Indian equities continue bull run for fourth trading day, Nifty at eight-month high
India’s stock indices extended gains to the fourth consecutive trading day, with the Nifty breaching 18,000 points for the first time in over four months, due to sustained inflows from foreign portfolio investors and positive global cues. Global markets, however, lost steam after data showed that US consumer prices remained stubbornly high in August.
Why it’s important: The benchmark Sensex is just 2 percent shy of a lifetime high. The Indian markets are rising despite a tightening monetary rate cycle, indicating the possibility of further volatility.
Reserve Bank may raise policy rate again in September as inflation remains high
Retail inflation in India quickened again to 7 percent in August, leading to expectations that the Reserve Bank of India will raise interest rates by another at least 0.35 to 0.5 percentage point in its September policy. A more aggressive 0.5 percentage point increase in the repurchase rate will take the policy rate to 5.9 percent, the highest in more than three years. It will be the third consecutive rate hike of 0.5 percentage point in the current monetary tightening cycle, beginning with a surprise increase in May.
Why it’s important: Another round of steep hikes is practically inevitable as inflation remains persistently higher than the central bank’s upper tolerance limit of 6 percent However, higher policy rates could have a negative impact on economic growth.
Vedanta and Foxconn to jointly build fab and chip facility in Gujarat
Vedanta and Foxconn have said they will invest over Rs 1.54 lakh crore to construct a display fabrication and semiconductor manufacturing facility in Gujarat. The facility will come up over the next two years, according to the terms of the deal. The mining giant will hold 60 percent stake in the venture while the Taiwanese chipmaker will own the rest.
Why it’s important: The joint venture is the fourth to announce plans under the Rs 76,000 crore production-linked incentive scheme to boost chipmaking capabilities in India. The country’s attempt to seed a vibrant semiconductor ecosystem is gaining momentum.
Large firms are getting ready to test IPO market again
Aadhar Housing Finance, travel firm Ixigo and lender Five Star Business Finance are some of the large issuers planning to approach institutional investors with the aim to tap the public markets around mid-October to November. Collectively, these companies have plans to raise around Rs 11,000 crore from their initial share sales. Others, such as media company Asianet Satellite Communications and car dealership Landmark Cars, too, are likely to begin investor road shows.
Why it’s important: Some large companies seem to be encouraged by the outperformance of Indian stocks compared with emerging market peers. If they go ahead with their plans, it will signal a revival in primary market activity.
Power Finance Corp may become development financial institution to lead energy transition
The power ministry has proposed to grant Power Finance Corporation the status of a development financial institution to enable it to steer global climate funding and net zero investment in India. With this, PFC will be the first DFI for climate and energy transition in the country if the proposal is approved. The DFI status helps a financial institution access foreign funding, grants, and loans easily and in higher amounts.
Why it’s important: The move will address concerns raised by multilateral and development financing agencies about the lack of a nodal agency for steering climate loans and aid in India.
Finance minister asks India Inc to stop hesitating and start investing
Finance minister Nirmala Sitharaman has asked domestic firms to shed their hesitation and start investing in the country that was seeing growing interest from foreign investors. The government had brought in production-linked incentive schemes and cut tax rates to encourage domestic industry to invest in manufacturing, she said.
Why it’s important: The government has in the recent past announced a slew of incentives to encourage investments in manufacturing to make India self-reliant in many sectors. These provide opportunities for companies to expand capacities and invest in new areas.
Market regulator investigates alleged violations by 20 alternative investment funds
The Securities Exchange Board of India is probing practices of at least 20 Indian-domiciled alternative investment funds managing Rs 10,000 crore. The violations include dividend stripping, inadequate diversification, abrupt change in control, non-adherence to stated investment mandate, conflicts of interest, valuation policies, priority payouts, and outsourcing management of investments to other entities.
Why it’s important: The investigation by the regulator is expected to ensure greater transparency across the alternative investment fund ecosystem and also ensure greater tax compliance.
Government updates 2022 essential drugs list, adds 34, drops 26 medicines
As many as 34 new medicines were added and 26 were dropped from an updated list of essential medicines. The National List of Essential Medicines has 384 drugs, up from 376 in 2015. Most of the drugs in the list, which guides the National Pharmaceutical Pricing Authority to cap prices, are antibiotics, antifungals, diabetes, tuberculosis and hormonal medicines, contraceptives, and anesthetics.
Why it’s important: Once a drug is in the essential medicines list, its price is capped by the pricing authority. This is intended to help patients to keep their out-of-pocket expenditure in check.
Zerwerk in discussions to raise up to $125 million from new, existing investors
Zetwerk, a B2B manufacturing services startup, is in talks to raise $100-125 million in another funding round, valuing the firm higher than its last valuation of $2.7 billion. The company has held discussions with funds such as Premji Invest, TCV Partners and Catamaran.
Why it’s important: The retreat of tech stocks and global monetary tightening have made it tougher for Indian startups to raise money. B2B manufacturing start-ups, however, continue to elicit investor interest.
CARE Hospitals see multiple suitors, including Blackstone, Temasek and Max Health
Some strategic and private equity investors, including Blackstone, CVC Capital, Temasek and Max Healthcare, are in the race to acquire CARE Hospitals from Evercare, an arm of TPG Growth. The deal involving 2,400 beds and 15 hospitals in India and two in Bangladesh, will value CARE Hospitals at around Rs 7,500 crore.
Why it’s important: The deal will make it the second largest hospital buyout in India after the IHH-Fortis transaction in 2018. The private healthcare sector in India continues to see robust growth.