#1. Stock market indices end lower on selling of index heavyweights, volatility to linger
India’s benchmark indices declined due to heavy selling in scrips such as Reliance Industries, Bharti Airtel and Maruti Suzuki amid weak cues from Asian and European markets. The 30-share BSE Sensex fell by 0.49 percent to end at 71,731.42 points. It has hit a day’s high of 72,385.93 points. The broader 50-share Nifty fell by 0.38 percent to close at 21,771.70 points.
Why it’s important: The markets are expected to remain volatile in absence of a strong positive cue as indicated by high values of the fear gauge that point to investor apprehension of increased instability.
#2. Stocks of state-owned firms soar way past benchmarks, sparking concern
The latest leg of the market rally from October 26 has seen the BSE PSU index return 52.6 percent to 18,123.77 points against the Sensex’s more modest gain of 13.6 percent to 71,731.42. Life Insurance Corporation of India, which traded at Rs 605 on October 26, has hit a record Rs 1,028. Others that touched new peaks include Coal India (Rs 450), BPCL (Rs588.80), HPCL (Rs 517.35) and Gail (Rs186.50).
Why it’s important: After underperforming their private peers for years, stocks of state-run companies have seen investor exuberance in the recent few months. There is now a strong chance of a shakeout and profit booking in the short to medium term.
#3. Multiple regulatory lapses at Paytm led to recent Reserve Bank action
Paytm Payments Bank might have fudged details of its user base and acted in a manner that was not complaint to its licensing requirements, compelling the central bank to act stringently against it. While the banking unit of the payments processor boasts of 330 million wallet users, just about 20 million may be active users, while 310 million may have been redundant accounts.
Why it’s important: Sordid details of dubious business practices are emerging everyday about Paytm Payments Bank, underlying the dangers of pursuing growth at the expense of prudential business practices.
#4. Dr Agarwals Health Care readies for initial public offer to raise $300 million
Dr Agarwals Health Care, the parent of publicly listed Dr Agarwals Eye Hospital, is planning a $300–400 million public share sale in 2024. The company, 60 percent owned by TPG and Temasek, will hear pitches from investment bankers this week and is expecting a valuation of $1.8–2 billion.
Why it’s important: The hospital chain has been expanding at a steady clip and would likely see interest from investors as growth in the private health care space in India far outpaces the government’s efforts.
#5. Dipstick poll shows corporate India set to push capex spending to the floor
Indian companies are planning to invest more in coming months as they expect consumer demand to revive substantially, according to a dipstick poll of 12 CEOs by the Business Standard newspaper after the interim budget. It showed 66.67 per cent of the CEOs are planning to spend on creating fresh capacities because the budget has given clear directions to firms to be ready for government orders.
Why it’s important: There has been multiple predicts of increased capital spending by the Indian private sector but not much has materialized till now. The proof of the pudding would be in the eating.
#6. Paytm Payments Bank could have been used to bypass forex management law
The Enforcement Directorate sought information from the Reserve Bank less than two months ago about alleged violation of the Foreign Exchange Management Act by individuals and companies using the Paytm Payments Bank. This was after central bank wrote to directorate in the last week of November, informing it of possible breaches.
Why it’s important: The suspicion of malpractices at the lending unit of Paytm is deepening by the day and could possibly spread to the entire payments processing sector in India. The sector could be bracing for dire days.
#7. Government may allow four state-run lenders to raise money in first half of 2024-25
The central government may allow at least four state-owned banks to raise funds or expand their public float in the first half of the next financial year to hasten their lending and improve public participation. These include Punjab National Bank, which is targeting a follow-on public offer by September, and Central Bank of India, which is seeking approval for an offer for sale to expand its public float.
Why it’s important: The latest nod is aimed at unlocking the value of state-operated lenders as the government is make a renewed push to privatize some of them.
#8. Bank of Baroda possibly breached norms by providing gold loans without collateral
A clutch of Bank of Baroda branches has disbursed fake gold loans over the last year to meet stiff targets, breaching regulatory guidelines and potentially risking depositors’ money. Gold loans were approved without gold, processing fees were paid by the branch and repayments were backdated to hoodwink the system, several employees of the public sector lender said.
Why it’s important: Revelations about these possible breaches have come to light after the Reserve Bank penalized the state-owned lender for violations related to onboarding of customers on its mobile app. The bank’s management seems to be in the need for improved governance.
#9. India’s fintech sector scrambles to tighten compliance after action against Paytm
After the Reserve Bank of India moved strongly against the Paytm Payments Bank, players in India’s fintech ecosystem have turned their attention to providing priority to complying with regulatory norms. The episode will ensure stricter adherence to regulations, industry insiders said.
Why it’s important: Fintech companies would surely like to ensure that the regulatory action does not spread to them as that would badly hurt sentiment. There could be some consolidation ahead as well.
#10. Vedanta’s proposal to build huge semiconductor facility put on the backburner
The government has put the Vedanta Group’s proposal to set up a mega semiconductor fab plant on the back burner due to the company’s inability to rope in a technology partner. The government is instead considering two new fab proposals, but no names have been disclosed. Vedanta’s joint venture with Foxconn fell through last year.
Why it’s important: The government continues to make efforts that there are factories making computer chips in the country. The road to becoming a semiconductor hub is proving to be bumpy.
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