1. Election Results: Stage Set for a Market Rally But Fed in Play
A landslide win for the Bharatiya Janata Party (BJP) in Uttar Pradesh will give fresh impetus to a rally in Indian stocks, propelling them to new highs, say analysts.
Some experts, however, warned that investors should not get carried away, given the shaky macroeconomic backdrop, poor earnings growth and a likely interest rate hike by the US Federal Reserve later this week.
On Saturday, the BJP won an unexpected 312 out of 403 seats in the assembly elections of India’s largest state, raising expectations of continued political stability, smooth implementation of a proposed goods and services tax and reforms in areas such as labour laws and land acquisition.
“The stock market will surely rejoice with a possible 150 point rally on the Nifty” when markets open on Tuesday, said Amar Ambani, head of research at financial services firm IIFL. The election victory “firmly puts the central government’s focus back on the reform path, which will enthuse markets minus any farm waiver as promised on win in UP”.
2. UTI MD Leo Puri Says Close to an IPO, Will Seek All Shareholders’ Nod
UTI Asset Management Co Ltd has enough shareholder backing to clear a proposal for an initial public offering (IPO), but the management wants approval from all its five shareholders, said a top executive.
The country’s sixth largest asset manager has four state-owned companies holding 18.5 percent each — State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corp. The remaining 26 percent is owned by T Rowe Price.
In terms of shareholder approval, UTI has more than the 51 percent backing required to do an offer for sale (which provides current shareholders an exit), or even the 75 percent needed to raise fresh capital, but the company wants to build a consensus first, managing director Leo Puri said in an interview.
Puri attributes a lot of UTI’s problems to its complex legacy and issues with shareholders. All the state-owned shareholders have their own asset management subsidiaries. They became reluctant shareholders 15 years ago when the government split the erstwhile Unit Trust of India into the asset manager and another unit — the Specified Undertaking of the Unit Trust of India (SUUTI), a repository of government holding.
3. Flipkart, Facebook Team up to Make Apps Lighter for Slow Networks
Flipkart said it is working with Facebook to ensure that users of their apps and websites on slower networks and low-cost smartphones don’t get bogged down by buffering or the need for updates.
“I am working with Facebook to converge our solution — which allows users to skip updates to apps — and there is a platform called React Native to see if we can share each other’s learnings and make one unified product for the developer community to leverage,” said Amar Nagaram, vice president of engineering at Flipkart.
The company wants to increase the number of users who access the site on the web, improving its Flipkart Lite mobile site, which doesn’t use too much data. Nagarajan said the two ways will eventually converge, a concept that its other partner Google is also working on.
(Source: Economic Times)
4. Idea Cellular Follows Bharti Airtel’s Lead; Will Offer Free Incoming Calls On Domestic Roaming
Telecom operator Idea Cellular Ltd announced free incoming calls on domestic roaming and unveiled international roaming value packs that, it claimed, would prevent "bill shocks" to those travelling abroad.
The offers come on the heels of the larger rival Bharti Airtel Ltd announcing removal of all roaming charges for outgoing and incoming calls as well as text messages and data usage within India, to take on competition from newcomer Reliance Jio Infocomm Ltd.
The Idea Cellular’s Statement said mobile data tariffs and data pack benefits of home circle will be available while roaming within India at no extra charge. The facility of free incoming calls on domestic roaming will be extended to both prepaid and postpaid customers.
5. Government's Credit Guarantee Scheme to Give Startups a Loan Lifeline of up to Rs 5 Crore
Startups will soon be able to take loans of up to Rs 5 crore without collateral through a credit guarantee scheme prepared by the government.
The scheme is awaiting cabinet approval and is likely to become functional soon under the supervision of the Department of Industrial Policy and Promotion.
“The scheme will help us address the most basic challenge of startups: access to capital. The corpus of the fund will also be guaranteed by the government,” a senior official told ET.
The government is looking at ways to increase availability of finance to startups. The credit guarantee scheme would help the flow of “venture debt from the formal banking system.” The government will provide up to 80% risk cover for collateral-free credit given by banks to startups.
(Source: Economic Times)
6. Fast Track Prosecution Against Shell Companies: CBDT To Taxmen
As the noose tightens around shell companies evading taxes, the Central Board of Direct Taxes (CBDT) chairman has asked field officers to file prosecution cases against those entities which claimed bogus long-term capital gains.
In a letter to principal chief commissioner of income tax, CBDT Chairman Sushil Chandra has called for fast track prosecution proceedings in cases where the settlement commission has rejected entry operators who have claimed advantages of long-term capital gains.
"Prosecution proceedings can be successfully initiated in several cases of entry operators, including those concerning bogus LTCG (Long Term Capital Gains) claims, cases rejected by Settlement Commission, etc," Chandra said.
According to the tax department, there are about 15 lakh registered companies in India of which only 6 lakh file annual returns. This means a large number of these companies could be indulging in financial irregularities.
7. EESL to Raise Rs 5,000 Crore to Fund Expansion
State-owned Energy Efficiency Services Ltd (EESL) is set to raise Rs 5,000 crore from its promoters Rural Electrification Corp., Power Finance Corp. and NTPC Ltd as well as through loans from domestic and overseas lenders. The money will be used to finance a major expansion of energy efficiency services and products in 2017-18, managing director Saurabh Kumar said.
The firm, which raised its authorized capital from Rs 500 crore to Rs 1,500 crore in the current fiscal to facilitate the planned capital infusion, will also go for listing in a year or two for the next level of expansion, Kumar said.
EESL, which led the government’s drive to popularize LED bulbs for home and street lighting to cut energy consumption, is set to get into new businesses of revamping public buildings with energy efficient lighting and appliances, selling efficient air-conditioners to institutional buyers, installing efficient municipal water pumps and solar-powered farm irrigation, said Kumar.
8. McAfee Looks to Ramp up India Investment
IT security firm McAfee is looking at adding more jobs at its centre in Bengaluru and will continue to invest in growing local business in India, a top official said on Sunday. Global chipmaker Intel had last September spun out McAfee as a separate company with private equity player TPG owning 51 percent share in the new entity.
The deal is expected to close in the second quarter of 2017.
"One of our largest sites around the world is in Bangalore. We continue to invest in that. "We are actually adding new functions into the site there," Intel SecurityGeneral Manager and SVP Christopher Young told PTI. "Under Intel, it was primarily development centre, but now we are adding finance, IT, HR to that site as well to support the new (unit)," Young added
McAfee, which has been a part of Intel as Intel Security Group, had witnessed 20% year-on-year growth in 2016.
(Source: Economic Times)
9. Government Proposes Subsidy for MSMEs Deploying Cloud Computing
The government has proposed subsidy up to Rs 1 lakh for micro, small and medium enterprises (MSMEs) to encourage them to use cloud computing for information and communications technology applications.
In cloud computing, MSMEs use Internet to access common as well as tailor-made IT infrastructure, including software, for managing business.
The subsidy will be provided on user charges for two years. The proposals are part of the modified guidelines of the scheme for ‘Promotion of Information and Communication Technology in MSME Sector’. It centres around cloud computing which is emerging as a cost-effective and viable alternative compared to in-house IT infrastructure.
“The benefits that accrued through implementing information and communications technology (ICT) for subsidy period in their enterprises will motivate MSMEs to continue to use the ICT application with their own expenses after this period,” the MSME ministry said in the draft guidelines.