US consumer inflation came in 90 bps lower at 4% for May 2023. Coming a day ahead of the Fed monetary policy announcement, it almost paves the way for a pause on rates. The lower consumer inflation in the US was triggered by a fall in the costs of energy products, including gasoline and electricity. However, the core inflation fell by just 20 bps from 5.5% to 5.3%, posing a sticky problem. On a MOM basis, the inflation increased by just 0.1% in May. The last time US inflation was below 4% was 27 months ago in March 2021.
With the Zee promoters appealing to the Securities Appellate Tribunal (SAT) against the SEBI order barring them from holding any key position in listed companies, the SAT will take hear the application June 15, 2023. Earlier, SEBI had issued an interim order against Subhash Chandra and Punit Goenka banning them from key positions in listed companies after allegations of round tripping of funds. According to SEBI, the FDs of ZEEL were used to defray loans of group companies and later paid back using the funds of ZEEL.
The biggest financial merger in Indian history is likely to be completed by shortly with just one step left. HDFC Ltd and HDFC Bank are expected to announce the record date for their proposed merger in the next one month. That will consummate the merger process that began in April 2022. The merger will create a bank worth $168 billion and straddle, banking, mortgage lending, insurance, asset management and other financial services. Approvals from shareholders, creditors, stock exchanges and regulators are through.
Once touted as the next big story in real estate, DLF has now touched its highest point since September 2008. At Rs501, the stock has already rallied more than 4 times in the last two years. In the current fiscal year, the stock of DLF has rallied 40%, outperforming the Nifty by a margin. For the March quarter, DLF had recorded new sales booking of Rs8,458 crore; a growth of 210% over the previous year. Cumulative new launches in FY23 were at 10 million SFT with new sales at Rs15,058 crore, again an all-time record.
SEBI has introduced a special regulatory framework for execution only platforms (EOPs) that facilitate online investment in commission-free mutual fund (MF) schemes. It makes life easier for the EOPs while also ensuring more skin in the game. Currently, such EOPs are registered as a stock broker or have an IA (investment advisor) license. Going ahead, they will have to also register with AMFI or SEBI. This will not apply if only offered by brokers to captive clients. Such EOPs can only sell direct plans, not regular plans.
Indian fintech sector has grown rapidly in recent years, with total funding at $39 billion in 2022. However, the fund has fallen by 40% in 2022. This can be attributed to the Ukraine war and fears of macro weakness apart from valuation concerns. FY22 saw 476 fintech deals and secured funding worth $6 billion. India is reported to have more than 9,500 fintech companies operating in India and ranks third after the US and UK. According to the IIFL Fintech Report, Indian Fintech market was slated to cross $1 trillion by 2030.
Adani Group is currently in talks with lenders to refinance $3.8 billion loan facility taken for its acquisition of Ambuja Cements last year. This is the first time they are refinancing such a large debt after the crisis triggered by Hindenburg. Adani is trying to convert the original loan into longer maturity debt. Adani has staunchly denied all allegations made in the Hindenburg report, but its market impact will get tested now. Adani group is in talks with Barclays, Deutsche Bank, Stanchart and Japan’s Mitsubishi UFJ Financial Group.
As per a recent CRISIL report, net interest margins in FY24 may compress by 10 bps to 20 bps to the level of 3.1%. In FY23, ICICI Bank had reported a record 90 bps rise in NIMs to 4.90%. According to CRISIL, NIMs of banks had peaked in India and would taper as the cost of deposits catches up with loan yields. Nearly 35% of overall deposits will come up for repricing in FY24. With asset side repricing already done and the RBI on pause-model, no additional NIM boost can be expected. Even ICICI Bank has admitted to the same.