Retail inflation cools to 0ne-year low in December, factory output rebounds in November
India´s factory output rose to a five-month high in November, mainly due to a favorable base effect, and retail inflation eased marginally to a 12-month low in December, as food prices cooled. The Consumer Price Index stood at 5.72 per cent in December, below the Reserve Bank of India’s upper tolerance limit of 6 per cent, for a second consecutive month. Factory output, measured by the Index of Industrial Production, grew at a robust 7.1 per cent in November.
Why it’s important: The two key macroeconomic indicators before the budget on February 1 have delivered positive surprises and will provide some comfort to policymakers. To be sure, retail inflation may rise in January as the favorable base affect wanes.
Infosys beats street expectation in fiscal third quarter, raises revenue guidance
Net profit at Infosys rose 13.4 per cent in the December quarter to Rs 6,586 crore from Rs 5,809 crore a year ago, beating street estimates. Analysts had estimated a profit of Rs 6,465 crore. Sales rose 20% to ₹38,318 crore. The firm raised its 2022-23 revenue growth forecast to 16-16.5 per cent from 15-16 per cent predicted in October and maintained operating margin guidance of 21-22%. Infosys signed 32 large deals, a 30.4 per cent increase on year for a total of $3.3 billion, the highest in two years.
Why it’s important: Boosted by strong new deal wins, India’s second-largest software services company has brushed aside concerns that business will suffer by the global economic slowdown.
Budget 2023-24 may launch scheme to settle defaults in export obligations
Budget 2023-24 may propose a dispute resolution scheme for exporters that would offer a one-time window to settle past disagreements on defaults in export obligations. The scheme may provide a window of three-six months for exporters to come clean. It could lower the interest to one-third on delayed customs duty payment and may even waive penalties. About 1,100 mostly small and medium exporters are learnt to have failed to fulfil the stipulated export obligation, making them liable to pay the 10 per cent customs duty, along with 15 per cent interest a year.
Why it’s important: The proposed scheme will benefit a large number of exporters who have defaulted on export obligations since 2010. It would be a welcome development, coming at a time when overseas shipments are moderating due to an economic slowdown in the West.
Markets regulator issues notice to alternative investment funds for flouting tenure rules
The Securities and Exchange Board of India has sent notices to several alternative investment funds, which include private equity investors and venture capitalists, for alleged violation of specified tenure rules on their investment vehicles. These funds supposedly failed to stick to the fund tenures they had specified in their respective offer documents while gathering the corpus. Many of the early funds, floated around 2013-14, were scheduled to wind up their operations by 2021-22.
Why it’s important: Some fund managers extended the tenure without informing the capital markets regulator, expected some leeway. The watchdog instead seems to be aiming to protect investor interest and ensure greater transparency.
Clutch of companies receives fresh summons under GST regime in recent weeks
Supriya Life Sciences, Blue Cross Laboratories and Yasho Industries were among half a dozen companies to have fresh summons in the new year under the GST regime. In the past 15 days, more than 60 summons have been issued to companies across sectors including pharma, IT and chemical, industry insiders said. Some of them have even approached courts seeking quashing of these summons.
Why it’s important: Summons by the Central Board of Indirect Taxes and Customs increase the cost of compliance. The authorities must make their concerns stick to justify the process that often ends up in the courts.
HCL Tech sees profits rise 18 per cent in third quarter, trims upper revenue guidance
HCL Tech reported a strong quarter with a net profit of Rs 4,096 crore in the three months ended December, an increase of 18.8 per cent on year against a weak global macroeconomic environment. India’s third-largest IT services firm brought down its higher end of revenue guidance for 2022-23 to 13.5 per cent to 14 per cent, down from the earlier 13.5 per cent to 14.5 per cent. Net consolidated revenue grew 19.6 per cent to Rs 26,700 crore, compared to Rs 22,331 crore a year ago.
Why it’s important: HCL has secured 11 new deals during the December quarter and seems to be weathering the economic slowdown in its main markets in the West quite well.
Reserve Bank open to non-banking route to end impasse with European regulator
Amid the standoff between the Reserve Bank and the European Securities and Markets Authority, India’s banking regulator is open to the idea of European banks carrying out government securities trading and custody businesses through locally incorporated non-bank arms. The suggestion was mooted at the meeting between deputy governor T Rabi Sankar and officials of European Union banks with branch operations in India.
Why it’s important: If the proposal gains ground, it would come across as a strong signal from the Indian authorities on regulatory jurisdiction and control over key market infrastructure.
Ratings agency pegs India’s likely fiscal deficit target at 5.8 per cent
The central and state governments are most likely to budget for higher market borrowings next financial year although the 2023-24 budget may peg a lower-than-expected fiscal deficit at 5.8 per cent of GDP, according to ICRA Ratings. The agency anticipated that higher redemptions would lead to gross market borrowings of the Centre and states to rise to Rs 14.8 lakh crore and Rs 24.4 lakh crore, respectively, in 2023-24.
Why it’s important: If the fiscal deficit target is fixed at 5.8 per cent of GDP, it would be a healthy moderation from 6.4 per cent projected for the year to March. Higher borrowing may pose a concern though.
Government starts seizing toys from retail shop on quality control concerns
The central government has seized about 18,600 toys from stores across the country, including those of well-known chains such as Hamleys, Archies, WH Smith, Kids Zone and Cococart, for lacking quality mark of the Bureau of Indian Standards. E-commerce firms such as Amazon, Flipkart and Snapdeal have also found selling toys without the mandatory certification, officials said. Bis has conducted as many as 44 raids in the past one month.
Why it’s important: Authorities are cracking the whip on the mandatory quality certification on toys to address concerns that unsafe material or manufacture could cause harm to children.
Anu Aiyengar of JP Morgan Chase becomes only women to head M&A on Wall Street
JPMorgan Chase & Company’s Anu Aiyengar will become the sole head of global mergers and acquisitions, making her the only woman to lead that franchise at a major Wall Street bank. Aiyengar has been with the firm for more than 20 years and was named co-head of global M&A in 2020. The India-born banker has worked on restaurant deals like Burger King Worldwide’s takeover of Tim Hortons and energy transactions including Saudi Aramco’s purchase of Valvoline’s petroleum unit.
Why it’s important: Aiyengar is taking sole charge at a time when the M&A market is trying to tackle rising interest rates, an overleveraged loan market and shaky stock markets that sees subdued takeover activity.
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