Tag Archives: demonetization

Another window for old currency?, Amazon keeps the investment flowing, IDFC-Shriram partnership- Weekly Digest #47

Monday- 3rd July 2017

  • Price cuts by companies and tax concessions for ITC helped investors confidence as Sensex claimed 31,000-mark to close at 31,221 and Nifty jumped beyond 9,600-mark to close at 9,615.
  • Munjals-owned Hero MotoCorp has decided to put a complete halt on royalty payments to its former joint venture partner Honda. It will now use its in-house R&D unit, CIT in Jaipur for all technological purposes.
  • Tata Chemicals sold last of its Indian Operations at Haldia, West Bengal, as it looks forward towards exiting fertiliser business to focus on on consumer and inorganic chemicals.
  • Byju’s, the ed tech company, has acquired TutorVista and Edurite from UK-based Pearson. It will help Byju’s to expand international research and creating a diverse product portfolio.
  • Online movie and event ticketing platform BookMyShow has acquired Mumbai-based local food and restaurant recommendation engine Burrp for ₹6.7 lakh in an all-cash deal. It was acquired by Network18 in 2009 for ₹4.25 crores.

 

Tuesday- 4th July 2017

  • The Jasper Infotech has rejected Flipkart’s initial offer of around $800-$900 million for its online marketplace Snapdeal. However, the talks are still expected to continue.
  • The government has issued a statement clarifying that manufacturers and retailers can stamp new prices on their preGST stock of goods and sell them until end September.
  • Chief Justice of India JS Khehar has asked the government to consider another window for people who have not been able to deposit old notes due to genuine reasons.
  • The Delhi High Court has ordered Malvinder and Shivinder Singh to respond to Daiichi Sankyo’s application alleging they had violated court orders by selling their stake in Fortis Healthcare in the open market through their holding companies.
  • NCLT has given the go-ahead to banks to initiate insolvency proceedings against Jyoti Structures, making it the first among the 12 companies identified by the Reserve Bank of India for bankruptcy proceedings.

 

Wednesday- 5th July 2017

  • Bharti Airtel likely to sell a controlling stake in arm Bharti Infratel and to utilise the proceeds to pay off $14 billion debt and help in network expansion.
  • In response to Supreme Court’s observation that the government should provide another window for the exchange of demonetised currency, the officials have said that they will consider the proposition but feel that opening such window will defeat the purpose of the radical change.
  • After a fresh investment of ₹1,680 crores, online marketplace giant has crossed $2billion mark in its investment in the Indian arm. The total funding is now $2.1 billion. Amazon has committed to $5billion investment in India.
  • Anil Ambani-owned Reliance Communications has accused Mukesh Ambani-owned Reliance Jio’s free offers as one of the causes of the financial stress of the telecom industry.
  • Shares of IDFC and IDFC Bank rose about 10% each on speculation that IDFC Bank may announce a large acquisition shortly. IDFC Bank gained 9.97% to close at ₹62.30 while IDFC rose 10.11% to end at ₹60.45.

 

Thursday- 6th July 2017

  • The Tata Group and Bharti Enterprises are in talks to form an alliance involving their telecom, overseas cable and enterprise services, and direct-to-home TV businesses.
  • IDFC and Shriram Group are in talks to combine all or some of their businesses that could straddle traditional banking, consumer lending and truck financing. It will also provide billionaire Ajay Piramal with an entry into a highly regulated industry.
  • Amazon has infused another amount of ₹341 crores into its Indian subsidiary Amazon Wholesale. This will take the total capital infused to ₹756 crores.
  • Founders of IndiGo, Rakesh Gangwal and Rahul Bhatia have clarified that their primary interest in Air India is in the carrier’s international operations that include the low-cost Air India Express.

 

Friday- 7th July 2017

  • Axis Bank has emerged as the frontrunner for acquiring digital payments platform owned by e-commerce marketplace Snapdeal, Freecharge. The deal is expected to be valued around $20-$40million.
  • A Bengaluru court has ordered the attachment of property belonging to former AirAsia India CEO Mittu Chandilya following a complaint filed by the airline that accused him of fund diversion.
  • Japanese major Tokio Marine has hiked its stake in non-life insurance venture IFFCO-Tokio to 49% by acquiring additional shares in the company for ₹2,530 crore.
  • RBL Bank has raised an amount of ₹1,680 crores by selling shares to existing investors at a slight discount to the bank’s closing price of ₹527 on Friday at ₹515 per share.

