QBiz: Markets Continue to Rally; PSB Trade Unions Call Off Strike

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1. Corporate Tax Cuts Hand Market Reins to Bulls

More brokerages upgraded their targets for India’s benchmark indices, indicating that the explosive stocks rally sparked by the government’s surprise tax cuts has more room to run.

Stocks surged for the second day in a row on Monday as investors judged that the government’s decision to slash corporate tax is aimed at pivoting the economy to an investment-led growth from a consumption-driven one. They expect companies to reinvest tax savings into their businesses to spur economic growth.

(Source: Livemint)

2. Direct Tax Code Panel Wants 4 Slabs, 35% I-T for Rs 2 Cr Income

The panel for drafting a new legislation on direct taxation has suggested an overhaul of personal income tax (I-T) slabs, to increase disposable income and give a fillip to consumer demand. Sources said the draft legislation had proposed four tax brackets by introducing a new slab of 35 percent for those earning an annual income of Rs 2 crore and above.

The panel on the direct tax code (DTC) has also suggested the increase in the threshold for exemption from income tax to Rs 5 lakh a year from the current Rs 2.5 lakh.

The panel has proposed lower rates of 10 percent for annual income between Rs 5 lakh and Rs 10 lakh, 20 percent for income between Rs 10 lakh and Rs 20 lakh. For income of Rs 20 lakh to Rs 2 crore, the suggested rate is 30 percent.

3. Thomas Cook India Mulls Buying the Brand for Three Markets

Thomas Cook India is evaluating the possibility of acquiring the brand for three markets including India and Sri Lanka. This comes after the announcement by Thomas Cook UK to go for liquidation.

Thomas Cook India pays Rs 2 crore a year fee for the brand. “Until 2024 there can be no change in the fee arrangement. If we buy the brand we will buy it only for the three markets. We will not buy the brand globally. But we will evaluate for India, Sri Lanka and Mauritius,” said Madhavan Menon, Chairman and Managing Director, Thomas Cook India at an analysts call.

4. RBI Turns Down SEBI Plan for Credit Rating Agencies' Access to Defaults

The Reserve Bank of India (RBI) has expressed disagreement over the Securities and Exchange Board of India’s (Sebi) proposed framework enabling credit rating agencies (CRAs) to legally access borrower database, helping them in timely recognition of default.

A panel of financial regulators, including the Pension Fund Regulatory and Development Authority and the Insurance Regulatory and Development Authority of India as well as the RBI and Sebi, met last month and discussed a proposal to give CRAs limited access to the RBI’s Central Repository of Information on Large Credits (CRILC).

5. Trade Unions of Public Sector Banks Call Off Two-Day Nationwide Strike

Trade unions of public sector banks (PSBs) on Monday decided to withdraw a two-day nationwide strike slated to begin from Wednesday.

The unions called off the strike after holding a meeting with Finance Secretary Rajiv Kumar in which they were assured that a committee will be set up to address issues arising out of the proposed amalgamation of 10 PSBs into four.

“The finance secretary was positive in formation of a committee consisting of all concerned to address the issues arising out of the proposed merger of 10 banks, including preserving the identity of all the banks. An appeal was made to us to revisit our strike call in view of the discussions,” a statement issued by four unions, which had given the strike call, said.

6. Reliance Industries Likely to Go on a Spending Spree After Becoming Debt-Free

Reliance Industries Ltd (RIL), which aims to become a debt-free company by March 2021, may start spending heavily again to upgrade its chemicals business once it repays its Rs 1.54 trillion of outstanding debt, two people aware of the talks said.

“The required capex is part of RIL’s oil-to-chemicals strategy to transform the Jamnagar refinery, which would take the company from primarily being a producer of fuels to chemicals for higher margins," one of the two people said, requesting anonymity.

(Source: Livemint)

7. Flipkart Says Optimistic of Meeting Big Billion Target

Despite negative consumer sentiments, Walmart-backed Flipkart is optimistic about meeting its targets in the six-day Big Billion Days (BBD) sale starting 29 September. To boost sales, the online retailer will offer no-cost-EMI and pay-later offerings to 55 million users this time compared to 17 million users last year. Many customers will be accessing credit for the first time, said top executives.

“Affordability becomes a major focus this year given the economy and the offline retail numbers on how consumer electronic sales have slowed down—these have typically been our strong point," said Smrithi Ravichandran, head, fintech, Flipkart. “There is an expectation in the market that Big Billion Days will kick-start the festive season well."

(Source: Livemint)

8. MFs Start Dumping Pledged ZEE Shares as Payment Date Nears

Mutual funds have started selling pledged shares of Zee Entertainment Enterprises (ZEE), rejecting the promoter’s plea for an extension of the repayment deadline.

ZEE shares slumped 10 percent on Monday to close at Rs 272 despite a stellar broader market rally as SBI Funds Management sold shares worth Rs 200 crore.

Funds like ICICI Prudential and Kotak Asset Management are also believed to be on the verge of offloading the shares ahead of the repayment deadline of 30 September.

9. Floods Force Govt to Revise Kharif Output Projections to 140 Mt

The widespread crop damage caused by floods during the current monsoon season has forced the government to downgrade its projections of foodgrain production during the ongoing kharif season to 140.57 million tonne (mt), marginally lower than 141.71 mt harvested in the corresponding season in 2018-19.

According to the First Advance Estimates of Production of Foodgrains released by the Agriculture Ministry on Monday, rice output during the 2019-20 kharif is slated to be 100.35 mt, about 1.6 percent less than 102 mt estimated in the 4th advance estimate for 2018-19.

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