Below is a shortlist of all the important articles from newspapers.
July has already set new benchmarks in the financing of IPO, with 18 top companies lately garnering more than ₹1.2 lakh crore to be lent to rich investors bidding for the stock, reports The Economic Times.
How it’s important: The pace and size of IPO financing via the sale of commercial papers or short-duration debt reflects surging demand for stock in initial share sales.
Self-funding and other sources of borrowing would further increase the size of the IPO financing market.
Bajaj Finance has raised ₹27,200 crore since June 10, while Infina Finance, Aditya Birla Finance and Tata Capital have collected ₹13,225 crore, ₹11,380 crore and ₹9,625 crore, respectively.
Two JM Financial firms have together raised ₹16,300 crore, while IIFL Facilities Services and IIFL Finance have garnered about ₹11,600 crore.
The flipside: Blockbuster IPO funding has led to massive oversubscriptions and high listing prices. That has also inflated risks of asset bubbles.
The euphoria due to excess funding is leading to artificial demand and distorting IPO prices in the short term.
Consumers opting for lower-priced goods
Consumers are increasingly down-trading to lower-priced or value products across FMCG electronics and apparel segments, reports The Economic Times.
Why it’s significant: It is signalling a possible squeeze on monthly household budgets as compared to a year ago.
Also, sales of large bulk packs were affected due to restricted operations by modern trade and online channels.
Consumers have also opted for buying smaller packs in categories such as edible oils, sugar and tea in the hope that their prices will come down soon.
Local funds keep their faith in equity
The gross purchase of equities by the domestic fund managers in the secondary market reached ₹83,006 crore in June compared with the five-year average of ₹58,187 crore, reports The Economic Times citing Sebi data.
How it’s important: The gross purchase in a single month in June is the second-highest after ₹1.2 lakh crore in March 2020.
The equity exposure of mutual funds includes equity funds, index funds, exchange-traded funds (ETFs), and balanced funds for trades in the secondary market.
The elevated purchase lifted the gross buy-redemption ratio of local funds to 1.08 in June 2021, which was a tad better than the long-term average of 1.06, reflecting easing redemption pressure.
Domestic Vs Foreign: So far in July, the domestic funds have increased allocation amid the selling by foreign funds.
Apple Q1 shipments decline by up to 40%
Apple saw a sharp decline of 30-40% in shipments to 600,000-700,000 units in the quarter to June, The Economic Times reports.
What it shows: Sales are hurt mainly by the disruption in the retail channels owing to Covid-induced restrictions.
Market trackers said the online channel is stuck with now high inventory, leading to sharp discounts and offers.
Market trackers are optimistic that recovery in sales of Apple devices would outperform the broader smartphone market as e-tailers push demand with special price cuts in the pre-festive quarter.
Monsoon covers all of India, to speed up sowing of crops
Finally making its advance into Delhi-NCR, the southwest monsoon on Tuesday covered the entire India five days past its usual date of July 8, reports The Times of India.
How it’s important: The seasonal rainfall activity will now speed up the sowing of summer crops (Kharif) in the northwest region.
The short delay in covering the entire country is not expected to impact farming operations.
Total sown area, in fact, depends more on the spatial distribution of rainfall over the entire monsoon season (June-September) than on early or late coverage unless the deviation is substantial.
Govt aims to list LIC by Q4 of FY22: Dipam Secretary
The Centre aims to list state-run insurance behemoth LIC by the last quarter of the current financial year, says The Times of India quoting Tuhin Kanta Pandey, secretary, department of investment and public asset management (Dipam).
Tuhin Kanta Pandey, said: “We are looking at the fourth quarter and work on several fronts is progressing for the IPO.”
How it’s important: LIC IPO is set to be the biggest and several estimates suggest that it could raise Rs 90,000 crore to Rs 1 lakh crore.
It will hand over much-needed revenue to the government against the backdrop of the Covid pandemic.
FM to decide: Pandey said the panel headed by FM Nirmala Sitharaman will decide on the exact quantum of share sale.
Merchant bankers for the transaction would be appointed soon.
He said the department of financial services was working on fulfilling other requirements for the IPO.
