1. Sensex Tanks on Fund Outflows, RBI Caution, Weak Q1 Earnings
Stocks continued to be under selling pressure because of funds outflow from Indian equities, macroeconomic concerns, slow monsoon progress, and weak corporate earnings.
Benchmark indices closed nearly 1% lower on Monday, 22 July.
The 30-share Sensex closed at 38,031.13, down 305.88 points or 0.8%, while the 50-share Nifty was at 11,346.20, down 73.05 points or 0.64%.
Lending bellwether HDFC Bank, down 3.1%, was among the top drags on the indexes, after provisions jumped over 60%, gross bad loans ticked up, and loan growth slowed.
Housing Development Finance Corp. Ltd, which holds the biggest stake in HDFC Bank, was the biggest percentage loser on the indexes, closing 5.1% lower.
(Source: LiveMint)
2. Super-rich Need to Pay Interest on June Advance Tax
The super-rich are likely to be hit with a double whammy. They will have to pay interest on the advance tax instalment that was due on June 15, in line with their increased liability on the back of higher surcharge on those with incomes above ₹2 crore.
The surcharge, although announced only in the July 5 budget, will be effective from April 1, the start of the financial year. Interest on the additional liability due to the surcharge has to be borne as there is no specific waiver from this.
Tax experts said the government should provide a waiver as the taxpayers aren’t to blame. “Individuals will be saddled with the liability for payment of interest under Section 234 C for no default on their part,” said Dilip Lakhani, a senior chartered accountant. The government should carry out a suitable amendment to waive interest, levied at the rate of 3%, he said.
(Source: The Economic Times)
3. RCom Lenders to Seek Rs 580 Cr from Ericsson Claiming Violation of IBC
Lenders to Reliance Communications (RCom) have decided to send a demand notice to Ericsson, asking the Swedish telecom equipment maker to refund the ₹580 crore that it received from the erstwhile Anil Ambaniowned telco under a Supreme Court directive, according to people directly aware of the matter. The lenders claim the payment to Ericsson qualifies as a ‘preferential transaction’ under the Insolvency & Bankruptcy Code (IBC).
The decision was taken at a recent meeting of RCom’s committee of creditors, and the consortium of lenders led by SBI is likely to send a formal communication to Ericsson soon, according to two independent sources. RCom was admitted for insolvency proceedings in the National Company Law Tribunal in February.
(Source: The Economic Times)
4. IndiGo Founders Said to Ready Compromise Deal
The feuding co-founders of InterGlobe Aviation Ltd, Rahul Bhatia and Rakesh Gangwal, are working towards a compromise formula that may result in every related party transaction in the company being vetted by independent directors, said two people with direct knowledge of the matter.
In addition, the Articles of Association (AoA) of InterGlobe Aviation, which runs India’s largest airline IndiGo, will be amended to expand the board to 10 directors from the current six, said the people cited above who did not wish to be named. This would however not require changing the existing shareholding agreement, they said.
“There has been no agreement reached yet. However, both parties are working towards reaching a solution before Mr Gangwal leaves for the US on Tuesday," said the first person.
(Source: LiveMint)
5. SoftBank Fund Says in No Hurry to Exit Firms in India Portfolio
SoftBank Vision Fund, the late stage fund led by Japan’s Masayoshi Son and one of the biggest investors in Indian tech-enabled startups, said it is not in a hurry to list the companies it has invested in the country and would wait for the right opportunity.
“Globally, we have had number of companies that have gone public—Uber, Guardant and Slack to name a few. And over the next few years, you will see more companies going public. As India grows, the plan is the same. But there’s nothing on the immediate horizon. IPOs (initial public offerings) are an important one-time decision for the company, so we will take them public when the time is right," Munish Varma, managing partner at SoftBank Vision Fund, said in an interview.
SoftBank recently said it plans to invest $2-4 billion in India. According to Varma, the mega fund’s philosophy in India is no different from the rest of the world.
(Source: LiveMint)
6. Cloudtail, Appario Push Brands for Higher Margins
Cloudtail and Appario, the two largest sellers on Amazon.in, are renegotiating deals and asking for higher margins from brands and distributors as they chase profitability post equity dilution by Amazon, multiple people familiar with the development said.
“They are asking for 18-20% hike of margins on the existing margin base,” said a top executive of a large FMCG seller on Cloudtail, owned by Infosys cofounder NR Narayana Murthy. “For example, earlier they were charging 10% margin for a particular product, now (they are) asking for 12% margin.”
The move comes barely months after Amazon, which was a joint venture partner in both Cloudtail and Patni Group-owned Appario, significantly reduced its stake in both the firms to small minority shares following a change in foreign direct investment (FDI) rules for ecommerce marketplaces in December.
(Source: The Economic Times)
7. Investments Through Participatory Notes Decline to Rs 81,913 Crore in June
Investments through participatory notes (P-notes) in the capital market slipped to Rs 81,913 crore in June after posting growth for the previous four months.
In the previous four months, cumulative investment of Rs 73,428 crore was made till the end of February, Rs 78,110 crore till March-end, Rs 81,220 crore till April-end and Rs 82,619 till May-end. P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly after going through a due diligence process.
According to the latest data from the Securities and Exchange Board of India, the total value of P-note investments in the Indian markets —equity, debt, and derivatives — fell to Rs 81,913 crore till June-end.
(Source: Business Standard)
8. Apex Court Stays NCLAT Verdict in Essar Steel Insolvency Case
The Supreme Court on Monday put on hold the sale of Essar Steel India Ltd to ArcelorMittal after lenders to the bankrupt Indian steel maker challenged an appeals court ruling that said operational creditors have to be treated on a par with financial creditors.
The Supreme Court agreed to “expeditiously" hear the plea filed by banks against the National Company Law Appellate Tribunal (NCLAT) order of 4 July.
The bankruptcy appeals court order, approving ArcelorMittal’s ₹42,000 crore offer for Essar Steel, had upset secured financial creditors, as it diminished their priority rights to the proceeds generated from the sale or liquidation of a bankrupt entity.
(Source: LiveMint)
9. 18% GST on Flat Owners Paying Monthly Maintenance of Over Rs 7,500
Flat owners will have to pay GST at 18 per cent if their monthly contribution to resident welfare association (RWA) exceeds Rs 7,500, the Finance Ministry said Monday.
As per the rules, RWAs are required to collect GST on monthly subscription/contribution charged from its members if such payment is more than Rs 7,500 per flat per month and the annual turnover of RWA by way of supply of services and goods exceeds Rs 20 lakhs.
In a circular issued to field offices on how should the RWA calculate GST payable where the maintenance charges exceed Rs 7,500 per month per member, the Finance Ministry said the exemption from GST on maintenance charges charged by an RWA from residents is available only if such charges do not exceed Rs 7,500 per month per member.
(Source: PTI)
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