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

Government considers lower tax rate under new income-tax regime

The finance ministry may offer lower tax rates in the two-year-old no-exemptions personal income tax regime, which has not yet found favor with taxpayers. The government may also phase out the older personal income tax regime, which offers several deductions and benefits.

Why it’s important: Authorities want to simplify the old income-tax regime, which it sees as quite complex because there are several deductions and benefits available to taxpayers.

NARCL offers to acquire five distressed loan accounts

The National Asset Reconstruction Company of India Ltd has offered to acquire five distressed loan accounts, including Future Retail, GTL Ltd, McNally Bharat Engineering, Consolidated Construction Co. Ltd and Rainbow Papers. The state-owned asset reconstruction company made the proposal in a recent letter to lenders.

Why it’s important: The state-promoted bad bank hasn’t been able to strike any deals due to a mismatch in the pricing of loans and lack of clarity on how the government guarantee would work. These kinks must be smoothened out for the process to work.

Alternative investment funds may get to extend lifecycle by two years

The Securities and Exchange Board of India may allow alternative investment funds to extend the lifecycle of investment products that are set to end by two additional years. Under the current rules, a close-ended AIF can have a fund life of three to 10 years. This 10-year period can be extended by two more investors agree. The regulator is considering an extension of another two years beyond this. This implies a total fund life of 14 years.

Why it’s important: This would be a much-needed breather to several private equity and venture capital funds, which in the past few months have found it difficult to offload unlisted investments as liquidity conditions are becoming tighter.

Provide incentives to alternative technology for small cars, Maruti chief says

Maruti Suzuki chairman R C Bhargava has made a strong pitch to the government for incentivizing the use of alternative technology such as hybrid, CNG, ethanol and biogas for small and affordable cars, so price-conscious consumers can have an alternative to the costlier electric vehicles currently out of their reach.

Why it’s important: The suggestion seems counterintuitive as the Indian market for small cars have been shrinking rapidly in the past few years, as consumer preferences shifted to bigger models and SUVs.

Investors want stricter conditions to put up money in start-ups

Indian start-ups looking for investments in the current environment are finding that investors want stricter covenants. The terms range from negotiating higher liquidation rights to mechanisms to claw back founders’ shares if they exit the startup upon vesting to valuations based on internal rate of return.

Why it’s important: The era of easy money has ended, and a funding winter seems have set in. The rout in technology stocks and rising interest rates have forced investors to become more cautious.

Insurance regulator proposes ceiling on agent commissions

The Insurance Regulatory and Development Authority of India has proposed a cap on commissions paid by the health and general insurance companies at 20 percent of gross written premium. The development comes after the regulator’s move to restrict non-life insurers’ management expenses at 30 percent of GWP. Insurers will need a board-approved policy on commissions and remuneration paid to agents and other intermediaries.

Why it’s important: The cap on agent commissions would have a high impact on the business practices of health insurers because their commissions are much higher than the proposed limit.

Valuation of Adani firms at a premium over benchmark Sensex companies

Adani group companies continue to scale new heights on the stock markets. The seven listed stocks are trading at a past price-to-earnings multiple of 109.2X, nearly five times the average of 22.9X for the 30 companies on the Sensex. The group companies reported combined net profits of Rs 17,676.3 crore during the trailing 12 months ended June against their market capitalization of Rs 19.3 trillion.

Why it’s important: The Adani group stocks are becoming quite expensive compared with the broader market. Their PE multiple has fallen a little bit, but the moderation has been much sharper in the broader market.

Rupee outperforms emerging market peers despite strengthening dollar

Although a global strengthening of the dollar this week has impacted several emerging market currencies, the Indian rupee has taken a milder hit and emerged as an outperformer. In the past three trading days, the dollar Index rose to levels last seen in mid-July, with the gauge moving up from 107.87 at the end of the previous week to 108.69. The rupee has depreciated just 0.04 percent against the dollar, performing better than 11 emerging market currencies.

Why it’s important: The return of foreign portfolio investors and interventions by the Reserve Bank of India are the key factors that have contributed to the rupee’s resilience.

Government may provide $500 million as incentives to develop electric batteries

The central government plans to offer production-linked incentives worth around $500 million to develop niche batteries. The production-linked incentive (PLI) scheme will be launched soon as discussions on this have been underway between the government and NITI Aayog for some time. Unlike other PLI schemes where the focus is on manufacturing, this scheme is likely to provide incentives for R&D.

Why it’s important: The upcoming scheme is expected to provide additional incentives to manufacturing firms as well as India moves forward to achieve climate goals and cut reliance on fossil fuel imports.

NDTV becomes costliest electronic media stock as Adani pitches for majority

The takeover battle for NDTV has led to a sharp rise in the company’s stock price and valuation. It is now trading at a valuation premium compared to its peers and is now the fourth-most valuable electronic media group in market capitalization. The company has an m-cap of Rs 2,479 crore and is trading at a trailing PE multiple of 28.5X, which is nearly 50 percent higher than the industry average PE multiple of 18.6X.

Why it’s important: NDTV has seen a rerating of its stock in the past 12 months, leading to a steady rise in its earnings multiple. The open offer launched by Adani has only added to this momentum.