 

Source: The Economic Times
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Tata’s Battle continues, PayTm duped, Cashback on fuel- Weekly Digest #26

Monday- 12th December 2016

  • Malvinder and Shivinder Singh are in negotiations with private equity group TPG Capital to sell a 26% share in Fortis Healthcare, the country’s second-largest private hospital chain. The current market cap of Fortis Healthcare is  INR 7,909 crore.
  • Tata Industries removed Cyrus Mistry as director after a shareholder’s meeting. This is expected to be followed by similar voting in other group companies.
  • Indian Oil Corp announced that from Tuesday, consumers will get an assured 0.75% cashback on cashless payment for fuel from state-owned outlets. The cashback will be credited within 3 working days.
  • Online B2B commerce company OfBusiness has raised an amount of INR 75 crores in a round of funding led by Zodius Technology Opportunities Fund. This takes the total capital raised by the venture to INR 110 crores.

Tuesday-13th December 2016

  • Shareholders of Tata Consultancy Services voted in favour of the removal of Cyrus Mistry as the director on Tuesday. 93% votes were in favour of removal while only 7% voted against the proposition.
  • Chinese smartphone maker Nubia is looking to invest $100 million in India over the period of next five years to expand its operations in India.
  • DLF is looking to split the sale of its rental commercial property arm between US private equity major Blackstone Group and Singapore’s sovereign wealth fund GIC, each getting a 20% stake. Total sale is expected to fetch INR 12,000 crores.
  • Retail inflation fell to a two-year low in November owing to cash shortage following demonetization. It fell from 4.2% in October to 3.63% in November.

Wednesday- 14th December 2016

  • Shareholders of Tata Teleservices voted to remove Cyrus Mistry as a director from the company. This is the third straight day where Cyrus Mistry was voted out as a director.
  • VK Sharma, acting chief of LIC of India has been officially appointed as chairman and MD of LIC of India for five years after the Cabinet’s Appointments Committee recommended his candidature.
  • Nusli Wadia has sent a letter to the shareholders of Tata Motors regarding his removal as an independent director for his “totally independent” decision of backing the former chief, Cyrus Mistry.
  • Amazon launched its Prime Video service in India along with 241 other countries. In India, it comes at no extra cost for existing Amazon Prime subscribers. Introductory price is INR 500 for a year and later as INR 1,000 for a year.
  • Coal India’s stock corrected to INR 292.25 on Wednesday as many brokers slashed their target prices after a weak Q2 was reported by the company.

Thursday- 15th December 2016

  • Nusli Wadia has filed an INR 3,000 crore defamation suit against Ratan Tata and Tata Sons for the accusations imposed against him in public statements to shareholders.
  • Renowned Investor Rakesh Jhunjhunwala has invested in Mandhana Retail Ventures to acquire a 12.74% stake in the company. It holds the licence to manufacture Being Human’s merchandise.
  • Axis Bank has suspended its 24 employees and is now examining over 50 accounts under suspicion after some of its branches were investigated by Government agencies for suspicious transactions in the wake of demonetization.
  • Telenor is in talks with Idea Cellular for the sale of former’s India’s business to the latter. Telenor has marked down the value of its India unit significantly throughout the year.
  • Indraprastha Gas shares hit an all-time high of INR 911.17 per share after traders were bullish on this stock and brokers raised their target price.

