.27 per dollar in intraday trading, shy of the record intraday low of 83.29.

Why it’s important: the relentless rise of US treasury yields this year and particularly in the past week has exerted a downward pressure on the rupee. Dealers expect the rupee to be range-bound for now.

Corporate guarantees in favor of related parties will be taxed at 18 percent GST on 1 percent of the amount guaranteed or on the actual consideration, whichever is higher, according to measures mulled by the GST Council. Personal guarantees offered by the promoter or director of a company might not attract tax. The Council may introduce these clarifications when it meets later this week.

Why it’s important: The measure would provide clarity on resolving conflicts on levying GST on personal and corporate guarantees between related parties, which trade associations have been requesting.

The Cricket World Cup may lift economic growth in India by about 10 basis points as cricket lovers get set to spend big, economists said. One basis point is a hundredth of a percentage point. Madan Sabnavis, chief economist at Bank of Baroda, estimates World Cup-induced consumer spending to be Rs 18,000-22,000 crore, which would yield Rs 7,000-8,000 crore in gross value added to the economy.

Why it’s important: Big sporting events typically tend to spur consumer spending, boosting the local economy. In India, nothing matches the extreme popularity of cricket.

After months of negotiations, JSW Group chairman Sajjan Jindal and Shanghai-based SAIC Motor Corporation have finalized terms of an agreement for an alliance involving MG Motor India, a wholly owned unit of the Chinese automaker that owns the British marque brand Morris Garages. Valuations of MG’s local business could just touch $1 billion. An announcement is expected after Diwali.

Why it’s important: MG Motors India has been making losses. It remains to be seen if the partnership with Jindal is able to reverse its fortunes in a growing Indian auto market.

The corporate affairs ministry has said some provisions of the insolvency code would not apply to aircraft, engines, and related parts. Provisions of Section 14(1) of code, which imposes a moratorium upon the admission of an insolvency plea, shall not apply to transactions, arrangements or agreements related to aircraft, aircraft engines, airframes, and helicopters. The moratorium prohibits the transfer of any assets by a corporate debtor and bars recovery of any property by an owner or lessor.

Why it’s important: The new provision could significantly affect bankrupt Go First airline. It could prompt lessors to exercise their right to reclaim leased aircraft, impacting the grounded airline’s revival plan.

Engineering giant L&T has an outstanding order book of Rs 4.12 trillion at the end of June, of which orders worth Rs 1 lakh crore, or about 25 per cent, originate from west Asia. This significant share is largely due to a construction surge in Saudi Arabia. L&T has emerged as one of the top engineering, procurement, and construction contractors in West Asia.

Why it’s important: The Middle East has increased in significance for the business expansion of the Indian engineering and infrastructure giant. Its success can largely be attributed to a localized approach.

The founders of Great Learning are lining up investors to buy back the online education provider from Byju’s. The management buyback will allow the founders to run the firm and receive equity payouts in return. Byju’s is also in advanced talks to sell the US kids’ reading platform Epic.

Why it’s important: The proposed buyback comes on the back of efforts made by Byju’s to monetize some of its assets to repay lenders. The troubles at India’s most valuable unicorn is far from over.

ShareChat, a short-video platform backed by Google, is seeking fresh investments that would value the firm at $2.2 billion, a 55 percent decline from the valuation it secured last year. The company is looking at a bridge round of around $40-50 million in primary capital.

Why it’s important: ShareChat has been grappling with setbacks in growth projections. It claims to be close to breaking even after recent rationalization that involved significant firings.

By the end of financial year 2023-24, almost 80 percent of IT firms will make a five-day-a-week work from office policy mandatory, which stands in contrast to what most employees want, HR executives said. Hybrid working may persist, but remote work will mostly be off the table for most software services companies.

Why it’s important: The return to office in the IT sector is much desired by corporate managers, but employees are not all on board with it. Forcing the move might affect staff morale.