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

Indian equities decline on muted earnings, inflation data

Indian stock markets fell by some 2 percent as investors sold shares of Infosys and HDFC Bank after the blue-chip companies reported lower than expected earnings in the fiscal fourth quarter. There were also concerns that surging wholesale inflation and faster policy tightening could slow economic rebound. The benchmark Sensex plunged 2.01 percent and the 50-share Nifty slumped 1.73 percent.

Why it’s important: The market turmoil is likely to continue as the Volatility Index shot up 8.7 percent to 19.34, indicating that options traders see higher risks. Several Asian markets also closed lower.

Banks hike interest rates for retail and corporate loans

The State Bank of India, India’s largest lender, has raised loan rates for corporates and some retail borrowers by 10 basis points, setting the stage for a wave of rate hikes in the banking sector. Private lenders Axis Bank and Kotak Mahindra Bank also raised their marginal cost of funds-based lending rate, the benchmark lending rate.

Why it’s important: The rate hike, the first from the State Bank in more than three years, signals the turn in the interest rate cycle, as rising inflation is likely to prompt the central bank to exit its easy money policy.

Wholesale inflation in March rises to its highest since 2004

Wholesale inflation, which has remained in double digits for a year, rose to a four-month high in March amid a constant rise in commodity prices following the Russian invasion of Ukraine. The Wholesale Price Index rose 14.55 percent in March from 13.11 percent in February, commerce ministry data showed. Food inflation quickened to 8.7 percent in March from 8.5 percent in February, led by a jump in food grain, fruits, and milk prices.

Why it’s important: Wholesale prices are expected rise further because of headwinds due to the disruption in the international supply and logistics chains, coupled with geopolitical uncertainty.

Indian economy to feel the pinch of higher commodity prices: CEA

Inflation will impact the Indian economy, chief economic advisor V Anantha Nageswaran said in an interview. The Reserve Bank’s new GDP growth estimate of 7.2 percent is the floor for this year, he said. India’s current account deficit will be higher than expected but still manageable, Nageswaran said.

Why it’s important: The conflict in eastern Europe has led to a relentless rise in commodity and crude prices that is expected to fuel domestic inflation. Higher oil bills will lead to higher current account deficit.

L&T Infotech and Mindtree may merge to form a $22 billion software firm

Larsen and Toubro is considering a merger between two of its publicly traded software firms. The boards of Mindtree and Larsen and Toubro Infotech could consider share swap ratios for the merger by next week.

Why it’s important: The Indian conglomerate seeks to upscale to compete with global giants. The two firms have minimal overlap in businesses or clients, and a merger would give them better pricing power and lower costs.

Enforcement Directorate attaches Amway assets in Tamil Nadu

The Enforcement Directorate, which investigates financial crimes, has provisionally attached assets worth Rs 7.57 billion belonging to Amway, and accused the country’s largest direct selling company of running a pyramid fraud. The attached properties include land and factories in Tamil Nadu, plant and machineries, vehicles, bank accounts, and fixed deposits.

Why it’s important: The company said it was co-operating with the authorities. The government in December released new rules for the direct selling industry that banned pyramid and money circulation schemes.

Number of new businesses in India climb to three-year high in 2021-22

The number of new businesses set up in the year ended 31 March rose to the highest in three years, led by the services sector, according to corporate ministry data. As many as 167,076 firms were set up in 2021-22, a 7.5 percent increase from the 155,377 companies created in the previous financial year. Around 122,721 companies were set up in 2019-20.

Why it’s important: The steady rise in entrepreneurial activity points in India to improving sentiment about business prospects and confidence that economic growth will rebound despite the coronavirus pandemic.

Highway construction falls 20% in 2021-22 due to pandemic, rains

The momentum gained in building highways over the past few years slowed with the pace of construction falling by more than 20 percent in 2021-22 over the previous year. Only 10,457km of national highways were laid in 2021-22 compared with 13,327km in 2020-21, according to data from the ministry of road transport and highways.

Why it’s important: Pandemic disruptions and an unusually long rainy season prevented the National Highways Authority of India from achieving its targeted 12,000km last financial year. Despite the setback, the budget for 2022-23 has set an ambitious target of building 25,000km of highways.

Digital industry lobbies to lower age of consent from 18 years

The Internet and Mobile Association of India, which represents companies like Meta, Google, Disney Star, Dell, and Reliance Jio, has opposed 18 as the age of consent for children under the proposed personal data protection law. The age requirement will slow the growth of industries that offer tailored knowledge as well as entertainment products and services for children, it said. The requirement of a data fiduciary to verify the age of children and parental consent should also be removed, it said.

Why it’s important: The suggestions in the draft data protection law regarding children are worrying for these firms as adolescents form a large part of their audience. Whether the government consults parents’ associations to agree to such a lowering remains to be seen.

Biocon Biologics to raise $1.2 billion overseas funds for Viatris deal

Biocon Biologics, a unit of Biocon, is raising $1. 2 billion via an offshore loan with the pharmaceutical company likely appointing HSBC, MUFG and Standard Chartered Bank to underwrite the proposed five-year overseas loan. The proceeds would be used to fund the acquisition of biosimilar assets of US-based Viatris, announced about six weeks ago.

Why it’s important: In the wake of the war in Ukraine, Indian firms are increasingly tapping offshore loans instead of bonds. This trend is likely to continue if the conflict lingers.