Mutual fund flows continued to be robust in November 2021, although the flow gains were neutralized by value depletion in equity funds. Equity funds saw net inflows of Rs.11,614 crore, even as the SIP flows touched a record level of 11,005 crore in November 2021. All equity fund categories saw net inflows while in debt funds it was only the liquid funds that saw net inflows. Flows into hybrid funds were robust at Rs.9,422 crore with balanced advantage funds dominating. NFO collections were sharply lower in Nov-21.
It looks like the Omicron virus is taking its toll as the DGCA announced that scheduled international flights would remain suspended till 31-Jan. The decision was in the light of the global spread of Omnicron variant. Scheduled international flights have been suspended since March 2020, with only air bubble countries allowed to resume flights. India has air transport bubble agreements with 32 countries. Currently, 573 international flights (47% of approved flights) are operating to and from India. Christmas is peak season.
Ride hailing app, Ola, is in discussions to raise over $1 billion via equity and debt over next few months. Ola is preparing for its proposed India IPO next year. Based on the latest fund raising, Ola is valued at over $7 billion. In addition, Ola will also look to raise $500 million via term loans from global investors. Ola has confirmed that it would look at an India IPO in 2022. The IPO will give an exit route to early investors in Ola like SoftBank, Tiger Global and Steadview Capital. Ola is present in India, Australia, NZ and in the UK.
Chinese real estate firms, Evergrande and Kaisa, jointly defaulted on over $1billion of bond repayments after keeping things in limbo for several weeks. Evergrande is the second largest Chinese real estate player with presence in over 280 Chinese cities. However, it has been teetering under $300 billion in debt with several defaults. Evergrande has already been lowered to Near Default ratings. Global markets are worried as this could have a cascading impact on bond yields and especially in the high risk bond category.
There appears to be some good news for Paytm. RBI has accorded the scheduled bank status to Paytm Payments Bank. This allows Paytm to offer more financial services and products. The new status also allows Paytm Payments Bank to participate in primary auctions, fixed-rate and variable rate repos, and reverse repos. Now Paytm Bank can also participate in the Marginal Standing Facility and partner in state-run financial inclusion schemes. Paytm Bank supports 33.3 crore Paytm Wallets and 2.11 crore merchants.
Tata Motors plans to invest Rs.7,500 crore over the next 5 years in the CV business as it seeks to focus on electric vehicles or EVs. Tata Motors is looking at a first-mover advantage in EV segment in the commercial market. Tata Motors is working on short-range battery-operated vehicles for the last mile. It is also looking at small CV offerings and gas-based fuel-cell electric vehicles. Currently, the other major CV manufacturer, Ashok Leyland, is also scouting for an investor in the EV business. Its focus will be on last mile delivery.
Sugar stocks were in the limelight with most sugar stocks making gains of over 10%. The expectation is that domestic as well as global sugar prices would remain firm due to lower inventories. The sugar industry has witnessed significant reduction in sugar inventory last year. Combine this with more sugarcane being diverted to ethanol and you have the recipe for higher sugar prices. In the current fiscal year, the sugar exports continue to be robust even without the sugar subsidy. Sugar inventories are likely to nearly halve.
Sequoia Capital, one of the world’s leading private equity investors, expects the valuation of India’s financial services providers to grow 3-fold to $2.5 trillion by 2030. However, the catch is that nearly 20% of this value would be cornered by the Fintech space. Fintech companies are expected to be worth $500 billion by 2030, up from $50 billion today. Sequoia Capital already has investments in the Indian start-up Fintech ecosystem including in names like Groww, Razorpay and Pine Labs. That is the next big agenda.
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