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

A round-up of the biggest articles from newspapers

#1. Finance and hydrocarbon sectors drive corporate earnings even as software stumbles

The slowdown in IT services has deepened and banking, financial services, and insurance, and oil and gas companies have emerged as the primary drivers of corporate earnings in India. The IT services sector’s share in corporate earnings declined to a five-year low of 17.4 percent in the fiscal second quarter, while banks and finance companies accounted for 46.5 percent, and oil and gas firms contributed 16.8 percent.

Why it’s important: A slowdown in India’s software sector will certainly impact overall corporate earnings in the coming quarters. A greater share of finance and hydrocarbons could lead to increased volatility.

#2. Ongoing correction in India’s stock markets underscore bigger woes for investors

Although the 50-share Nifty index has only corrected 2.5 percent in October, granular data suggests bigger woes for investors. The advance-to-decline ratio for Nifty 500 stocks this month stands at 0.39, marking its lowest level in 16 months, underscoring the severity of the ongoing correction. About 360 of the Nifty 500 stocks declined in October, compared with 36 of the Nifty 50 from their price at the end of September.

Why it’s important: A closer look at the broader market trajectory compared with frontline gauges, where select performing stocks can drive the benchmarks, belies the initial impression of a much calmer market.

#3. Securities appellate tribunal sets stage for mega merger of Sony and Zee

The Securities Appellate Tribunal has overturned a regulatory ban on Punit Goenka, managing director and chief executive of Zee Entertainment Enterprises, which prevented him from holding a directorship or top managerial role in a listed entity. The latest order paves the way for Goenka to lead the proposed merged entity of Zee and Sony Pictures Networks India.

Why it’s important: The merger of the two media giants was announced in December 2021, but faced delays due to regulatory approvals and objections from financial creditors of Zee promoters. The way now seems clear for the merger.

#4. Tata Motors wins arbitration award of Rs 766 crore in scrapped Singur factory case

Tata Motors has won an arbitration award of Rs 766 crore from the West Bengal Industrial Development Corp, the automaker said in a regulatory filing, marking the resolution of a long-standing dispute related to its Singur plant, where it intended to make the nano car but was shuttered in 2008 due to local protests against land acquisition. The automaker’s statement did not mention the seat of arbitration.

Why it’s important: West Bengal’s industrial development agency can only move an application, and not an appeal, against the order. The state government is sure to move higher courts. The saga is not over.

#5. Vodafone Idea likely to secure funding of around Rs 2,000 crore by end of December

Vodafone Idea is expected to conclude discussions to secure funding from investors within this quarter, chief executive Akshaya Moondra said during an earnings call. The promoters’ commitment to put in an additional Rs 2,000 crore stands and will likely come in alongside investments from external investors, Moondra said. The distressed telco settled spectrum dues in the last quarter using bank debt, which will be repaid by the end of March, he said.

Why it’s important: Vodafone Idea has been in the doldrums for quite a while now, despite the government converting its dues into equity and becoming its largest shareholder. A revival of the wireless operator would prevent India’s telecom sector becoming a duopoly, which restricts competition.

#6. Tower Semiconductor seeks government inputs on setting up fabrication factory  

Israel’s Tower Semiconductor is seeking guidance from the central government on the best possible way to establish a fabrication facility in India by the end of the financial year to March. CEO Russell C Ellwanger and other top executives met officials at the electronics and IT ministry as well as from the India Semiconductor Mission earlier this month.

Why it’s important: This marks a second attempt by the Israeli tech firm to enter the semiconductor space in India after an earlier agreement with ISMC to set up a chip factory collapsed.

#7. Blackstone buys Care Hospitals and Kims Health in $1 billion multilayered deal

Private equity firm Blackstone Group has acquired a controlling interest in Care Hospitals and Kims Health in a $1 billion multilayered deal. Blackstone bought around 75 percent stake in Care Hospitals from TPG’s healthcare platform Evercare Health Fund for around $700 million. Care Hospitals in turn has signed a pact to acquire a majority stake in True North-backed Kims Health. Together, Care and Kims Health will have over 4,000 beds across 23 facilities in 11 cities.

Why it’s important: The multilayered acquisition marks Blackstone’s foray into the Indian healthcare sector. Rapidly expanding private healthcare has seen keen investor interest in recent times.

#8. Indian savers are slowly understanding pros and cons of mutual funds, says KV Kamath

As financial literacy improves in India, savers are increasing understanding the benefits of investing in mutual funds, veteran banker K V Kamath said. Savers were parking their money with fund houses because they have offered better returns than banks’ fixed deposits. Real returns in bank deposits have stayed negative for quite sometime after the pandemic due to high inflation.

Why it’s important: Bank deposits have been the traditional instrument of choice for savings in India. This could be changing as mutual funds have been providing higher returns that beat the erosion in savings due to high inflation.

#9. Limited liability partnerships asked to be more transparent on beneficial owners

The corporate ministry has mandated limited liability partnerships to be more open about beneficial owners by stepping up reporting obligations of both the firm and its partners. The new rules require both the partners in the firm representing the beneficial interest of third parties and those having such interest in the firm but remain anonymous to disclose their true status.

Why it’s important: Limited liability partnerships are becoming more popular because of the flexibility this legal structure offers firms. That makes it more important to improve transparency in ownership of assets and businesses in such firms.

#10. Luxury brands woo buyers with new launches in ongoing festive season

Luxury brands are wooing customers with new products to ensure more options for indulgence in the ongoing festival season. As Diwali draws closer, retailers across India are aiming to grow sales for consumer products. The country’s luxury market is experiencing increased activity as crowds throng shopping malls.

Why it’s important: Global marquee brands are increasingly seeing India as a luxury destination. Disposable incomes at the higher end of the Indian middle class are seen to be rising significantly.