Top 10 pieces to start your day with in the morning:
#1. In February, foreign investors continued to purchase sovereign debt while selling their stocks.
Foreign portfolio investors have doubled down on debt while remaining net sellers of stocks so far in February. According to depositories data, they contributed up to Rs 15,093 crore in the first nine days of the month. Foreign investors maintained their January trend of net selling of shares for Rs 3,074 crore through February 9.
Why it matters: Due to high stock prices and rising US bond yields, foreign investors are selling their holdings. Before India is added to international bond indices, they are still optimistic about debt.
#2. Systemic investment programs will add a net of 2.8 million accounts as they grow rapidly in 2024.
According to figures from the Association of Mutual Funds in India, the net addition of accounts under systematic investment plans reached a record high of 2.8 million in January, approximately 2.5 times more than the monthly average over the previous two years. The new SIP account-to-closure ratio last month was 2.18, the best in 25 months, and the gross addition of accounts was also the highest at 5.1 million. With a monthly SIP book of Rs 18,872 crore, it increased by 7% from December to the highest level in 21 months.
Why it matters: The Indian middle class has moved money from bank savings into systemic investment plans due to higher returns on mutual fund investments. The trend is expected to continue as mutual funds emerge as the preferred savings instrument.
#3. Reliance and Disney are in the final stages of talks to merge, creating a media powerhouse.
The Walt Disney Company and Reliance Industries are in the last stages of discussions to complete their massive stock-and-cash merger, which would create India’s largest media and entertainment company. The talks are set to conclude on February 17 and have one week remaining. Viacom18 appears to be the sole major shareholder in the combined company, holding 42–45% of the shares.
Why it matters: Even if the competition in this growing sector is becoming more fierce, the merger will result in the largest entertainment company in India. Reliance is going to win big time again.
#4. TCS’s market capitalization share in the Tata Group is less than 50%
A surge in other Tata equities, driven by smaller companies, caused the contribution of Tata Consultancy Services to the total market capitalization of public Tata group companies to fall below 50% for the first time in over ten years. In recent quarters, Tata’s listed companies have performed exceptionally well on the bourses; early last week, the group’s combined market valuation exceeded Rs 30 lakh crore.
Why it matters: In just three years, the market valuation of the Tata Group has almost doubled. Other group firms’ growth can be seen as TCS’s diminished contribution.
#5 Bandhan Bank facing forensic editing over evergreening loans and bogus loan accounts.
A forensic audit launched by the National Credit Guarantee Trustee Company is presently underway at Bandhan Bank, which covers Rs 23,300 crore of loans disbursed under credit guarantee schemes, due to concerns about the evergreening of loans and fictitious loan accounts hanging over certain portfolios covered under credit guarantee schemes.
Why it matters: Reviews of this kind are usually routine when an insurance and loss claim settlement procedure is in progress. But in this instance, the audit isn’t just focused on the problematic loan accounts that the guarantee claim has been started on. That might be cause for concern.
#6. The government is examining Chinese foreign direct investment in Paytm.
The government is considering Chinese foreign direct investment in One97 Communications’ payment aggregator company, Paytm Payments Services. In November 2022, the Reserve Bank denied the company’s application and requested that it reapply by FDI regulations’ Press Note 3. Chinese business Ant Group Company has invested in One97. Paytm re-filed their application.
Why it matters: To prevent opportunistic takeovers, the government has made prior approval required for foreign investments in any industry from nations that share a land border with India. It’s unclear if Paytm Payments Services will be discontinued.
#7. Before hiring Paytm Payments Bank clients, lenders request immunity
Parent company One97 Communications hasn’t done much to assure service continuity in the three weeks until Paytm Payments Bank shuts down. The company has not made progress in resolving the crucial problems necessary for it to continue operating. These problems include creating nodal accounts to help merchants receive payments and receipts and anchoring other transactions, such as transferring merchants to other banks and wallets with other banks.
Why it matters: The soon-to-be-defunct institution is reportedly being harmed by banks’ reluctance to accept Paytm Payments Bank clients. It is said that they are requesting immunity for mistakes.
#8. Infosys is returning to engineering institutions, but it is only hiring for specialized positions.
This year, software company Infosys is returning to college campuses, abandoning its earlier decision to avoid them and providing some relief to institutions experiencing a lack of recruiters. According to placement officials, the second-largest IT services company in India is hiring a small number of people with expertise in data mining and cybersecurity. It is not intended for general employment.
Why it matters: This year’s placement of recent engineering graduates on quiet software exporters’ order books has been shady. It will probably take more than a few high-paying jobs to cheer everyone up.
#9. Direct tax receipts from personal income taxes increased by 20% between April and February.
Between April 1 and February 20, 2023–2024, there was a 20 percent increase in net direct tax collection due to the significant growth in personal income tax. The amount of direct tax collected during the period was Rs 15.60 lakh crore, which is 20.25 percent more than the mop-up of Rs 12.97 lakh crore from the same period the previous year. It accounted for more than 80% of the revised total projection of direct taxes for 2023–2024.
Why it matters: The interim budget increased the direct tax collection projection for 2023–24 from Rs 18.23 lakh crore to Rs 19.45 lakh crore; on the strength of these strong receipts, the target should be easily met.
#10. As India’s GDP soars, business travelers eclipse pre-pandemic travelers.
Contrary to popular belief, corporate air travel has increased above pre-pandemic levels as virtual meetings have been the norm since the pandemic. Executives from airlines and travel agencies stated that the trend is being driven by increased activity among IT, mechanical, banking services, and pharmaceutical industries.
Why it matters: The increasing trend in business travel appears to be more durable than that in the more budget-conscious leisure travel market, even amid capacity reductions and rising airfares. Airlines would be happy about that.
