1. Adani stocks continue to be pounded for third straight session, flagship firm rises
The hammering of several Adani group stocks continued for the third consecutive day, with trading in some scrips halted as they hit circuit breakers, although investors managed to recoup some losses in Adani Enterprises, the flagship company running India’s largest follow-on public offering (FPO). Investors in Adani group stocks have now lost approximately Rs 5.7 lakh crore ($70 billion) after the damaging report of Hindenburg Research report alleging accounting fraud and stock manipulation. The rise in Adani Enterprises partly contributed to the benchmark Nifty and Sensex indices closing in the green after a turbulent session.
Why it’s important: The constant pounding of Adani stocks for the third trading session indicated that investors did not pay much heed to the group’s rebuttal to the Hindenburg report. Whether this will continue remains to be seen.
2. Abu Dhabi’s ruling family writes $400 million cheque to shore up FPO of Adani Enterprises
The struggling Rs 20,000 crore FPO by Adani Enterprises has received a welcome boost, as the International Holding Company, the investment firm of Abu Dhabi’s ruling family, agreed to invest $400 million amid a $70 billion rout in Adani group scrips. IHC said it has subscribed to 16 percent of Adani Enterprises’ secondary share sale through its subsidiary, Green Transmission Investment Holding RSC. The FPO has received subscriptions worth 4 percent of the offer in the retail investor category. The non-institutional investor category that includes wealthy individuals and corporates, got bids for another 4 percent. The response from qualified institutional buyers remained muted. The issue closes today.
Why it’s important: Investors need to bid for at least 90 percent of the shares on offer for the FPO, the largest ever in India, to succeed. It will be a major setback for the group if the offer fails, or if Adani Enterprises is forced to lower the offer price or extend the January 31 deadline.
3. Banks wary of giving fresh loans to Adani as Reserve Bank of India takes stock
Domestic lenders to the Adani Group are wary of providing new loans to the conglomerate, at least in the near term, two senior bankers have said, with one saying that officials from the Reserve Bank of India (RBI) last week requested data on the bank’s exposure to the conglomerate. Bankers have turned cautious of their involvement after Hindenburg Research alleged stock manipulation and fraud by Adani Group companies. Adani has called the allegation malicious and baseless.
Why it’s important: It’s no secret that the Adani Group is highly leveraged. However, group companies have been regularly servicing their loans, but bankers could be cautious given the recent controversy.
4. Budget may extend production-linked incentives scheme to other industries
There is an expectation that the production-linked incentives (PLI) scheme might be extended to other industries in the Union Budget 2023 to be presented in Parliament on February 1, or that its outlay for some of the existing incentives might be increased. The central government has already allocated $23.5 billion for the incentives to be disbursed over the next three to five years. Based on various new schemes under discussion, the allocation could go up by at least 10 percent in this financial year, experts have said.
Why it’s important: The scheme is the government’s flagship program to make India self-reliant in manufacturing. It has seen a measure of success, which may prompt the government to extend it.
5. Corporate chiefs may get 9.1 percent pay hike in 2023, survey predicts
Top-level executives in Indian companies, including chief executives, are likely to get a 9.1 percent average salary hike in 2023, according to an executive rewards survey by Aon. It would be a slight drop from average salary increment of 9.7 percent last year, when salary hikes saw a correction after the COVID-19 pandemic, but were higher than pre-Covid increment of 8.1 percent in 2019. The Aon survey analysed data from 519 companies in India across 25 industries. The average CEO compensation, based on data from over 150 companies, stood at Rs 8.4 crore in 2022-23, increasing 21 percent in four years, the survey said. It was Rs 7.05 crore in the last financial year.
Why it’s important: With rising shareholder activism, executive compensation and its related governance continue to be an important issue for employers as they strive to build and maintain a resilient workforce.
6. IMF retains India’s GDP growth forecast at 6.1 percent for 2023-24
The International Monetary Fund (IMF) has predicted that India will be the fastest-growing major economy in 2023-24, retaining its forecast at 6.1 percent in its latest World Economic Outlook, citing resilient domestic demand despite a challenging external environment. However, GDP growth is expected to slow down from 6.8 percent estimated for the current financial year and then rebound to 6.8 percent in the year to March 2025. The forecast is in line with the RBI’s projection of 6.8 percent growth in 2022-23.
Why it’s important: The fund’s projects came a day ahead of India’s budget to be tabled in Parliament on February 1. The budgetary allocations for 2023-24 are expected to help insulate India’s economy from global headwinds and geopolitical uncertainty while sticking to the path of fiscal consolidation.
7. Government’s market borrowing seen a new high at Rs 15.5 lakh crore in 2023-24
Most economists agree that the central government is likely to peg its gross market borrowing for the next financial year at a fresh record high of about Rs 15.5 lakh crore from Rs 14.3 lakh crore in the year to March. The increase in borrowings in the past few years has been spurred by the pandemic crisis, which compelled the Centre to spend more to revive the economy. The market does not seem perturbed by the prospect of an increasing supply of government securities, as traders have predicted only a slight rise in bond yields.
Why it’s important: There is firm demand for longer-dated government securities from insurance companies and pension funds. There has been a thematic shift out of richly priced equities to safer, higher-yielding debt instruments, particularly for retirement funds, education investments and insurance.
8. Fifth-gen Ananya and Aryaman inducted as directors on Aditya Birla Fashion’s board
Ananya Birla (28) and Aryaman Vikram Birla (25), children of billionaire Kumar Mangalam Birla, were inducted as directors of Aditya Birla Fashion and Retail, marking the entry of the fifth generation of the family in the $60 billion conglomerate. Both were groomed in the family’s privately owned businesses. Ananya’s stint in business is over a decade old as she pursued music on the side. Aryaman tried his hand in cricket, representing the Madhya Pradesh Ranji team as well as being a member of the Rajasthan Royals team in the Indian Premier League (IPL).
Why it’s important: The appointment of the siblings to fashion retail instead of its flagship cement and aluminium businesses is considered a well-thought move as their contributions may be more valuable in the rapidly changing fashion and new-age industries, which sees rapid shifts in consumer tastes.
9. Bharti Airtel set to widen base tariff hike in the remaining regions of the country
Bharti Airtel, which has gradually raised entry-level tariffs from Rs 99 to Rs 155 in 18 out of 22 telecom circles, plans to do the same for the remaining circles as well, an industry executive said. India’s second-largest telecom operator raised the entry-level tariff to Rs 155 in Odisha and Haryana on 21 November, followed by Karnataka, Bihar, the northeast, Himachal Pradesh, Andhra Pradesh, Rajasthan and Uttar Pradesh West on 24 January; and Delhi, Mumbai, Tamil Nadu, Chennai, Uttar Pradesh East, West Bengal, Punjab, Jammu and Kashmir, and Assam a day later.
Why it’s important: An upward correction of base tariffs enables the wireless operator to charge more from prepaid customers, who constitute the majority of its user base. It has been gaining subscribers at the cost of struggling Vodafone Idea.
10. Top corporate executives go gaga over AI after success of ChatGPT
When Samir Seksaria discovered ChatGPT in mid-December, the excited chief financial officer of TCS couldn’t wait to share the news with his children. To his amazement, he found his children have already aware of the web-based artificial intelligence (AI) service. The chatbot, which has an answer to every question, has crawled its way into the professional and personal lives of India Inc.’s top executives. The generative AI bot built by Open AI had reached over 1 million users within five days of its launch in November.
Why it’s important: Given the waves ChatGPT has been making in recent times, there is a lot of froth over AI, prompting corporates to look for real-world applications. Whether it transforms businesses is not yet certain.
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