1. Indian equities decline for third consecutive session, Rupee weakens
India’s benchmark indices have closed near their two-week lows and the Rupee weakened 0.2 percent against the US Dollar, due to rising COVID-19 cases in China and talk of rate hikes by the US Federal Reserve unnerved markets. The Sensex fell 0.84 percent to close at 61,145 points, while the Nifty lost 0.81 percent to 18,160 points, logging their third straight day of losses. The Rupee closed at 81.85 against the Dollar compared with 81.69 on Friday. So far in 2022, it has depreciated 9.2 percent versus the dollar.
Why it’s important: This is in sharp contrast from a week ago when the Sensex had reached fresh highs and the Rupee strengthened after the US inflationary pressures eased. The market is expected to remain volatile.
2. Foreign asset managers get tax notices on various discrepancies
The Income Tax (I-T) Department has sent notices to several foreign portfolio investors (FPIs) and alternative investment funds (AIFs), flagging faults in their tax returns. These red flags include errors in capital gains tax computations, erroneous declarations, suppression of income and wrong exemption claims. The notices were sent in October and up to November 15, and largely relate to tax returns for 2021-22.
Why it’s important: Some of the notices could be errors, experts said, because computerised processing could have applied the wrong surcharge or not considered treaty benefits claimed by the entities.
3. India Inc. asks for lower taxes, more capital spending, and job creation
India’s top business leaders have asked finance minister Nirmala Sitharaman to boost capital expenditure to Rs 10 lakh crore, rationalise personal tax rates, especially at the lower end of the income spectrum, and focus on job creation in the central government’s last full budget before the 2024 national elections. Tycoons like Sanjiv Goenka, chairman of RPSG Group, BVN Rao, chairman of GMR Group, and Naveen Munjal, MD of Hero Electric Vehicles, and representatives of lobby groups participated in the meeting with Sitharaman as she prepares the Budget for the next fiscal year. The budget for 2023-24 is expected to be presented on February 1.
Why it’s important: The 2023-24 Union Budget will have to address challenges on consumer demand and job creation amid high inflation, slowing global economic growth, and geopolitical uncertainties.
4. Hiring firms flag sharp fall in new recruitment in fiscal third quarter
Head-hunters are running to secure hiring mandates from domestic companies, particularly technology firms, as higher recruitment for mid-level workers, driven by the COVID-19 pandemic has cooled in the face of a looming economic slowdown. Hiring by technology and e-commerce companies in the December quarter is 50 percent below last year’s levels, executives at multiple recruitment firms said. The start-up sector is also experiencing a fall in hiring.
Why it’s important: Part of the decline was expected as there’s chance of an economic recession in the developed world. Lower jobs opportunities will create fresh challenges for the government.
5. General Atlantic to double India investments over next 10 years
General Atlantic has invested over $4.2 billion in Indian companies such as Byju’s, Jio Platforms and Reliance Retail, but will double its India investments over the next 10 years, senior executives said. The future investments will be focused on companies in sectors such as consumer goods, financial services, healthcare, life sciences, technology and climate, the private equity firm said.
Why it’s important: General Atlantic has built its growth investments in India but will look increase the pace of buyout deals and focus more on mid-market IT services firms.
6. E-commerce platforms on board government campaign to fight fake reviews
The government has announced guidelines for e-commerce platforms to fight the menace of fake reviews and ratings through automated and manual moderation that would filter out biases, fraudulent posts, and foul language. The processes will also verify the authenticity of the reviewers. The guidelines will take effect from Friday at e-commerce platforms dealing in consumer goods, food delivery, and travel.
Why it’s important: This underscores the importance of reviews in consumer buying behaviour. India is the first major economy to issue such guidelines.
7. Kirin Holdings spends Rs 570 crore to raise stake in Bira 91 to around 20%
Japanese beverages group Kirin Holdings has raised its stake in B9 Beverages, the producer of Bira 91 beer, to close to 20 percent from 10 percent earlier by investing an additional Rs 570 crore in the liquor company, valuing the beer maker at $550-600 million after the fresh investment.
Why it’s important: The funding comes at a time when beer consumption is seeing strong recovery after two years of pandemic-induced stress that led to closure of bars and restaurants, followed by curbs on operating hours. Business is looking up and companies are readying for it.
8. Government to bring in two important changes in bankruptcy code
The Insolvency and Bankruptcy Board of India (IBBI) is set to propose two key modifications to the law governing bankruptcies to enable quicker debt resolutions and distribution of recovery proceeds despite continuing litigation. Stakeholders have agreed that banks must be allowed to restart a resolution plan in case a successful resolution applicant backs out. There was also agreement to allow distribution of proceeds from a recovery even if there is pending litigation.
Why it’s important: The tweaks in the insolvency law are expected to strengthen the hands of creditors in instances when new buyers develop cold feet or there’s ongoing litigation, which is all too common.
9. India’s bad bank in advanced talks to sell debt of Videocon-led VOVL
Lenders are in advanced negotiations with the government-promoted bad bank to sell the debt of Videocon-promoted VOVL, which is among the largest distressed loans on their books. The National Asset Reconstruction Company (NARCL) last week made a binding bid of Rs 860 crore to acquire the debt of oil and gas exploration company VOVL. Lenders will ask the bad bank to improve the offer since it is reported to be lower than proposals from other bidders.
Why it’s important: The resolution of debt by Videocon Industries is in limbo after lenders decided to restart the sale process. The Supreme Court stayed it a year ago after a petition by the winning bidder. There is now new hope for a resolution.
10. Electric mobility corners bulk of climate tech funding but more is required
Although investments in the Indian climate technology sector have grown four times this year, most of the financing has been limited to the electric mobility sector. There are currently 2,053 climate tech start-ups in India. Climate tech start-ups have raised $2.02 billion in equity funding from 122 deals between January 1 and November 10 in 2022, compared with $589 million from 147 deals in the same period last year, according to data from Tracxn, a market intelligence platform. The whole of 2021 saw $844 million in funding from 171 deals.
Why it’s important: Although innovation funding in the electric vehicle (EV) sector is welcome, there is dearth of investments in the carbon capture and sequestration sector due to a lack of clarity on carbon prices.
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