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

Electric vehicles and clean energy have been among the key focus areas for the Narendra Modi government

The Centre has offered multiple incentives to encourage the production of such automobiles in the country.

The government is also in touch with large global companies to set up manufacturing plants in the country.

Sebi wants AIFs raising funds to hire I-Banks

The Securities & Exchange Board of India wants all private equity and venture capital funds raising money to hire investment banks, The Economic Times reports.

Why it's important: It's a proposal that fund houses are trying to push back.

The regulator wants a third-party intermediary, governed by rules of the capital market, to verify information in a fund’s ‘private placement memorandum.’

PPM is the key document prospective investors skim through before putting money in alternative investment funds (AIFs) — the regulatory term for PE and VC funds.

The stand taken by Sebi follows large funds, running multiple schemes with thousands of crores of assets under management, submitting PPMs that are incomplete and often in violation of regulations.

India Inc seeks ₹20k cr more in IPO season

Companies are rushing to tap the primary market on the heels of strong investor response to the IPO of Zomato and the subsequent stellar listing, The Economic Times reports.

What it shows: At least nine companies are planning to raise over ₹20,000 crore through IPOs over the next two weeks.

While Rolex Rings has announced the opening of its IPO on July 28, three companies — Devyani International, CarTrade, and Windlas Biotech — are expected to launch their issues early in August.

Companies usually time their IPO launches based on the market sentiment and investor appetite for these share sales.

Other companies that plan to launch their IPOs in early August include Nuvoco Vistas, Krsnaa Diagnostics, and Aptus Value Housing. Ruchi Soya, owned by Patanjali Ayurved, is also expected to launch its FPO early in August.

RBI eyes transparency in forex deals

The RBI wants banks to disclose the money made on foreign exchange deals to clients The Economic Times reports.

Why it's important: The central bank believes this would prevent banks from taking customers for a ride.

The move would enable businesses to fish for better exchange rates when they enter into forward contracts with banks or buy or sell foreign currency in the spot market.

Top 6 steel cos to foray into speciality steel: Steel Minister

In an endorsement for the government’s Productivity-Linked Incentive (PLI) scheme for speciality steel, India’s top six steelmakers are set to produce speciality steel within the first year of the announcement of this scheme, Union Steel Minister RCP Singh told in an interview with The Economic Times.

What the Minister says: The scheme has been designed with input from the industry, and the top six companies will soon enter the speciality steel sector.

Six top companies – including 4 international and 2 domestic players - will enter (producing speciality steel) in the first year itself.

All of them - integrated steel mills, secondary steel mills and MSMEs in the sector - will benefit from the scheme.

Executives, HNIs stuck in India may face tax, regulatory troubles

Several Indian employees on global assignments, expats and high net-worth individuals (HNIs) who are stuck in the country amid the pandemic are likely to face tax and other regulatory problems this year, The Economic Times reports.

Why it's significant: Indian tax authorities have not issued fresh guidelines for FY21-22 on people who have had to stay in the country for an extended period due to Covid-19 disruptions.

As per the current regulations anyone staying for more than182 days in India will have to pay domestic taxes.

Many executives on global assignments had moved back to India during the second wave of the pandemic but are now unable to return.

They may see some complications around their income tax payments if tax authorities decide to scrutinise them.

Intellectual foundation needed for reforms 3.0: Vijay Kelkar

Vijay Kelkar, a former finance secretary and veteran policymaker, in an interview to The Times of India, calls for governance and administration reforms as well as knowledge-based policies.

What Kelkar says:

Governance reforms include strengthening of the “rule of law” through legal, judicial and administrative reforms.

The new challenges for our country have come up in the last 30 years in addition to the continued challenges of achieving higher and equitable growth.

New challenges are due to the growing global climate and environmental stress and consequent existential challenges to our planet.

Then there is the issue of management of our cities so that these are governed properly and become engines of growth like the great cities across the continents.

The third issue is an old one of building human capital, which means more effective supply of public health and higher-level education.

More knowledge, better analysis and greater decentralisation will lead to the design of knowledge-based policies.

The next reforms will have to cover reforms of governance, urban affairs and empowerment of state governments, cities & local bodies.

Gradual tweaks to LIC surplus payouts likely

The government is considering gradual tweaks to the surplus distribution of Life Insurance Corporation of India (LIC) to policyholders and shareholders as the insurer looks to list on the stock exchanges, Business Standard reports.

Why it's important: The finance ministry is exploring the adoption of a glide path for changing the existing surplus distribution from 95:5 so that policyholders do not immediately feel the pinch.

