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

Morning Scan

#1. Adani Group plans to shake up India’s metals sector with war chest of $5 billion 

The Adani Group is planning a $5 billion foray into India’s metals business two years after marking its entry into the country’s cement sector, the Mint reported. Adani’s natural resources division will be spending the amount over the next 3-5 years on mining, refining and production of copper, iron and steel, and aluminium.

Why it’s important: Adani’s metals plan would shake up the sector in India and challenge incumbents such as Anil Agarwal-promoted Vedanta, Aditya Birla Group’s Hindalco Industries and Tata Group. It has already become the country’s second-largest cement maker two years after making an entrance.

#2. Reliance Industries to invest Rs 65,000 crore to build biogas plants in Andhra Pradesh  

Reliance Industries will invest Rs 65,000 crore in Andhra Pradesh to set up 500 compressed biogas plants over the next five years, the Economic Times reported. The factories, each involving an investment of around Rs 130 crore, will be built on wasteland. They are expected to generate direct and indirect employment for 250,000 people, the state government has estimated.

Why it’s important: The Andhra investment will be the biggest by Reliance outside Gujarat under its clean energy initiative. It is also the first major investment plan fronted by Mukesh Ambani’s son Anant, who heads the company’s clean energy division.

#3. Apple aims at third of iPhone production in India and fourth in value terms by 2026-27  

Apple and its vendors are targeting to assemble 32 percent of iPhone’s global production volume and 26 percent of its value in India by 2026-27, a year after the final year of the  of the five-year production-linked incentive scheme for mobile devices, the Business Standard reported. This could translate into a production value of over $34 billion, assuming global iPhone sales remain consistent at 2023-24 levels.

Why it’s important: Apple has rapidly deepened its engagement in India in order to diversify its supply chain away from China. That it will continue to expand its operations in the country even after business incentives end points to the success of its strategy.

#4. Jubilant’s Bhartiyas in advanced talks with Goldman Sachs over Hindustan Coca-Cola buy  

The Jubilant Group’s Bhartia family is in final negotiations with Goldman Sachs as a partner in the proposed acquisition of a 40 percent stake in Hindustan Coca-Cola Beverages, a wholly owned bottling unit of Coca-Cola in India, the Economic Times reported. Goldman Sachs is expected to finance the special purchase vehicle to house the stake, deploying Rs 3,500 crore through a convertible preferred equity instrument.

Why it’s important: Coca-Cola looks to replicate the asset-light, value-unlocking initiative by rival PepsiCo, which outsourced bottling to Varun Beverages. The Bhartiyas are expected to publicly list Hindustan Coca-Cola Beverages in the next 2-3 years.

#5. American Tower suffered loss of $1.2 billion on sale of ATC Telecom Infrastructure to Brookfield  

American Tower Corporation has told the US Securities and Exchange Commission that it took a hit of $1.2 billion (Rs 10,125 crore) on the recent sale of its India arm ATC Telecom Infrastructure to Canadian asset manager Brookfield. The loss on the sale of ATC TIPL was included in loss from discontinued operations, net of taxes, in the consolidated statements.

Why it’s important: Under the terms of its agreement with a special purpose vehicle of Brookfield, the American tower company was obligated to indemnify it with respect to certain tax-related liabilities that arose from activities prior to completing the deal. A cumulative translation adjustment is typically an accounting entry reflecting gains and losses from fluctuating exchange rates over time.

#6. Trade in index options surges weeks ahead of regulatory curbs to rein in speculation  

Index options trading on the National Stock Exchange hit a record high based on the number of contracts traded in October, the Mint reported. Heightened volatility in the month led to greater participation, with the number of index options traded hitting a record 12.74 billion contracts.

Why it’s important: The jump in participation in index options came weeks ahead of measures by the market regulator to curb retail frenzy in weekly index options trading. Rising market uncertainty was has seem the fear gauge India VIX rising by 71.5 percent to a high of 16.24 in October.

#7. Government hopeful of meeting 2024-25 capital expenditure target of Rs 11.11 lakh crore  

The central government is optimistic of meeting its capital expenditure target of Rs 11.11 lakh crore for the current financial year, the Hindu Businessline reported, citing a finance ministry official. It was also indicated that, if required, curbs under cash management guidelines might be relaxed in the March quarter of 2024-25.

Why it’s important: Much of India’s economic growth in the past few years has been driven by government spending, particularly on infrastructure. Private capital spending, on the other hand, is still lagging as consumption demand is still muted in the country.

#8. Inflows into equity mutual funds jumps to record Rs 41, 887 crore in October  

Inflows into India’s equity mutual funds have jumped to a record high of Rs 41,887 crore ($5 billion) in October, rising 22 percent from the previous month and partly offsetting hefty foreign outflows, the Mint reported. Inflows into equity mutual funds continued for the 44th month in a row in October, the longest on record, with large-cap mutual funds garnering twice the inflows compared to the previous month.

Why it’s important: Although local equity markets have fallen about 8 percent from the record peaks in late September, investors are still positive on Indian economy, hoping that the stock market will deliver a reasonably good return in the mid and long term.

#9. Companies race to offer stock options to even junior staff to prevent attrition  

Companies across industries in India are rolling out the red carpet for middle and junior management employees in a bid to both retain top performers as well as attract new talent, the Mint reported. Long-term incentives, floating stock units and global postings are being liberally handed out at a time when companies cannot afford big hikes and bonuses, industry insiders said.

Why it’s important: It seems that group incentives and flexible work arrangements, which are routine in tech companies, are percolating to other industries as well.

#10. Indian gaming market to touch as much as $9.2 billion by 2028-29, study says 

India’s gaming market is expected to reach $9.2 billion by 2028-29, driven by a rise in advertisement revenue and in-app purchases, the Economic Times reported, citing a report by venture capital firm Lumikai. The Indian gaming market grew by 23 percent in the financial year 2024 to $3.8 billion from $3.1 billion in 2022-23, according to the State of India Interactive Media and Gaming Report.

Why it’s important: the deep penetration of smartphone into India’s hinterland in the past few years has seen it emerge as the world’s second-largest market by mobile gaming downloads, three and a half times larger than the US and Brazil. There has been a sustained growth in in-app purchases and ad revenue, which is expected to continue.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.