Stock markets crash as Russia invades Ukraine
Stocks plummeted after Russia moved troops into Ukraine. The benchmark Sensex fell 2,702 points, or as much as 4.72 percent, to end trading at 54,530, the sharpest daily decline in two years. Nifty shed 4.78 percent. The declines put the indices in correction territory as they have lost more than 10 percent of their value from a recent peak. Global markets tanked as well. Safer assets like gold and government bonds surged. The price of crude oil jumped past $100.
Why it’s important: War in Europe puts pressure on the global economy already reeling from the Covid-19 pandemic and galloping inflation. Investors are fleeing from risky assets and emerging markets are likely to bear the brunt. There are fears that the Ukraine crisis will raise input and energy costs.
Crude oil prices at nearly $104 a barrel, highest since 2014
International oil prices rose steeply to $103.78 a barrel of benchmark Brent Crude, the highest in seven years, after Russia invaded Ukraine. Supply lines to India is expected to remain unaffected, the government has said.
Why it’s important: The surge in oil prices is bound to impact already high inflation although the state-owned oil marketers are holding the rates of petrol and diesel for now. That will change once the state assembly elections are over on March 7. Brace for higher auto fuel prices.
Moody’s predicts India’s GDP growth at 9.5 percent in 2022
Moody's Investors Service has said India’s economic growth in calendar year 2022 will be 9.5 percent, up from 7 percent estimated earlier. The GDP growth forecast for 2023 has been retained at 5. 5 percent. This translates into 8.4 percent expansion in 2022-23 financial year and 6.5 percent growth in 2023-24.
Why it’s important: The global ratings agency has raised its India growth forecast on a stronger than expected economic recovery despite the disruptions caused by the coronavirus pandemic. The government expects the economy to grow at 9.2 percent in the fiscal year ending March.
Will Ukraine war delay LIC’s initial public offer?
The central government has adopted a wait and watch policy in the backdrop of the Russian invasion in Ukraine before deciding whether to delay the initial public offering of the Life Insurance Corporation of India expected in March. The is no change in stance as of now, and the government is continuing with its roadshows for the IPO, an official said.
Why it’s important: The sale of 5 percent state in India’s largest insurer has generated high interest globally but that might change given the geopolitical situation in Europe. The stake sale is important for the government to meet its already pared down asset sale target.
India Inc braces for fresh round of hikes in input costs
Indian firms are bracing for yet another crisis as crude oil prices jumped by more than 5 percent as Russia launched an attack on Ukraine. Chief executives are worried over the impact this will have on sales and raw material costs in the medium term.
Why it’s important: In the quarter ending December 2021, Most Indian corporation reported higher input costs in the three months ended December 31. Combined with continued stress on supplies and higher crude prices due to the conflict in Europe, input costs are expected to trend higher, not good news for companies in sectors already facing muted demand.
SEBI informed CBI about irregularities at National Stock Exchange in 2018
The Securities and Exchange Board of India had shared information sought by the Central Bureau of Investigation related to the National Stock Exchange in 2018, when the central agency had registered a first information report in the co-location case, Economic Times reported, citing an unnamed source. The markets regulator did not allow term extensions to NSE board members in October-November 2016 over issues relating to Anand Subramanian, former group chief operating officer, and alleged sharing of confidential information by former chief Chitra Ramkrishna, the source said.
Why it’s important: The charges of favored treatment of some brokerages in trading facilities at the National Stock Exchanges have shaken the markets, as has recent revelations that Ramkrishna shared sensitive information with a so-called Himalayan yogi. All accountable agencies are in damage control mode.
CBI interrogates bankers over ABG Shipyard swindle
The Central Bureau of Investigation has questioned nearly half a dozen bank officials in connection with its probe into India’s biggest bank fraud involving Surat-based ABG Shipyard. The bankers were quizzed on the loans given to the shipbuilder, which faces charges of defrauding a group of 28 banks to the tune of Rs 228.42 billion.
Why it’s important: The diversion of borrowed funds by ABG shipyard has raised uncomfortable questions over loan request appraisals and lax supervision. There has been a political outcry as well over alleged delays in initiating an investigation.
BharatPe investors reject stake sale offer by cofounder Ashneer Grover
Top investors of payments firm BharatPe have turned down an offer made by cofounder Ashneer Grover to sell his 9.5 percent stake for over Rs 40 billion if they want him to leave the company. Grover seems to have valued the fintech startup at around $6 billion, far higher than its valuation of $2.8 billion in August.
Why it’s important: The battle between investors in the fintech firm and Grover heated up on Wednesday, when the services of the head of controls Madhuru Jain, Grover wife, was terminated on charges of financial irregularities. The company also cancelled her stock options. Grover had earlier gone on voluntary leave for three months.
Hindustan Unilever splits positions of chairman and chief executive
Consumer goods firm Hindustan Unilever has announced the splitting up of positions of its chairman of the board and the chief executive officer and managing director. The company has appointed Nitin Paranjpe, currently chief operating officer, as a non-executive chairman with effect from March 31. Sanjiv Mehta will continue as chief executive and managing director.
Why it’s important: The decision at Hindustan Unilever is in line with the market regulator’s guidelines for listed companies to split the two top management roles. SEBI earlier this month made the move voluntary as there was scant compliance by top listed companies, particularly those run by business families.
Indian airports report sharp drop in passenger traffic in January
Air passenger numbers in India fell steeply in January, the first time in several months, due to fears overs the rapid spread of the Omicron variant of coronavirus, the Airports Authority of India said. The country’s Indian airports catered to 15.27 million domestic passengers in the month, compared with 25.12 million in December.Why it’s important: The travel and tourism industry has been among the hardest hit due to the Covid-19 pandemic. Margins have been squeezed across the board and many of thew carriers need to see a business revival soon.