Sensex roars past 63,000 points on fresh foreign inflows, global cues
Indian equities gained for seventh consecutive session, buoyed by positive global cues and strong buying by foreign portfolio investors. The benchmark Sensex went past 63,000 points for the first time. It ended the session at 63,099 points, rising 0.6 per cent. The 50-share Nifty closed at 18,758 points, or 0.7 per cent. Both the indices ended the month with gains of around 4 per cent. The Sensex has risen 3.2 per cent in the past seven sessions.
Why it’s important: India is seen as the sole bright spot in an otherwise gloomy global economic situation. Its revival after the pandemic shock is encouraging sentiment. However, market volatility is not over yet.
GDP growth in second quarter slows to 6.3 percent as manufacturing contracts
India’s economic expansion slowed in the September quarter as manufacturing output contracted amid rising interest rates and the favorable base effect from the covid pandemic period receded. GDP grew 6.3 per cent in the three months ended September compared with a year ago, significantly slower than the 13.5 per cent growth in the preceding quarter.
There was, however, robust growth in the services sector. The country’s fiscal deficit touched 45.6 per cent of the budget target in the first seven months of the current financial year, higher than 36.3 per cent in the same period of the last year. The deficit stood at 8.3 per cent of GDP in the first six months of 2022-23.
Why it’s important: Rising costs of raw materials and higher interest rates have started hurting manufacturing growth. High inflation has forced the Reserve Bank to raise policy rates to temper demand.
Transactions in digital rupee may offer same anonymity as cash transactions
The Reserve Bank has asked lenders not to report low-value transactions made through the digital rupee. Once the Central Bank Backed Digital Currency Retail is transferred to customer wallets, banks will not track or report these transactions, bankers said. Currently, most cash transactions over Rs 50,000 require customers to disclose their permanent account number. While no limit has been set for digital rupee transactions, it is believed that retail transactions up to Rs 50,000 will not be reported. Transactions in excess of Rs 2 lakh will have to be reported for tax purposes.
Why it’s important: The move will ensure the virtual currency will offer a similar degree of anonymity associated with paper money for business exchanges below a value threshold. It will encourage wider use.
Vodafone India in talks with State Bank to borrow Rs 16,000 crore
Cash-strapped Vodafone Idea is in discussions with the State Bank of India for a Rs 15,000-16,000 crore loan to meet its 4G capex needs, fund equipment supplies contracts for its pending 5G rollout and to clear some vendor dues. The fundraising via debt is held up for over a month as the State Bank seeks clarity on the government’s potential shareholding in Vodafone Idea, as well as the telco’s business scale-up plans.
Why it’s important: A delay by the government to convert its Rs 16,130 crore of accrued interest on dues into equity has delayed equity infusion by other investors, who want clarity before committing funds. This leaves Vodafone Idea with no option but to arrange more debt to meet its immediate needs.
Reliance, Adani skip Lanco auction, citing faulty sales process
Two of India's biggest business houses, the Adani Group and Reliance Industries, did not participate in the auction for insolvent Lanco Amarkantak Power, citing a violation in the sale process. Lenders had invited three resolution applicants — Adani Power, Reliance Industries, and a Power Finance Corporation-REC team- to bid at the auction. Both conglomerates said the proposed challenge mechanism violated the rules governing the Insolvency and Bankruptcy Code, as there is no provision for it in the relevant legislation.
Why it’s important: There’s a problem when two out of three bidders withdraw from an auction. This needs to be resolved fast if the sale of the bankrupt firm is to be a success.
Max Healthcare emerges as frontrunner in race to but AMRI Hospitals
Max Healthcare Institute could be keen to buy Kolkata-based Emami Group’s AMRI Hospitals with a counteroffer that trumps an earlier Manipal Health Enterprises bid by Rs 900 crore. Sources close to Emami, with interests in consumer goods, medical care and property development, said Max has made a counteroffer of Rs 2,700 crore to buy the AMRI chain to strengthen its position in eastern India. AMRI has three superspecialty hospitals in Kolkata and one in Bhubaneswar.
Why it’s important: The counteroffer could trigger a potential corporate war between two of the country’s leading hospital chains. Manipal has already approached a court to prevent AMRI to sell any of its shares.
Enforcement Directorate scanner on firms with third party deals with Iran
Some Indian companies that dealt with third parties in carrying out trades with Iran and other countries have come under the lens of the Enforcement Directorate, which investigates financial crimes. The federal agency has asked about a dozen firms to share information on payments against third-party exports and imports for the past 6-7 years. In such trade transactions, an Indian exporter shipping goods to Iran receives payments from another party located in a third country such as the United Arab Emirates.
Why it’s important: Although such transactions have been permitted by the Reserve Bank since 2013, companies that made or received payments from another nation without a tripartite agreement have drawn the attention of the directorate.
Reliance Brands to buy stake in US luxury fashion retailer’s lifestyle brand
Reliance Brands is in talks to purchase a stake in American luxury fashion retailer Prabal Gurung’s premium lifestyle label. A Nepalese American fashion designer, Gurung is known for dressing up celebrities such as Michelle Obama, Sarah Jessica Parker, and Anne Hathaway. He had launched his line in 2009 at the New York Fashion Week.
Why it’s important: Reliance intends to set up exclusive luxury flagship stores at its Jio World malls. It already owns stakes in other high fashion brands and is consolidating its presence in the segment.
Industrialist Vikram Kirloskar, who brought Toyota to India, dies at 64
Vikram Kirloskar, vice-chairperson of Toyota Kirloskar Motor and the man credited with winning the trust of Toyota for its India bet, died late Tuesday night. Kirloskar, 64, suffered a heart attack on Tuesday morning and was rushed to Manipal Hospital in Bengaluru, where he passed away. He is survived by his wife, Geetanjali, and daughter Manasi, who was inducted on the board of Toyota Kirloskar Motor last year. The Kirloskar Group holds 11 per cent of the joint venture forged 25 years ago in 1997, while the majority stake in the company is held by Toyota Motor.
Why it’s important: The first alliance between Toyota and the Kirloskars goes back to the 1980s. It is rare to have such a stable joint venture with a Japanese firm that has strict rules on designated roles in manufacturing.
Alstom, Medha, Siemens in race to secure Rs 26,000 crore Vande Bharat contract
Alstom India, Medha Servo, Titagarh Wagons, and Siemens are among the five bidders for a Rs 26,000-crore order by the Indian Railways to make 200 lightweight Vande Bharat trains. Russia’s Transmashholding is the fifth bidder. The closure of the technical bids for the mega tender kickstarts the process of rolling out 400 Vande Bharat trains over the next three years. At least four of the five firms that have submitted the bids have formed consortia to participate in the tender.
Why it’s important: The lightweight trains are a big part of the modernization of India Railways. It might take 18-24 months for the national transporter to procure the first prototype from manufacturers.
(Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)
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