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In today’s podcast, we talk about the Paytm crisis, Adani group, and fuel prices. Also, know which are the stocks you need to look out for today.
Today’s Latest Business News Transcript at 10:00 AM on 5 February 2024
Let’s begin, the government’s nudge to the private sector in the interim Budget by reducing its borrowing for FY25 comes at a time when announcements of new investments have slowed down. According to data from the Centre for Monitoring Indian Economy, announcement of investments by the private sector in the September and December quarters of 2023-24 have dipped by 66% and 70%, respectively. Overall, in the first nine months of FY24, investments worth `8.56 trillion have been announced – almost one-third of the total announcements of `24.47 trillion in FY23. Industry players believe demand will be the key variable even though the government’s nudge, along with lower cost of borrowing, will encourage players to increase their capital expenditure.
Next up, the Singapore International Arbitration Centre has denied an interim relief to Japanese major Sony in its plea against Zee Entertainment approaching the National Company Law Tribunal to implement the merger scheme. In a filing to the stock exchanges on Sunday, Zee said that the emergency arbitrator had passed an award, denying the application by Sony’s entities Culver Max Entertainment and Bangla Entertainment, saying it had no jurisdiction or authority to injunct Zee from approaching the NCLT. Sony had invoked arbitration proceedings against Zee when terminating the proposed $10-billion merger on January 22, citing non-fulfillment of closing conditions and had also slapped a $90-million termination fee on the latter.
Moving forward, the Adani Group plans to demerge its airports division within the next 3 to 5 years, aiming to become India’s largest airport operator. With seven operational airports, Adani Airport Holdings, controlled by the group’s flagship company Adani Enterprises, is the second largest airport operator in India. The company is looking to grow its passenger handling capacity three-fold to 240-250 million over the coming years. It has further hinted at continued participation in the government’s airport privatisation drive. Jugeshinder ‘Robbie’ Singh, group chief financial officer, Adani Group said, “We will wait for the demerger of this business till it achieves the benchmarks we have set and that’s an event we have flagged between 3 and 5 years from now.”
In other news, Paytm parent One97 Communications has refuted media reports claiming that the company is being investigated by the enforcement directorate. “Neither the company nor its founder and CEO is being investigated by the Enforcement Directorate regarding inter alia money laundering,” the company said in an exchange filing on Sunday. The clarification comes after many news outlets reported on Saturday that the Enforcement Directorate will probe Paytm Payments Bank if any fresh charges of fund siphoning are found. In its notification, RBI stated that a comprehensive system audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action.
Meanwhile, retail prices of petrol and diesel are likely to be cut by state-run oil marketing companies to some extent, just ahead of the general election scheduled in April if crude prices remain below $80 a barrel through this period, sources said. The OMCs could have cut prices now as the crude prices are hovering below $80/barrel, a threshold for doing so, but for the heightened uncertainties due to geopolitical tensions. A retail price cut now would have made it difficult for OMCs to raise prices till elections were over even if crude prices shot up. The three OMCs, Indian Oil, BPCL, and HPCL are expected to continue making profit till the oil price remains below $85 a barrel.
Moving ahead, Banks have witnessed strong growth in corporate loans in the third quarter, driven by demand from companies in the infrastructure and power sector. With the economy expected to grow at a faster pace and the government’s focus on strengthening the infrastructure, lenders expect the corporate loan demand to remain firm in the coming quarters. “We have seen much better utlisation when it comes to corporate loan book. As far as the pipeline is concerned, it is somewhere around Rs 4.6 trillion and out of this Rs 4.6 trillion, public sector accounts for 25% of proposals and private sector hold the major remaining share,” said Dinesh Khara, chairman, State Bank of India in earnings call.
Lastly, GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a negative opening on Monday. GIFT Nifty traded down by 31.50 points or 0.14% at 21,935 indicating a negative opening for domestic indices NSE Nifty 50 and BSE Sensex on Monday. Previously, on Friday, the NSE Nifty 50 gained 156.35 points or 0.72% to settle at 21,853.80, while the BSE Sensex surged by 440.34 points or 0.61% to 72,085.64. The key stocks to watch in trade are One 97 Communication, Aurobindo Pharma, Bajaj Finance, Alembic Pharmaceuticals, Artemis Medicare Services, Ashok Leyland, Aurionpro Solutions, and Avanti Feeds among others.