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

Morning scan.

#1. India’s benchmark gauges recover on buying by domestic institutions

Equity indices rose half a percent, lifted by short covering and purchases by domestic institutions, a day after a sharp single day decline due to profit taking. The Nifty and Sensex rose 0.5 percent each to close at 21,255.05 and 70,865.10 points, respectively, as local institutions bought shares worth a
provisional Rs 1,464.70 and bears trimmed short bets in Nifty futures. These supported the rally despite foreign investors selling shares worth a provisional Rs 1,636.19 crore.

Why it’s important: Market direction is now uncertain. There could be some consolidation before equities resume their upward march.

#2. FlipKart in talks to raise $1 billion with Walmart contributing $600 million

Online marketplace Flipkart is in discussions to raise $1 billion, with parent Walmart committing to infuse $600 million. It would be the first fundraise for Flipkart since 2021, when it closed $3.6 billion in funding at a valuation of $37.6 billion. The new fundraise may value Flipkart at about 5-10 percent
premium to its latest valuation of $33 billion arrived at after PhonePe separated from the group in December last year.

Why it’s important: Flipkart’s fundraise comes amid a funding winter. India’s start-ups raised $7 billion in 2023, the lowest in seven years that underlined the severity of the tech downturn.

#3. Market regulator probes Religare open offer made by Burman family

The Securities and Exchange Board of India is inquiring the open offer made by the Burman family, Religare’s largest shareholder, to shareholders of the financial services company, which triggered a tussle with the present Religare brass. Dabur promoters Burmans announced an open offer on September 25.

Why it’s important: The Burmans have alleged Religare chairperson Rashmi Saluja sold some of her personal holdings after a meeting at which she was told about the open offer. The family wrote to the regulator and stock exchanges for an investigation into Saluja’s trades.

Also Read | Stock Market Today: Top 10 things to know before the market opens

#4. General Atlantic to acquire hospital chain of Amar Ujala at Rs 1,600 crore valuation

General Atlantic is set to buy some 70 percent stake in Ujala Cygnus Healthcare Services, a multispecialty hospital chain, which will value the entity at about Rs 1,600 crore. The private equity firm will acquire about 51 percent stake held by existing investors Eight Roads Ventures India, Evolvence India Fund and Somerset Indus Healthcare Fund. The deal is likely to be signed in a couple of weeks.

Why it’s important: The underpenetrated hospital industry in India has become an investment magnet for international private equity funds. General Atlantic has made several high value investment in the sector in recent times.

#5. Shadow banks start provisioning for AIF investments following Reserve Bank strictures

Piramal Enterprises and IIFL Finance have announced that they are making provisions to respond to the Reserve Bank of India’s fresh norms on lenders’ exposure to alternative investment funds. Disclosures from other financial institutions are awaited. The central bank has restricted lenders and financial institutions from investing in AIFs where there is any downstream link or exposure to a debtor firm.

Why it’s important: The new rules that imposes a blanket restriction on financial institutions with downstream links are expected to impact inflows into AIFs and reduce the investable pool.

#6. Industry lobby seeks government help to ease curbs announced by banking regulator

The Indian Venture and Alternate Capital Association is said to be in discussions with the central government to help ease the wide-ranging curbs the Reserve Bank imposed on alternative investment funds. SIDBI, which lends to small industries, and multiple AIFs are seeking clarity or relief amid the sudden changes in AIF investments ordered by the banking overseer.

Why it’s important: The new norms could choke institutional fund flows to high-risk and lightly regulated investment vehicles which could be misused to evergreen dodgy corporate loans.

Also Read | Moneycontrol Daily: Your Essential 7

#7. Eversource Capital looks to raise $100 million for smart meter business

Eversource Capital is in discussion with family offices and institutional investors to raise $100 million for its smart meter platform. It may even float a second platform for this. Eversource, a venture of European renewable energy company Lightsource BP and local private investor Everstone Capital, is also looking to raise its second large fund.

Why it’s important: The smart meter segment is likely to attract investor interest as India’s power network continues to grow. The central government intends to promote prepaid smart meters for better financial discipline.

#8. Government working on new regime to regulate group bankruptcies

Central ministries are discussing a draft legislation that will modify the insolvency and bankruptcy code to expand the resolution rules from individual entities to groups of enterprises. The new legal regime would likely decide how, and which group companies should be selected for the rescue act.

Why it’s important: More clarity is needed to provide a regime that would benefit all stakeholders that include creditors, investors, resolution professionals and the judiciary.

#9. Designated responsible person at drugmakers to be held accountable for best practices

Pharmaceutical companies may soon have to designate an in-house point person for authorities to communicate with and hold responsible for breaches, a government communication showed. The responsible person will be accountable for day-to-day affairs and serve as a single point of contact for state and central licensing authorities.

Why it’s important: The development follows charges of shoddy drugs exported by Indian firms that have been linked to the deaths of children in Gambia and Uzbekistan. Quality oversight needs to be tightened at the world’s largest exporter of generic medicines.

#10. Financial advisors question poor view of rating agencies on India’s economy

India’s economy remains in the lowest investment grade assigned by credit rating agencies, which has dismayed the finance ministry’s economic advisors, who attribute the low rating to the overreliance of Standard & Poor’s, Fitch Ratings and Moody’s Investors Service on qualitative parameters. Their views have been expressed in Re-examining Narratives: A Collection of Essays authored by chief economic advisor V Anantha Nageswaran and team.

Why it’s important: India has been critical of the so-called lopsided approach to financing efforts against climate change and sharing responsibility with developing countries to reduce carbon emissions. It remains to be seen if the country’s alternative views are entertained by the raters.