SEBI approved reclassification of government’s shareholding in IDBI Bank as public. That had been a moot point for some time. In this case, the government’s voting rights would be capped at 15%. Government of India and LIC jointly plan to divest 60.72% out of their 94.72% stake in IDBI Bank as part of the strategic sale. Ahead of the stake sale, there were concerns about the government continuing to use its veto power in EGM resolutions. However, with the reclassification, its voting powers are now curtailed to just 15%.
The stock markets saw 2 consecutive days of carnage as the Sensex lost 1200 points in just 2 days. The hawkish tone of the minutes had an impact on the markets. US markets were also under pressure as most traders are unwinding positions. Banks and IT stocks were the worse hit in the day. For the Indian markets there are concerns like FPI selling, IT sector performance and the response of the RBI to Fed hawkishness. FPIs were persistent sellers in the new year after ending December 2022 with net buying of $1.35 billion.
According to a recent report by CRISIL, capital goods companies could see revenue growth of 16-18% in FY23, despite a strong base of 20% growth last year. Capital goods companies have seen their order books overflowing and that has been backed up by solid execution. Capital goods are also gaining from state commitment to enhance capital spending on infrastructure. Order book of capital goods companies has expanded by 14% in FY22 and another 9% in the first half of FY23. Order book to revenue ratios is 3.82X.
Former NSE honcho, Sundararaman Ramamurthy, assumed charge as Managing Director and CEO of the Bombay Stock Exchange (BSE). SEBI has already approved the appointment of Sundararaman for the new position. After a very long stint at NSE, Sundararaman had spent a number of years at Bank of America Securities handling their operations and risk management. Ashish Chauhan, former CEO and managing director of BSE, had resigned to assume charge as chief of the NSE. He was earlier with IDBI and SBI too.
The stock of IRB Infra dropped 4% after the board approved the stock split in the ratio of 10:1. The stock of par value Rs10 would be split into 10 shares of par value Rs1 each. The record date for the stock split would be intimated in due course. The move is likely to enhance liquidity in the stock, although stock splits are normally value neutral. IRB is the largest toll road and highway infrastructure developer in India with asset base of Rs60,000 crore. It currently has 22 road projects of which 17 are under BOT and 4 in HAM.
Citigroup cut India’s current account deficit projection for FY23 to lowered its projection for India’s current account deficit (CAD) from 3.9% to 2.9% of GDP. Earlier in August, Citi had projected India’s CAD to touch 3.9% of GDP. According to Citi, the big boost came from the stellar growth in services exports in H1FY23. Net exports of services rose 35% to $34.5 billion in the second quarter. Citi has also lowered its CAD forecast for FY24 from 2.4% to 2.2%. Lower oil prices are also expected to cut down the CAD level sharply.
After petchem, oil, retail and telecom; the million dollar question is, where will Mukesh Ambani focus on next? His attention is now likely to be pivoted on green energy. He will personally drive the building of gigafactories and blue hydrogen facilities as well as work on plans to expand inorganically. Reliance plans to invest $75 billion on clean energy projects in next 15 years. He has already passed on leadership in digital and retail to his children and his focus going ahead would be on the green energy sector economics.
Why did Xi Jinping drop the zero COVID policy? By October 2022, it was already clear that zero-COVID was not working. Containment had come at a very high cost as it had severely impacted Chinese exports and its retail sales. Of course, there are concerns that this abrupt move could trigger a public health emergency in the near future. In December, Chinese hospitals had been swamped by patients and the cremation grounds were stretched. The trigger could be unrest at the mega iPhone assembly plant at Zhengzhou.