Friday- 16th December 2016

  • The government has offered a final window for income declaration under Pradhan Mantri Garib Kalyan Yojana 2016, which will start from December 17, 2016, to 31st March 2017. The assessee will be charged 50% tax and 25% declared income will compulsorily be deposited into a non-interest account of Pradhan Mantri Garib Kalyan Deposit Scheme with the lock-in of 4 years.
  • The government is proposing an equalisation levy on the revenues of cloud computing companies and content providers from next financial year. This will be known as Google tax and companies like IBM, Microsoft, Amazon Web Services will fall under it.
  • CBI has filed a case against 15 people from Delhi after PayTm accused them of duping the mobile payment platform for INR 6.15 lakh for over 2 years.
  • Reserve Bank of India has reduced merchant discount rates for card payments below INR 2,000. It has also instructed banks to not levy charges on transactions up to INR 1,000 through USSD, IMPS or UPI. This comes as a welcome move in an economy facing aftermaths of demonetization.

 

Source- The Economic Times

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Demonetization crashes Market, Tata-Cyrus battle, Kingfisher Airlines Winding Up- Weekly Digest #23

Monday- 14th November 2016

  • IRDA (Insurance Regulatory and Development Authority) has raised its concerns over proposed merger of Max Financial Services and Max Life into HDFC Life as it may not be in the lines with the act. The Insurance Act does not permit the merger between an insurance company and a financial services company.
  • The Indian unit of Walmart posted a 7% rise in revenue and narrowed losses in consumer goods market that saw decade low sales growth. Loss declined to ₹140.4 crores. Sales grew 34%, from ₹2,991 crores to ₹3,997 crores.
  • Tata Motors’ independent directors are backing Cyrus Mistry and his strategy and that of the management. The statement was drafted by Nasser Munjee and was endorsed by every independent director.

 

Tuesday-15th November 2016

  • Tata Global Beverages sacked Cyrus Mistry as chairman of the company. However, the decision was declared illegal by the former chairman. Harish Bhat will be the new chairman.
  • A group of foreign institutional investors (FIIs) in Tata Steel have written to its independent directors raising concerns about cross holdings between the steel company and Tata Group firms.
  • India’s stock market plunged after overseas investors went on a selling spree amongst higher aversion to riskier assets and also due to the demonetization scheme .
  • Shares of listed jewellery companies hit their 52-week lows on Tuesday. This has been due to the government’s decision to curb black money by regulating the gold market.

 

Wednesday- 16th November 2016

  • Massive deposits in the bank accounts by people holding old ₹500 and ₹1,000 currency has lead to a decline in the interest rates. State Bank of India (SBI) reduced rates on deposits from one year to 455 days to 6.90%.
  • The Sensex gave up its initial gains and ended marginally lower, pulled down by consumer durables, healthcare and metal counters following a bout of fag-end profit booking; while the Nifty managed to close above the 8,100-mark. Sensex ended at 26,298 and Nifty at 8,111
  • Snapchat has filed for an initial public offering, which could make it the biggest US stock market debut since 2014. It will be valued at $20 billion to $25 billion.

 

Thursday- 17th November 2016

  • TCS has called for a shareholder meet on December 13th to oust the former chairman Cyrus Mistry. Tata Sons is expected to take a similar decision, by calling an EGM to sack the former chairman.
  • Banks across the country are scrambling to meet the demand for the new currency as well as continuously changing regulations of the demonetization. Various limits have been changed and restrictions gave been imposed and bank officials are finding it difficult to orient themselves according to them.
  • Raghav Chandra, chairman of the National Highways Authority of India (NHAI), announced Paytm has won the contracts for automatic toll collections at highways in various states. Now users will be able to pay tolls through their Paytm wallets.

 

Friday- 18th November 2016

  • The Income-Tax department has asked two Tata Trusts to explain investments flagged by Parliament’s Public Accounts Committee. It is also reconsidering the tax exemptions claimed by the trusts.
  • Near 700 petrol pumps in rural areas started dispensing cash to ease the pressure on the banking sector to exchange the currency. However, the daily limit of ₹1 lakh will only be able to meet the needs of 50 customers.
  • The Karnataka High Court on Friday ordered winding up of bankrupt businessman Vijay Mallya’s defunct carrier Kingfisher Airlines, paving way for an official liquidator to take charge of assets and books.
  • Indian market ended weak on Friday, with benchmark indices falling for the 4th straight week. this has been due to continuous selling in the market and fears amongst demonetization scheme.
  • The rupee declines to a 9-month low against US dollar. It closed at 68.14, its weakest since 29th February 2016 .

