Equities jump highest in three weeks on relief rally, but rupee sinks
India's benchmark stock gauges continued to recover on global cues, but the rupee hit a new low of 78.0825 against the dollar. The Sensex ended at 52,532 points, rising by 1.8 percent. The Nifty gained 1.9 percent to settle at 15,639 points. The rise was the biggest since May 30.
Why it’s important: The sharp rise was a rebound from the sustained selloff in the past week or so. Market volatility is expected to remain. Increased crude oil prices have stoked fears of higher inflation and current account deficit in India, which sank the rupee.
Imports from Russia rise 3.5 times on increased crude oil purchases
A significant rise in crude oil purchases has seen imports from Russia rise 3.5 times in the year in April to billion, commerce ministry data showed. In April, India’s imports of Russian crude were valued at $1.3 billion, 57 percent of the country’s inbound shipments from that country. Outbound shipments declined to $96 million in April, down by 59 percent year-on-year.
Why it’s important: Sanctions-hit Russia sold crude oil at a discount to India, which moderated the country’s oil import bill to an extent as international prices soared since the Ukraine war. Russia has become India's second biggest oil supplier in May, overtaking Saudi Arabia.
Government extends concession period for logistics parks to attract investors
The central government has extended the concession period for its scheme on multi-modal logistics parks from 30 to 45 years, which can potentially attract more long-term investors. The government plans to build 35 mega freight-and-transport hubs under its flagship Bharatmala scheme to smoothen freight mobility, improve efficiency and reduce logistics costs.
Why it’s important: The longer concession period would help investors recoup their investment and generate surpluses. These gigantic parks are expected to reduce India’s high logistics cost of around 13-14 percent of GDP to single digits, as is the case in most advanced economies.
National Securities Depository in talks for IPO to raise Rs 4,500 crore
National Securities Depository Ltd, India’s biggest depository services company, is in talks with investment banks for an IPO worth Rs 4,500 crore. Central Depository Services went public in 2017, raising Rs 524 crore in an IPO that was subscribed 170 times.
Why it’s important: The plans to go public come at a time when opening of demat accounts has skyrocketed on account of a post-pandemic rally in the stock markets. The account openings could slow down due to current market volatility.
Edible oil prices cool as companies pass on benefits of lower input costs
Retail prices of branded edible oil are declining as consumer goods firms pass on the gains from import duty cuts and cooling global prices. While Adani Wilmar, Patanjali, Mother Dairy and Emami Agrotech have cut prices, others are expected to introduce promotions to win back consumers lost to cheaper products.
Why it’s important: Cheaper cooking oil will provide a much-needed relief for millions of households where budgets have been badly impacted due to persistently high inflation.
Export-focused SEZs could be allowed to sell products in domestic markets
The Indian government is proposing to transform its export-focused special economic zones into economic hubs through several concessions and the easing of restrictions to attract more investment. Industrial units located in these hubs, which will be called Development of Enterprise and Service Hubs (DESH), may be allowed to sell in the domestic market, and contract manufacture for those outside these zones as well, according to a draft circulated for consultation.
Why it’s important: It’s no secret that many units inside the country’s SEZs are ailing. An incentive to sell products in the local markets could see a reversal of their fortunes.
Foreign investors sell Rs 3 trillion worth of equities in nine months to June
Foreign portfolio investors have pulled out $39 billion (about Rs 3 trillion) from Indian equities through the stock exchange route in the nine months to June, data from NSDL show. Their assets under management fell by 18. 6% to $531 billion at the end of the first fortnight of June, compared with $653 billion at the beginning of the year. InJune so far, FPIs have sold $5. 1 billion of Indian equities.
Why it’s important: The capital outflow has reached a record because of high local valuations and India’s high sensitivity to crude oil imports. The rise in benchmark rates by the US Fed has added to the outbound momentum.
Duty corrections and easing of norms to feature in GST Council meeting
The GST Council in its upcoming two-day meeting is likely to take up the fitment committee’s recommendations that propose raising rates on certain goods and services and pruning exemptions on a host of other items. The Council may also discuss adjusting and rectifying the inverted duty structure for certain items. It may extend the composition scheme to online sellers and exempt them from compulsory registration norms.
Why it’s important: The exemption from compulsory registration would ensure parity between online and offline suppliers, providing a push to the ease of doing business, especially for small businesses.
Biocon Biologics in line of fire after allegations of bribing drugs controllers
The Central Bureau of Investigation has alleged that senior officials of the Central Drugs Standards Control Organization colluded with pharmaceutical firm Biocon Biologics to waive the phase 3 clinical trial of the Insulin Aspart injection and manipulated the minutes of the subject expert committee meeting, causing substantial wrongful gain to Biocon Biologics.
Why it’s important: Biocon has denied wrongdoing, but the charges have shone a spotlight on regulatory oversight on developing new medicines. The processes might need an overhaul to ensure better transparency.
Over Rs 10 trillion locked up in buyer payments to small businesses
As much as Rs 10.7 trillion, nearly 6 percent of the gross value added of domestic businesses, is locked up annually as delayed payments from buyers to MSME suppliers, according to a report by the Global Alliance for Mass Entrepreneurship and Dun & Bradstreet (D&B) India.Why it’s important: Delayed payments severely impact the business survival of small enterprises and slow their growth. Given their oversized importance in the economy, measures must be taken so that buyers cannot get away with this.