Increased demand for consumer goods puts shine on festive sales
Demand for consumer products has risen significantly in the past 10 days on festive purchases in both offline retail and e-commerce platforms due to attractive deals and discounts, and an easing of inflationary pressure, according to executives of leading brands. Sales of smartphones, televisions, home appliances, apparel and fashion products went up 12-20 percent over last year's Navratri period. There has been 8-12 percent growth in volume sales of electronic products.
Why it’s important: The excellent start to festive sales that is expected to continue till Diwali is welcome as there was muted growth in sales for the past 6-8 months due to persistently high inflation.
Finance ministry panel considers broad-based rules for alternative investment funds
A high-level panel set up by the finance ministry to look into issues being faced by venture capital and private equity investors is examining the feasibility of introducing a broad-based framework for alternative investment funds. Currently, these do not have any broad-based regulation, requiring a large number of investor representations. The six-member panel is discussing whether a broad-based parameter as applicable on mutual funds should be introduced for AIFs.
Why it’s important: Having clear norms will provide a sense of valuation practices and nature of business. The parameters could also help understand the intent and approach of big-ticket investors and investee companies raising money through privately placed PEs and VCs.
Zee, Sony willing to shut channel to get competition approval for merger
Zee Entertainment Enterprises and Sony Pictures Networks India have offered fresh concessions, including a proposal to shut down a major entertainment channel, to ease competition concerns and secure the antitrust regulator’s approval for their $10 billion merger. Zee has offered to shut down a major general entertainment channel with a massive 20-30 percent market share in a submission to the Competition Commission of India.
Why it’s important: This is the first time Zee and Sony have offered a structural remedy. The move aims to ease the regulator’s concern that India’s largest media merger may give Zee-Sony unprecedented pricing power that may hurt the prospects of other channels in the entertainment broadcasting industry.
Reliance Jio to bet big on enterprise 5G in addition to consumer business
Reliance Jio Infocomm will be simultaneously focusing on 5G consumer and enterprise businesses, compared to the traditional approach, where a majority of revenues came from consumer mobility. India’s biggest carrier will price its 5G services for consumers to ensure mass adoption but will also target 35-50 million small and medium-scale businesses, and at least 100 million homes, to drive broadband usage.
Why it’s important: The integrated approach could help Reliance Jio to garner an even larger market share by offering managed as well as consumer services. Mukesh Ambani has already said Jio will offer the most affordable 5G services globally.
Deutsche Bank chief says India bright spot amid global economic uncertainty
India will be the shining star of the global economy that faces a decade of volatility amid war, inflation and supply chain disruptions, although New Delhi could make implementation of projects easier to attract more overseas investments, Christian Sewing, chief executive of Deutsche Bank, said in an interview. Large pockets of the global economy will likely go through a round of pain as central banks drain liquidity and raise interest rates to fight inflation, he said.
Why it’s important: Sewing joins top financial chief executives like Jane Fraser of Citigroup and Jamie Dimon of JPMorgan in acknowledging India’s ability to reap the benefits of a shift in globalization patterns, where multinational firms diversify supply chains away from China amid rising geopolitical risks.
Investments in new projects slide further due to higher borrowing costs
Capital expenditure on new projects have slowed down for the second quarter in a row amid an uncertain global environment and higher borrowing costs. There were new projects worth a cumulative Rs 3.26 lakh crore in the three months to September, according to data by Centre for Monitoring Indian Economy, which was much lower than Rs 4.39 lakh crore in the June quarter and Rs 8.46 lakh crore in the March quarter. Spending on new projects declined 4.4 percent year-on-year basis.
Why it’s important: Capex can be an important driver of economic growth and indicates business confidence on future rise in demand. Higher borrowing costs could stymie some investment plans.
Captured GST data set to drive future loan decisions to smaller businesses
The trove of data captured in the GST framework about economic transactions is beginning to drive financial institutions’ lending decisions, especially to small and medium businesses. E-way bills are now mandatory for freight, and e-invoices show business-to-business transactions to the government on a real-time basis. Data from these will help lenders to ascertain a corporate borrower’s cash flow position and identify creditworthiness.
Why it’s important: E-invoicing and e-way bills are expected to have a huge impact on credit distribution in India. It could be the beginning of a foundation for algorithmic credit disbursal.
Vedanta, Adani in race to acquire Karaikal port in Puducherry
Adani Ports & Special Economic Zone and a Vedanta group entity have submitted binding financial bids for Karaikal Port on September 30 at the close of the deadline. The two companies were among five firms that had submitted expressions of interest for the 600-acre port, which also include JSW Infra, Jindal Power and a consortium of RKG Fund and Sagacious Capital. Karaikal Port defaulted on loans of Rs 2,960 crore and was admitted for insolvency proceedings in April. The two final bids will be opened on Monday.
Why it’s important: Karaikal port have the capability to handle a diverse set of cargo. Acquiring the harbor would provide its owner a firm foothold on the eastern seaboard.
Tighter disclosure rules may see rush for DRHP filing in next two months
Issuers and investment bankers could speed up the process of filing of draft red herring prospectus to avoid stricter disclosure requirements. There is likely to be higher-than-usual filings of offer documents over the next two months before the new framework kicks in. The Securities and Exchange Board of India has announced tightening of disclosure requirements for all IPOs amid criticism over pricing of share sales by loss-making companies.
Why it’s important: The rules for higher disclosure in the interest of more transparency are expected to kick in later this year. Pricing in share issues has been a cause for concern in recent times.
Homebuying could slow down as EMIs become costlier due to higher interest rates
The Reserve Bank of India’s fourth successive hike of the repurchase rate last week by 0.5 percentage point is expected to push some prospective homebuyers to defer plans to purchase property, and instead opt for rental accommodation for the next few quarters. India’s two biggest mortgage lenders, HDFC and LIC Housing Finance, have already revised interest rates upwards.Why it’s important: Although the rising interest rates have not yet significantly impacted house sales this far, a further deterioration in affordability could soon become a factor for prospective buyers.