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

A round-up of the biggest articles from newspapers

March 31, 2022 / 07:53 AM IST

Indian equities rise to highest in more than a month on Ukraine peace hopes

India’s stock indices rose to their highest levels since the middle of February, mirroring increases in other Asian markets, as there were renewed hopes of peace talks between Russia and Ukraine. The benchmark Sensex rose 740. 34 points, or 1.28 percent, to 58,683.99 and the 5-share Nifty rose 1 percent to 17,498.25 points.

Why it’s important: Indian indices have rising around 11 percent from the March lows. The cooling of tensions between Russia and Ukraine is vital for the renewed strength in the market. But Russia has said there’s no breakthrough in peace talk. More volatility is therefore expected.

Markets regulator closes loophole in new rules on related party transactions

The Securities and Exchange Board of India provided clarifications on the new norms governing related party transactions that comes into effect from April 1. Listed companies need not seek fresh approval from the shareholders for a related party transaction that has been approved by the audit committee and shareholders till March 31.

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Why it’s important: The clarification would be disappointment to large conglomerates that have been asking for a deferment of the new guidelines for at least six months and were lobbying for an easing of the rules. It is now unlikely that the regulator would agree to their demands.

Axis Bank to buy Citibank India’s retail business for Rs 123.25 billion

Axis Bank will buy the retail business of Citibank India in an all-cash deal for Rs 123.25 billion. The deal includes Citi’s credit cards, retail banking, wealth management, and consumer loan businesses, besides the consumer business of Citicorp Finance, but excludes Citi’s institutional client businesses in India. Axis will also make job offers to Citi’s 3,600 employees.

Why it’s important: This is the biggest deal in banking since Kotak Mahindra Bank bought ING Vysya Bank in 2014 for Rs 150 billion. The latest purchase by India’s third-largest private lender will give Axis a stronger retail presence to compete with larger rivals ICICI Bank and HDFC Bank.

Banks buy fewer government bonds as demand for credit rises

The purchase of government bond by banks have slowed to about a third of the levels seen in the preceding year. Purchases amounted to Rs 2.4 trillion over the last one year, compared with Rs 7.2 trillion in the same period of 2020-21, Reserve Bank data showed. Aggregate investment in government bonds was Rs 47.5 trillion as on March 11, higher by only 5.2% on an annualized basis compared with 19 percent in the corresponding period of the last fiscal year.

Why it’s important: Yields on government bonds have surged on inflation concerns. There is also a pickup in credit demand, prompting banks to focus on the core business of lending.

Antitrust regulator says Google Paly Store billing rules are unfair

The additional director general of the Competition Commission of India, which is investigating Google’s payment billing system for Play Store developers, has found it unfair and discriminatory. Further hearings on the findings of the probe will begin shortly and the search giant will get to present its argument to the regulator on these latest findings, after which a verdict will be given.

Why it’s important: The findings could be a setback to Google as it might be penalized on these counts. It wants app developers to mandatorily use its in-app payment system, which has been deferred to October 2022 after a backlash. The US firm has been facing anti-competitive charges in other countries as well.

iPhone production may touch Rs 250 billion in 2022-23 under production-linked scheme

Apple’s vendors have made a commitment of a minimum incremental production of Rs 250 billion of mobile devices in 2022-23. The threefold jump in the commitment of minimum incremental production will be possible because of the entry of Apple’s third contract manufacturer, Pegatron, which will soon start commercial production, besides production at Foxconn Hon Hai and Wistron.

Why it’s important: This could give a big boost to the government’s production-linked incentive scheme, in addition to a large push in exports.

Courier company DTDC Express plans initial public offering

Courier firm DTDC Express has begun work on its initial public offering to raise Rs 10 billion. One of India’s largest courier service providers has not finalized the quantum of equity stake to be diluted or the amount to be raised through it, but the size of the fundraising is likely to be around Rs 5-10 billion. It will use some of the proceeds to strengthen its technology platform to compete with younger tech-enabled delivery companies.

Why it’s important: DTDC is not the only company in the logistics sector planning to go public. SoftBank-backed Delhivery has filed draft documents to raise Rs 74.6 billion. In February, TVS Supply Chain Solutions Ltd filed draft documents for an initial share sale to raise Rs 20 billion in fresh capital.

IMF builds case against adoption of cryptocurrencies in India

The International Monetary Fund has flagged significant financial risks over allowing the use of cryptocurrencies, as India deliberates with multilateral agencies and domestic institutions about a planned regulatory framework. The talks are expected to lead to a consultation paper in the next six months.

Why it’s important: India does not have a policy on virtual digital assets, including cryptocurrencies such as Bitcoin and Ethereum. There is strong interest among retail investors in India to trade in digital assets, which has prompted the government to announce a 30 percent tax on earnings from digital transactions.

India Ratings cuts 2022-23 GDP forecast to 7-7.2 percent from 7.6 percent

India Ratings has slashed its real gross domestic product growth forecast for 2022-23 to 7-7.2 percent from 7.6 percent earlier because of higher commodity prices due to the war in eastern Europe. The cut in projections comes a day after ICRA cut its 2022-23 growth forecast to 7.2 percent from 8 percent.

Why it’s important: Supply chain disruptions and higher commodity and crude oil prices due to the Ukraine was poses significant risks to India’s nascent economic recovery, which is now being reflected in the forecasts by various agencies.

Long way still to go for India to achieve renewable capacity targets

Although the government has set an ambitious target to take India’s renewable capacity to 500 GW in 2030, an analysis by Business Standard showed most states have a long way to achieve that aim. India had utilized only 6.3 percent of its renewable potential by 2020-21, according to Energy Statistics 2022 released by the government.

Why it’s important: A target of 500 GW translates into India using a third of its potential. The government will have to increase its grid-interactive installed capacity at least five times by 2030, which is not an easy task.



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