Equities rise to four-month high as foreign investors become net buyers
India’s stock markets reach a four-month high as foreign investors bought stocks amid hopes that lower inflation in the US would make the Federal Reserve raise interest rates more slowly than expected earlier. The benchmark Sensex has breached 59,000 points, which the gauge last saw on April 8.
Why it’s important: India continues to be one of the best-placed emerging markets and valuations are not being seen as expensive, which is easing selling pressure by foreign portfolio investors. The market could remain bullish in the short term.
Health and education not seen as freebies, finance minister says
Health and education are the main principles of a welfare state, and no government has ever denied them, finance minister Nirmala Sitharaman has said. The Supreme Court has said legislation banning political parties from offering voters freebies was not advisable, while de-registering such parties would be anti-democratic.
Why it’s important: The central government has in recent days criticized so-called freebie politics, which has been interpreted by some as targeting state-funded education and healthcare. The Supreme Court has also held hearings on populist schemes but advised not acting against promises made by political parties.
Indian sovereign bonds emerge as most attractive in the Asia-Pacific
India’s benchmark bond is the highest-yielding sovereign security in the Asia-Pacific region, barring that of Pakistan, which is not really comparable. The yields are attracting investors to invest in local debt paper. Foreign portfolio investors turned into net buyers of bonds in August after a gap of six months as the Reserve Bank aims for a positive real interest rate amid cooling inflation in the US.
Why it’s important: If inflation in the US keeps easing, overseas investors are expected to extend their purchases of Indian bonds. The purchases could become higher once the country’s real rate turns positive on efforts by the central bank.
Tata Trusts may have separate helmsmen for philanthropy and holding company
The Tata Trusts are seeking legal opinion to explore the possibility of including a clause in the trust deeds so that the same person cannot head them as well as holding company Tata Sons, while honoring the wills of the founders. About 66 percent of the equity capital of group holding company Tata Sons is with the philanthropic trusts endowed by members of the Tata family.
Why it’s important: The initiative is aimed at improving corporate governance within the group by avoiding the concentration of power. Present patriarch Ratan Tata is said to be keen on this.
Earnings of Indian CEO rise in tandem with higher corporate profits
Mirroring the increase in the earnings of their companies, chief executives and promoters of India’s top listed firms gained handsomely from the boom last financial year, which includes salaries, perks, and profit-linked commissions, according to an analysis based on a sample of 329 companies on the BSE500 index that have published their annual reports for 2021-22.
Why it’s important: The top 10 earners saw their earnings rise 71.1 percent on an annualized basis even as the combined net profits of the respective corporations increased 26.2 percent. The C-suite seems to be making the most of good corporate performance despite the pandemic.
Good rainfall, cooling commodity prices good news for economy
Easing global commodity prices bodes well for the India economy and will reflect positively on the current account deficit, even as the central government keeps up efforts to tame retail inflation. Given the country’s dependence of rain-fed agriculture, a good monsoon would also provide a big boost, government officials said.
Why it’s important: Easing global commodity prices will provide relief to the central government, which has been worried at the effect of imported inflation. The authorities are trying to make sure than external factors do not impact the local economy. Plentiful rainfall and a good harvest will help.
New digital lending rules may raise compliance costs for apps
India’s fintech sector is worried that adherence to the new digital lending framework would drive up compliance cost and increase the operational complexities of their business models. The Fintech Association for Consumer Empowerment and Digital Lenders Association of India are likely to approach the Reserve Bank to weed out any interpretational ambiguity.
Why it’s important: The central bank has tightened guidelines for digital lending to stop illegal entities lending to economically weak people. Ambiguities in the framework could result is a temporary growth slowdown in the sector, but these should be ironed out soon.
Retailers see small towns become big markets as demand revives
Small towns are growing faster than the larger metros across diverse categories such as packaged foods, beauty, personal care, and quick service restaurant chains. Small towns are either growing faster than the metros or are contributing equally to growth. This is across sales of both direct-to-consumer online brands, and mainstream retail brands.
Why it’s important: This could be an early indication that demand in reviving in the country post the pandemic. The efforts to strengthen distribution networks als seem to be having a positive effect.
Google opposed to government-backed plan of setting up self-regulatory body
Google has reservations about developing a self-regulatory body for the social media sector in India to hear user complaints, although the suggestion has support from Facebook and Twitter. India proposed appointing a government panel to hear complaints from users about content moderation decisions in June but has also said it was open to the idea of a self-regulatory body.
Why it’s important: If the tech giants are unable reach a consensus, it would increase the likelihood of a government panel that might lead to regulatory overreach in the country.
Adani group to invest Rs 58,000 crore in two Odisha projects
The Adani Group is planning to invest Rs 57,575 crore in Odisha as the state government has approved its proposal to set up two projects including a 4 million metric ton per annum alumina refinery and a 30 MMTPA iron ore project.Why it’s important: Odisha is home to more than half of India’s bauxite reserve and also has massive iron ore deposits. Higher resource extraction could lead to increased growth in the state, but there are environmental concerns around such development.