Indian equities rise as institutional investors turn net buyers
Indian stock markets gained more than 1 percent along with global peers as investor sentiment improved on optimism that the Covid-19 situation in China may not be as bad as feared earlier. Excellent numbers posted by Hindustan Unilever triggered a surge in consumer goods stocks. The benchmark Sensex rose 1.2 percent to 57,521 points, while the 50-share Nifty ended at 17,245 points, with a gain of 206.
Why it’s important: The markets were on a rollercoaster ride this past week as investors were worried about the Covid situation in China, the war in Ukraine, and the possibility of aggressive monetary tightening by central banks. The volatility is expected to continue.
Competition watchdog raids top sellers of ecommerce platforms
Officials of the Competition Commission of India searched the offices of some of India’s largest online sellers, including the Amazon-owned Cloudtail as well as Appario Retail, a joint venture of the UD online giant and Patni group. The antitrust regulator also visited some of the top sellers of Walmart-owned Flipkart and social commerce firm Meesho.
Why it’s important: The commission is probing allegations of all sellers not receiving equal treatment from ecommerce platforms and that online marketplaces enter into special agreements with select sellers. Small online sellers and offline traders have long complained about the preferential treatment.
LIC has a Rs 60 billion mark-to-market problem on its books
Life Insurance Corporation of India is sitting on a mark-to-market loss of Rs 60.28 billion that must be accounted for in its income statement, the state-run insurer’s draft documents filed with the Securities and Exchange Board of India showed. The insurance regulator has given LIC time till January 31, 2023, to ensure the value of the loss-making investments reflects in its income statement.
Why it’s important: The mega IPO of LIC opens next week which is expected to earn the government Rs 210 billion at the upper end of the price band. The unaccounted losses are unlikely to impact demand for its shares.
Intense heatwaves across India create severe power supply-demand mismatch
Record electricity demand amid a scorching heatwave in several parts of India and depleting coal stocks may worsen power outages, disrupt industrial activity, damage crops and further strain power plants and grid stability.
Why it’s important: There could be widespread demand curtailment in many parts of the country till the heat conditions moderate. Climate change has started affecting economic activity significantly.
M&A activity continues in India despite high market volatility
India's deal street is buzzing despite worldwide volatility in stock indices. Several blockbuster deals like Reliance Industries potential $10 billion (Rs 76,000 crore) acquisition of European medicine chain Walgreens Boots, Adani and JSW groups bidding for Ambuja Cements, and the merger of the HDFC twins are leading the M&A pecking order.
Why it’s important: With deals crossing $105 billion in the first four months of the calendar year, 2022 could be a record year for M&As. It shows confidence in the fundamentals of the India story and a nascent economic revival.
Hotter summer spells big business for summer product makers
Sales of summer products, from air-conditioners and refrigerators to beer and non-alcoholic beverages, have touched lifetime highs amid a scorching early summer, according to company officials and FMCG sales data by retail intelligence platform Bizom. The sales growth in these categories have risen by as much as 75-120 percent in March and April on a low base of 2021.
Why it’s important: Pent-up demand of two seasons lost due to the Covid-19 pandemic, the heatwave in north and east India, and hybrid work and education have helped expand sales dramatically for summer goods makers. If the heat persists, there could be issues with availability of such products.
Government to speed up asset monetisation plans to meet ambitious target
The central government is looking to hasten work to achieve its ambitious target to raise Rs 1.62 trillion through sale of state assets in 2022-23 financial year. Cabinet secretary Rajiv Gauba has called a meeting on Friday of secretaries from 12 key ministries to discuss their roadmaps with timelines to monetize assets such as power lines, gas pipelines, roads, and railway assets, among others.
Why it’s important: The government has missed its asset monetization target for the year to March and is keen to start the process early this financial year to meet the huge target set in the national budget. Finance minister Nirmala Sitharaman had earlier this month reviewed the implementation of the national monetization pipeline.
Future Lifestyle preparing debt restructuring plan to avoid insolvency
Future Lifestyle Fashion has informed lenders on April 26 that it would present a debt restructuring plan to prevent its entry into the bankruptcy process. The company was part of the asset-sale deal with Reliance Industries that’s been called off. The company must arrange Rs 1.63 billion by April 30 to prevent a default.
Why it’s important: If Future Lifestyle fails to make the payment on April 30, the one-time restructuring scheme agreed to a year ago will be rendered void. Creditors will have to Lenders either consider a debt recast or proceed under the Insolvency and Bankruptcy Code to recover their dues.
Many Indian companies plan IPO despite market volatility
A large number of companies in India with regulatory approvals waiting in the wings to avoid a clash with the mega LIC issue are expected to make a beeline to the primary market initiate their share sale process.
Why it’s important: After a record 2021, when firms raised Rs 1.18 trillion through public issues, only six companies have launched their IPOs so far this year, raising Rs 78.19 billion in 2022. That might change although volatility continue to plague market sentiment.
India to launch ecommerce network to compete with Amazon, Walmart
India will launch an open network for digital commerce on Friday, as the government tries to end the dominance of American companies Amazon and Walmart in the fast-growing e-commerce market. The launch of the platform comes after the Competition Commission of India raided domestic sellers of Amazon and Walmart’s Flipkart following accusations of preferential practices.
Why it’s important: Indian retailers have long complained that Amazon and Flipkart provide preferential and unfair advantage for some big sellers. The new network could provide them with an alternative.