 

Source- The Economic Times

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Demonetization of Currency, Donalds Trumps, Sensex slides 699 points- Weekly Digest #22

Monday- 7th November 2016

  • Private equity firm, Warburg Pincus, has invested $75 million transport logistics provider Rivigo Services for a minority stake.
  • ICICI Bank reported an insignificant 2.4% rise in its Q2 profit, at ₹3,102 crores, up from previous year’s ₹3,030 crores. A surge in corporate bad loans nullified the gains from the sale of stake in its insurance venture.
  • PNB Housing Finance made a decent debut in the market, with the share price closing at 15% premium at ₹890.60 in comparison to issue price of ₹775. It touched the intraday high of ₹902.95

 

Tuesday-8th November 2016

  • In the biggest step to curb black money, PM Narendra Modi announced demonetization scheme, where old ₹500 and ₹1,000 currency ceased to be legal tenders and replaced by new ₹500 and ₹2,000 currency.
  • Two American mutual funds, Valic and Fidelity have marked down the value of their investments in Flipkart, to $95.84 per share and $81.55 per share respectively. This comes at the time when Flipkart is seeking fresh round of funding.
  • IndiGo’s parent InterGlobe Aviation reported a a 24% rise in its Q2 profits at ₹139.85 crores. This has been attributed mainly to higher passenger revenues.
  • Varun Bev made a tepid debut in the market, with the share listing at 3.4% discount at ₹430 against issue price of ₹445. However, it closed at ₹461.9.
  • National Pharmaceutical Pricing Authority (NPPA) is seeking to recover over ₹1,000 crores from drug makers for allegedly overcharging patients.

 

Wednesday- 9th November 2016

  • Donald Trump won the 2016 US presidential elections to become the 45th president of the United states of America. He defeated the rival party’s Hillary Clinton by 279-228 to win the elections.
  • The healthcare index at the BSE, surged to 15472, up 1.48% following US presidential election results. Shares of Sun Pharma, Dr Reddy’s, Natco and Lupin, among others, posted a sharp rise at the end of day’s trading.
  • Shares of jewellery and luxury goods companies shed up to 17% in intrada trade following the demonetization of ₹500 and ₹1,000 currency. This sector previously relied heavily on cash transactions, thus crashing their stock.
  • Following the news of Trump victory, Indian Indices shed up to 6% due to initial panic selling. However, it recovered to end at just 1.3% below at the close of the day.
  • Gold prices shot up as high as 5% in intraday trade but closed around 2% higher. This has been due to demonetization of currency, as people are looking to spend this old currency for the purchase of securities.

 

Thursday- 10th November 2016

  • The stock market recovered from Donald Trump victory and demonetization. The Sensex rose 1% to 27,517.68, while the Nifty rose 1.1% to end at 8,525.75.
  • SBI is in talks with global sovereign wealth funds and strategic investors to sell up to 5% stake in SBI Life. It is a life insurance joint venture with BNP Paribas Cardiff. It is currently valued at ₹37,000-40,000 crores.
  • Passenger vehicle sales in the domestic market rose 4.48% in October, slower than the month before with manufacturers resorting to inventory correction after pushing stocks in the previous month ahead of the peak of the festive season.
  • Tata Chemicals reported a small increase in Q2 profits at ₹293.04 crores, up from previous year’s ₹292.80 crores. This has been attributed to lower fertiliser sale.
  • Bank Nifty index jumped 3.5%, its highest single-day gain in eight months. This comes as the government’s move to demonetise select notes would help them access a cheap source of funds. The PSU Bank index shot up 8.7%.