The gradual change will aim to move towards the regulator-mandated distribution of surplus.

The Irdai currently mandates distribution of surplus by insurers in the 90:10 ratio, where 90 per cent goes to policyholders and the remaining to shareholders.

Markets to time correct for next few months: Nirav Sheth

Nirav Sheth, CEO, Institutional Equities, Emkay Global Financial Services, tells Business Standard in an interview that the key risk for equity markets, especially emerging markets, is a counter-trend rally in the US dollar.

What he says: Earnings racing off a cliff have some upside risk and low-interest rates will support relatively high valuations.

Markets to time correct for the next several months and sector rotation to be the dominant theme.

The key risk for equity markets, especially emerging markets, is a countertrend rally in the US dollar.

The US economy is firing and a reset of interest rate expectations can dislocate the markets.

Domestically, inflation risk can overwhelm the RBI’s dovish monetary policy.

Apart from this, a newer variant of Covid-19 and a slow pace of vaccination can delay growth recovery.

The Road Ahead:

We are overweight on financial services, capital goods, consumer discretionary, and materials and energy.

We are underweight on software and healthcare.
Red flags have been raised on the small-cap space.

Zomato plans fresh Grofers investment

Zomato Ltd is set to double down on the online grocery market, Mint reports.

Why it's important: It will lead a ₹3,500 crore investment in Grofers, which turned unicorn recently.

Several global investors will join Zomato in investing in Grofers.

Zomato invested $100 million in Grofers about a month ago for a 9.3% stake, valuing the online grocer at more than $1 billion.

Grofers is banking on Zomato’s popularity to augment its existing grocery business.

Festive travel may accelerate 3rd wave

Indians plan to travel either to meet friends and family or for a much-needed break later this year despite looming fears of a third wave of the covid pandemic, Mint reports.

Why it's important: The travel plans come ahead of the August and September holidays for festivals such as Rakhi, Janmashtmi, Independence Day, Onam and Ganesh Chaturthi, also fuelling pent up demand for leisure travel.

The good & the bad: While bringing good news for the travel and hospitality industry, there are also apprehensions that a spurt in travel may actually speed up the pandemic’s third wave.

Tour operators Thomas Cook (India) and SOTC said the upcoming festive season is seeing encouraging interest, with demand upwards of 35% over last year.

JSW Steel funding in paints firm an arm’s length deal: Parth Jindal

JSW Paints Ltd’s Managing Director Parth Jindal in an interview with Mint defended a proposed ₹750 crore investment by group company JSW Steel Ltd.

What he says: He claimed it was an arm’s length transaction and was finalized after much deliberation.

Jindal said the transaction was vetted by independent valuers, and the price offered is based on the aggregated market valuation.

“After we received the non-binding term sheets, we approached JSW Steel and requested them to consider an investment as, personally, I feel it was a bit too early for us to go outside the group for funding,” said Jindal.

Byju’s bets big on higher education

In an interview with Mint, Byju Raveendran, founder and CEO, spoke about Byju’s’ acquisition strategy, growth outlook and focus areas.

What Byju says: Upskilling is a sector that will see positive disruption in the coming years.

Higher education is slowly and surely moving online, at a fraction of the cost, and the opportunity is huge.

Individuals are learning and working from home. What would have taken a lot many years has been accelerated due to the pandemic.

In India, we will go deeper into smaller cities and towns.

There will be continued growth in India, but in 3-4 years; we expect the revenue split to be 60-40% between Indian and global markets.

Private passenger train plan sees few takers

The Union government’s ambitious plan to run private passenger trains has received a muted response, Mint reports.

What it shows: Only three out of a dozen clusters offered for public-private partnerships received financial bids.

These three clusters of Delhi-1, Delhi-2 and Mumbai-2 received limited bids, with state-run IRCTC being the single bidder for the Mumbai-2 cluster, where it quoted an 18% revenue share.

For the Delhi-1 cluster, IRCTC and Hyderabad-based Megha Engineering and Infrastructure Ltd quoted revenue shares of 15.3% and 2.16%, respectively. For Delhi-2, IRCTC and MEIL quoted revenue shares of 6.3% and 0.54%, respectively.

The laggards:

More than a dozen firms qualified to place financial bids for a total of 12 clusters comprising around 150 origin-destination pairs of routes, involving an investment of around ₹30,000 crore.

The nine clusters that didn’t receive any financial bids are Mumbai-1, Chandigarh, Howrah, Patna, Prayagraj, Secunderabad, Jaipur, Chennai and Bengaluru.