QBiz: DIPP Push For 100% FDI in E-Tail, Gold Gallops, and More

QBiz: Read the top business stories of the day. 

5 min read
Many blame the slowing of the US economy on foreigners, but a recent article by <i>The Forbes </i>has said that rise of the US dollar is the root cause: FE (Photo: iStockphoto)

1. DIPP Pushes For 100 Percent FDI in Marketplace E-Tail: BS

E-commerce companies, many of them unicorns (valued at $1 billion or more), could get full foreign direct investment (FDI) if a proposal of Department of Industrial Policy and Promotion (DIPP) passes muster.

Press Trust of India reported on Tuesday that the government was considering permitting 100 percent FDI in the marketplace format of e-commerce to attract more foreign investments. This follows a recent meeting of top officials in DIPP, and the department of economic affairs and corporate affairs.

At present, while no foreign investment is permitted in e-commerce, there are no rules for those operating in the online marketplace format.

Major online players, including Flipkart, Snapdeal, Amazon.in, Shopclues and Paytm, which are funded by marquee international investors, operate as marketplace firms, thereby skirting the FDI hurdle.

Read more here.

2. Sensex Follows Rout in Other Asian Markets: BS

Indian equities slid more than one percent for a second straight session after a slump in Japan’s shares and renewed concerns over a global economic slowdown spooked investors.

Markets opened the day on a negative note and continued to trade in the red on the back of an overnight slide in US stocks and a steep selloff in Japanese shares on Tuesday.

The BSE Sensex closed 266 points, or 1.1 percent, lower at 24,021 while the 50-share Nifty slumped 89 points, or 1.2 percent, to 7,298. In the broader market, BSE mid-cap and BSE small-cap indices slid by 1.9 percent and 1.3 percent, respectively.

Read more here.

3. Start-ups, Venture Capital Backers Turn to Investment Banks For Deals: Livemint

Weak business models and a funding slowdown are forcing many Indian consumer Internet start-ups and their venture capital (VC) backers to seek help from investment bankers in order to secure fresh funds from new investors or find buyers.

Last year, several banks including Kotak Investment Banking, Motilal Oswal Financial Services Ltd, Morgan Stanley and others pitched to help fund start-ups as the number of deals and cheque sizes swelled.

Investors pumped in more than $9 billion into start-ups over the past two years.

Read more here.

4. Jet May Order More Planes, Says Boeing Executive: Livemint

Steady profits recorded in recent quarters may prompt Jet Airways (India) Ltd to place another large aircraft order, a top official at aircraft maker Boeing Co. said, three months after India’s second largest airline (by revenue) said it will buy 75 Boeing 737 MAX aircraft, valued at about $8 billion.

Jet is done with their 75. I think what I find is typically, when airlines get profitable continuously—now it’s been three quarters—people feel like okay, I want to do something and I think we are coming to that stage.
Dinesh Keskar, Boeing’s Asia-Pacific senior vice-president (sales)

A sharp fall in jet fuel price in the last year has buoyed profits at local airlines, which are preparing to bulk up their fleets.

Read more here.

5. Gold Gallops on Frantic Demand; Silver Reclaims Rs 37k Mark: ET

Gold continued its seven-day rising momentum at the domestic bullion market here today due to robust off take by stockists and retailers in the face of encouraging global cues.

Tracking the general positive trend, silver too surged ahead of reclaim the key Rs 37,000 mark on the back of aggressive speculative as well as industrial off take.

Apart from strong domestic retail and jewellery demand ahead of peak wedding season, speculators who are heavily betting on gold following its soaring global valuations are mainly driving the prices here, a bullion trader said.

Read more here.

6. Wall Street Stocks Edge Lower After Volatile Session: ET

US stocks recovered from early losses to end slightly lower on Tuesday while European shares plunged for a second straight day on fears of slowing global growth, with particular concern over the health of the banking sector.

The benchmark US S&P 500 erased most losses after falling as much as 1 percent, with gains in health care and materials shares offsetting declines in energy stocks. Shares of US banks stumbled before paring losses, with the S&P financial index ending just 0.16 percent lower.

Read more here.

7. Budget 2016: Startups May Get Tax Benefit For Brand Building: FE

In order to encourage startups, especially e-commerce companies, the Finance Ministry may look at according beneficial tax treatment to their brand building expenses in the forthcoming Budget.

According to experts, the government could allow startups and e-commerce companies to appropriate initial brand building expenses over several years for accounting benefits.

The government has decided to give host of tax incentives to encourage startups and some decisions are likely to be announced by Finance Minister Arun Jaitley in the 2016-17 Budget, to be presented on February 29.

The Finance Ministry may also look at providing relief to e-commerce companies with regard to withholding tax. Currently companies are required to withhold 10 percent of the payment as tax.

Read more here.

8. Punjab National Bank Net Drops 93 Percent on Rising Provisions: FE

Punjab National Bank (PNB) said on Tuesday its profit for the three months to December plunged 93% year-on-year (y-o-y) to Rs 51 crore owing to higher provisions. The lender reported a pre-tax loss of Rs 858 crore in Q3FY16 but a tax writeback of Rs 909 crore helped it remain profitable. Meanwhile, total provisions more than doubled y-o-y to Rs 3,775 crore as asset quality deteriorated sharply.

Interestingly, PNB’s slippages of Rs 17,655 crore at the end of December 2015 were larger than its current market capitalisation of Rs 17,250 crore. The public sector lender has lost approximately Rs 12,404 crore in value over the last six months.

Following the announcement, the PNB stock fell as much as 7.4 percent on the BSE in intra-day trade, ending the session at Rs 87.85, up 3.9 percent. Since January, PNB shares have fallen 24 percent against an 8 percent drop in Sensex. 

Read more here.

9. Real Estate Private Equity Funds Forced to Face Up to the Harsh Realty: FE

Private equity funds focused on real estate investments in India are finding it hard to raise funds overseas with investors not confident they will make decent money.

A host of companies including IDFC, Piramal, Red Fort, HDFC, ASK Property Investment Advisor, India Infoline and Edelweiss are scouting for investors. Between them, half a dozen funds are looking to mop up close to $2.5 million, an ambitious sum not met since 2008.

A JLL India report says offshore funds raised around $4.4 billion in 2008 but between June 2014 and June 2015, inflows into PE funds amounted to just $1.4 billion. Investors’ concerns are justified given the investments made between 2005 and 2008 have largely not delivered returns.

Read more here.

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