 

Friday- 11th November 2016

  • Majority board members of Tata sons, including 3 independent directors opposed the move for a unanimous decision to support Mistry, as in the case of Indian Hotels and Tata Chemicals. Thus the motion was not adopted, giving Tata sons a crucial victory over its former chief.
  • India’s largest direct-to-home (DTH) player Dish TV , and NASDAQ-listed Videocon d2h (Vd2h) have decided to merge operations to form the single largest pay-TV operator in the world.Dish TV shareholders will own 55.4%, while the remaining 44.6% shares will be owned by Vd2h shareholders in the new entity.
  • SBI quarterly earning plunged by 35% for the second quarter to ₹2,538 crores from previous year’s ₹3,879 crores. This has been attributed to bad loans and weak interest income.
  • Mahindra & Mahindra saw a 28.8% jump in profit after tax for Q2 to ₹1,253 crores from last year’s ₹973 crore. This has been due to strong tractor business and higher dividend income.
  • The Sensex fell nearly 700 points to 26818.82, its lowest closing since June 29, while the Nifty slid over 229 points to 8296.30 due to the selloff in Asian shares and currencies.

 

Source: The Economic Times

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Surgical Strike on Black Money- All You Need to Know.

During his address to the nation on 8th November 2016, PM Narendra Modi highlighted the two problems that the country is currently facing, terrorism and corruption. These two issues converged to the point of money, counterfeit currency promoting the former one and black money causing the latter one. He announced a single measure to tackle this problem, the ₹500 and ₹1,000 notes ceased to be legal tenders from the inception of 9th November 2016. They will be replaced by new ₹500 and ₹2,000 currency notes.

Here are the key takeaways-

  • Old currency can be deposited in the banks and post offices from 10th November 2016 to 30th December 2016 without any limit.
  • Old currency can be exchanged for valid one at banks from 10th November 2016 to 30th December 2016. The limit for such exchange is ₹4,000 till 24th November 2016. This limit will be enhanced after the period.
  • Those people who fail to exchange the currency by 30th December, they will be given another time period up to 31st March 2017 to exchange their old currency from special exchange counters at RBI. These individuals are required to submit a declaration form along with their amount.
  • ATMs will be closed on 9th of November and in some cases, 10th of November.
    Amount of ₹2,000 can be withdrawn per day per card and the limit will be enhanced to ₹4,000 in the coming days.
  • Branch withdrawal limit has been fixed at ₹10,000 per day and ₹20,000 per week.
  • Banks were closed on 9th of November, which enabled them to cope up with the changes being brought about.
  • Tourists have been given the option to exchange their old currency notes till 11th November 2016 at airports. The limit for such exchange is ₹5,000.

Various short-term respites have been announced. The now defunct currency of denominations of ₹500 and ₹1,000 can be used up to 11th November 2016 in following mentioned cases-

  • Government hospital and dispensaries, on presenting a valid prescription from any doctor.
  • Air, bus and railway tickets.
  • Government cooperatives and milk booths.
  • Fuel Pumps.

This decision has brought about turbulence in the economy, and following after-effects are expected to be felt owing to this step-

  • Real estate sector is expected to take the hardest hit from this decision. The property rates are expected to slide down over coming months.
  • Gold trade is also expected to hit a speed bump. Despite that, traders welcomed this decision as in the bigger picture, it will bring about positive impacts.
  • This decision comes as late Diwali gift for the e-payment players in the market as their user base is expected to expand exponentially in coming days.

Features of the new note-

As per the tweets by the RBI, the following are the key highlights of the new currency that is being issued in lieu of the old ones.

A day after the decision was made, following clarifications were also issued-

  • Banks to remain open on Saturday and Sunday this week to handle the pressure that they will face regarding deposits, exchange, and withdrawals. This will also make it convenient for the general public as they will get more days for exchange and deposits.
  • Deposits made between 10th November and 30th December shall be kept under the eye and those deposits in excess of matching income as per ITRs shall come under the scrutiny of ITOs.
  • Deposits up to ₹2-2.5 lacs are less likely to come under scrutiny, so as to give relief to small artists and housewives, who have kept that money as their savings in their homes. They need not worry about such deposits as any income that can be accounted for will not be penalized. Savings don’t qualify as black money.
  • Deposits in excess of declared income will be considered as tax evasion and penalty up to 200% of tax, along with tax can be levied on such amounts.
  • All the transactions involving gold cannot be made without PAN. Any dealer who sells gold without PAN will be penalized.
  • Delhi Metro will accept old notes of ₹500 and ₹1,000 up to Saturday i.e. 12th November.

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