The US Federal Reserve published the minutes of the 02nd November FOMC meeting late on 23rd November 2022. Two things emerged from the FOMC minutes. Firstly, the views of the FOMC members and the emerging dot plot chart is quite clear that rate hikes would slow from here on. However, it is also evident that the terminal rate of interest would be higher than originally envisaged, which means it would be well above the 5% mark. Fed rates are already in the range of 3.75% to 4.00% after the November hike.
It looks like a massive value downgrade for Byju’s. One of its key shareholders, Prosus NV, has written down the value of its 9.67% stake in Byju’s to $578 million as of the end of the third quarter. Now, that pegs the indicative valuation of Byju’s overall at closer to $5.9 billion as against the valuation in its latest funding round at $22 billion. Reclassification of holdings is common among large PE investors, but Prosus has not decided to exit from Byju’s. The edtech had reported net loss of Rs4,588 crore in FY21 fiscal year.
Gautam Adani is trying to woo sovereign funds to raise close to $5 billion to fund his ambitious business plans in green energy. However, banks have been urging Adani to reduce its leverage levels at the earliest.
Mubadala Investments and ADIA are some of the sovereign funds that Adani has reached out to. He has also approached the Canadian Pension Fund to participate in the group equity. Already, ADIA and Qatar Investment Authority are among the key investors in Adani group. Its leverage has been often red-flagged.
FDI flows into India in H1FY23 fell by 14% to $26.9 billion as per data put out by the DPIIT. The comparative figure stood at $31.15 billion in the previous year. However, if reinvested earnings were also added to the FDI flows, then the figure is closer to $39 billion in H1FY23. In the first half, Singapore was the top FDI investor in India at $10 billion followed by Mauritius at $3.32 billion and UAE at $2.95 billion. The US, the Netherlands and Japan followed after that. IT and ITES attracted the bulk of the FDI flows at $10.5 billion.
With the 04th December deadline approaching, the European Union is considering capping the price of Russian crude at between $65 and $70/bbl. A final confirmation is still awaited. The price of $70/bbl is much higher than the cost of production of oil for Russia, so it leaves them with a margin still. For Russia, it may not make a difference since it is already selling oil at a discount. The sharp price fall in Brent Crude was after the details of the likely price cap was announced. For Russia this may be like business as usual.
A recent research report has pointed out that lumpsum gross inflows into equity funds (ex-NFOs) stood at Rs17,900 in October 2022. This is the lowest level witnessed since November 2020. With the Nifty at close to its highs, investors are obviously waiting for a better entry point. But another reason is that a lot of equity fund inflows have gravitated towards SIPs while passive funds like ETFs and index funds have also taken away a chunk of the traditional active equity fund lumpsum flows. HNIs have preferred passive.
Adani Enterprises, the flagship incubator of the Adani group, plans to issue $1.8 billion in new shares as part of its follow-on offer. The sale amount could go as high as $2.4 billion and is likely to happen around middle of next year. Adani Enterprises stock has risen 136% in 2022 so far and with a market cap of $56 billion, it is among the 10 most valuable companies in India. This will also help address the allegations of small free float in Adani group companies. It is also tapping sovereign funds for raising up to $10 billion.
SEBI has announced that in the interests of operational efficiency, all F&O stocks would transition to T+1 cycle from January 2023. Originally, these were to transition in 2 tranches in December and January. The essence of T+1 is that stock deliveries on purchase and funds credit on sale would be completed the day after the trade itself. It would release locked up capital and make markets more efficient. India had last moved from T+3 to T+2 settlement in the year 2003, so after 19 years there is a strong case for upgrade.
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