CEA indicates a reduction in fuel taxes is unlikely
The government is unlikely to cut fuel taxes despite petrol crossing the ₹100 per litre mark in all metros, hinted Krishnamurthy Subramanian, chief economic adviser to the finance ministry, Mint reports.
What the CEA says: A cut in fuel taxes, he contended, is unlikely to have a significant impact on retail inflation because of its low weightage in the index.
The bigger concern is food inflation, not fuel.
“Weightage of petrol and diesel in CPI is less than 3% while weightage of food is about 50%.”
On the growth outlook, Subramanian said double-digit growth is still possible despite some impact of the second wave of the pandemic.
On the third wave: “So, if you take into account the vaccination, the health impact of the third covid wave may not be as intense as the second wave.”
Experts caution as govt intervenes in food markets
The Union government has virtually rolled back its policy of not intervening in food markets except under “extraordinary circumstances” to cool prices of lentils, reports Hindustan Times.
How it’s important: This lays bare the challenges of keeping food prices low and farm incomes high in a country where much of the agricultural trade is opaque.
The government, using a measure known as stock-holding limits, has set restrictions on the quantity of pulses, excluding moong (green gram) that sellers, including importers, wholesalers and retailers, can store.
This goes against the provisions of one of the three farm laws passed by the government last year but put on hold on account of protests by farmers.
Fresh fundraising through IPOs set to hit a 14-year high
Fresh capital raised by companies by way of IPOs is set to hit a 14-year high, says Business Standard.
Why it’s important: India Inc has raised about ₹ 19,300 crore in fresh capital by maiden offerings, including the ₹ 9,000 crore Zomato will raise this week, so far in 2021.
The best year in terms of fresh fund-raise was 2007 when companies had raised ₹ 32,102 crore.
With Paytm planning to issue fresh shares worth ₹ 12,000 crore, the domestic market looks set to surpass that tally this year.
Since 2013, secondary share sales have dominated IPOs, with private equity investors using them to liquidate their holdings.
Also, due to the economic slowdown, very few companies have rolled out expansion plans, minimising the need for fresh fund-raise.
‘Not very concerned about 3rd wave impact on biz’
Mohit Malhotra, CEO of Dabur India, tells Business Standard in an interview that a steep rise in prices, changing consumer preference, and a dynamic business environment are keeping him on his toes.
CEO speaks: Share of our healthcare portfolio went up to 45 per cent from 30 per cent and essentials like oral care did well, while share of skincare, hair oils, and foods shrank.
We had anticipated that our discretionary portfolio may not do well, so we diversified into areas like edible oil and launched several products.
We haven’t witnessed this kind of inflation in eight years.
It has jacked up input costs by 5-6 per cent as it has hit the entire bucket of our business.
The spurt in demand for ayurvedic products has exhausted our production capacity, we don’t have any option but to augment capacity.
So, we have begun construction of our eighth plant in Madhya Pradesh at an estimated cost of ₹ 550 crore to meet current and future demand, taking advantage of incentives provided by the government under its ‘Atmanirbhar Bharat’ programme.
Tatas hire consultants, go deep into Air India due diligence
Tata Sons has started the process of due diligence of state-owned Air India and its subsidiary Air India Express, reports Business Standard.
How it’s important: The group has appointed Bain and Company and Seabury Group for this purpose.
Once complete, a financial bid will be submitted and a deal to take over the airline is likely to fructify by end of this year or even earlier.
Simultaneously, the group has brought in veterans in the aviation business from Delta and United Airlines to prepare a plan for post-merger integration of Air India with its existing airline ventures.
NTPC set to build India’s largest solar park in Kutch
The country’s largest power generator, NTPC, through its renewable energy arm, will construct what would be India’s largest single local solar power park of 4.75 Gigawatt (Gw) in Kutch, reports Business Standard.
Why it’s important: NTPC-REL plans to use this project for the production of green hydrogen, too.
The current total installed generation capacity of NTPC stands at 66 Gw.
The company wants to soon go public for raising funds.
The company would add 7-8 GW renewable every year.
Apart from solar and wind power projects, NTPC is looking to invest in green hydrogen and green methanol.
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