Fitch Ratings affirmed India’s long-term foreign currency rating at “BBB-“, which is the lowest grade above default grade. However, Fitch has maintained its positive outlook on India. Fitch has highlighted India’s robust growth outlook among peers and resilient external finances. Fitch also pointed out that the banks were on a much stronger footing in India with better capital adequacy, improved solvency and lower gross NPAs. Fitch expects repo rate to peak around current levels, although current account deficit is a concern.
The SEBI board approved phasing out buybacks through stock exchanges in a phased manner. SEBI favours the tender route for buybacks. Buybacks through stock exchanges will be fully phased out by March 2025. SEBI will also permit upward revision of buyback price until 1 working day prior to record date. One of the contentious issues in buybacks is the taxation, which is currently paid by the buyer. However, SEBI has already expressed reservations that such a practice is unfair to shareholders who choose to stay invested.
Shipping Corporation of India (SCI) hit a 52-week high of Rs151.30, soaring over 8% amidst heavy volumes. The stock has rallied 17% in the last 2 days. SCI is up 65% in last 6 months ahead of the scheme of demerger announced. The final hearing before the MCA is scheduled for 29th December. Shipping Corporation will hive off most of its non-core assets, including land and property, by transferring it into a separate entity. This scheme of demerger has already been approved by DIPAM and the board of Shipping Corporation.
SEBI now plans to float a consultation paper on implementation of an ASBA like mechanism for the secondary markets. The application supported by blocked amount (ASBA) is currently the default mode for retail investors to invest in IPOs. This method does not debit the bank account till the allotment. What SEBI wants to bring in is a system where the broker has no control over investor funds and only facilitates the trade and gets paid for it. Float remains with the trader only. It could make the markets a lot safer.
Domino’s Pizza (Jubilant Foodworks) plans to aggressively ramp up its domestic retail store network. India is the largest market for Domino’s, outside the US. Jubilant will add another 1,300 stores across India, taking its store count to 3,000. It has also recently launched its 20-minute pizza delivery in 20 zones across 14 cities. This will be achieved through store expansion and improved operational efficiencies. Quicker delivery will improve sales volumes and also improve consumer retention as well as frequency of orders.
Economists assigned a 70% probability of the US economy sinking into recession next year. In the light of massive interest rate hikes, economists are pencilling lower demand and trimmed inflation. The recession probability moved up from 65% in November. In its latest Fed statement, the accent of FOMC was that inflation was not coming down in a hurry, so another 75-100 bps rate hike will be on the cards in 2023. Major headwinds for the US are surging interest rates, high inflation, fiscal unwinding and weak exports.
According to Kotak Securities, Indian equities would witness strong investor interest next year with likely Nifty gains of 14%. Kotak has pegged the Nifty index value at 20,922; an upside of 14% from current levels. Kotak is betting on the favourable policy environment, impact of PLI schemes and opportunities from shift in global supply chains. Low corporate leverage and rising capacity utilization are positive triggers for the markets. Downside risks to Indian GDP growth are global factors and the lag effect of monetary tightening.
The Cosmea-Piramal consortium pulled out of the race just a day before auction of Reliance Capital assets. The consortium objected to the new base price being unreasonable. The base bid of Rs6,500 crore is well above the highest Cosmea-Piramal bid worth Rs5,330 crore. That leaves 3 players in the race for Reliance Capital viz. Hinduja, Torrent and Oaktree. Reliance Capital was sent for debt resolution in November 2021 after it defaulted on bank loans worth Rs24,000 crore. Most bids are far lower than the liquidation value.