Reserve Bank raises policy rate to 6.5 per cent, inflation remains a worry

The Reserve Bank has raised the repurchase rates by a quarter percentage point, the sixth increase in a row, but said persistently high core inflation, after stripping out volatile food and fuel prices, is keeping its monetary policy committee wary of declaring victory over price pressures. The central bank estimated inflation to average 5.3 per cent in 2023-24, above its 4 per cent target. It forecast the economy to expand at 6.4 per cent, slightly lower that the projection in the Economic Survey.

Why it’s important: The quantum of rate hike was widely expected and has already been priced in. The moderation in retail inflation in recent months has led so smaller hikes that before but a pause in the tightening monetary policy cycle may take some more time.

France’s Total puts on hold green hydrogen partnership with Adani

French energy firm TotalEnergies has put it plan to produce green hydrogen with Adani Group on hold, pending audits of the Indian conglomerate accused of fraud by a US short seller. The hydrogen partnership announced by the two groups last year “hasn’t been signed, and won’t be signed for the moment,” TotalEnergies chief executive Patrick Pouyanne said. “We’ll wait for the results of the audits.” The French oil and gas giant has invested $3.1 billion in stakes of Adani Total Gas and Adani Green Energy, which represent 2.4 per cent of Total’s capital employed last year.

Why it’s important: The French conglomerate launched an audit after US short seller Hindenburg Research accused the Adani Group of financial irregularities. It makes sense to pause the partnership till the auditors file a report.

Adani Group stocks rally for second trading day, recover Rs 49,000 crore

Six of the 10 Adani stocks gained between 5 and 20 per cent on Wednesday, helping the beleaguered group regain Rs 49,000 crore in market value. The group’s total market capitalization has now risen by Rs 12,190 crore, the first increase since the rout in its stocks began on January 25. Shares of Adani Enterprises gained almost 20 per cent, followed by Adani Ports, which gained 8 per cent. The stocks saw investors returning, reflecting in the delivery to traded volumes, which was higher than both the one- and three-month average.

Why it’s important: Although the market capitalization of the Adani Group has risen in the past two trading sessions, it is still down 46 per cent from the levels before the Hindenburg report was published.

Blackstone looking to sell $1 billion worth of stake in IBS Software

Blackstone Inc. is in talks with multiple private equity funds to offload a significant minority stake in IBS Software after plans for a foreign listing failed to materialize. The private equity firm has hired investment bank JP Morgan to sell at least 40 per cent of its total 44 per cent stake in the travel and hospitality software provider for about $1 billion. The discussions are still in the early stages. Blackstone had acquired a minority stake in IBS Software for some $170 million in 2015 from General Atlantic and other shareholders.

Why it’s important: Blackstone has made several other investments in software technology services over the years. Besides IBS, it also in talks to exit a part of its stake in Embassy REIT.

GST Council unlikely to discuss levying tax on online gaming activities

The GST Council is unlikely to take up the report of a group of ministers on taxing online gaming at its upcoming meeting as the matter requires further deliberations. The Council, chaired by finance minister Nirmala Sitharaman, is scheduled to meet on February 18. The council may take up another panel report on setting up an appellate tribunal for GST related disputes. The ministerial group had submitted its report on setting up an appellate tribunal, proposing that each bench comprise a president, two judicial members, one central technical member, and another state technical member.

Why it’s important: There has increasing scrutiny on online games in the recent past. The government will seek to tax such activities sooner or later. Regulating them might prove to be a more difficult task.

Telecom firms plan marketing push for 5G offerings during Indian Premier League

Telecom companies are expected to spend around Rs 350-400 crore on marketing and advertising during this year’s Indian Premier League cricket tournament as telcos and handset makers push their 5G-related offerings. The telcos will lead the marketing spending with Rs 240-280 crore across digital and television advertising, with the rest coming from handset makers, media planners said. Reliance Jio and Bharti Airtel are expected to lead the spending, with Vodafone Idea making some investments as well.

Why it’s important: All three telcos will have the chance to push data top-up packs using IPL as the marketing hook. It will also aid in 5G adoption since the tournament will be aired in 4K HD on digital, which will provide a better viewing experience but will use up more bandwidth.

Infotech companies to put out 2,500 new hires who failed screening tests

Indian software service providers may let go of around 2,500 recent recruits for failing screening tests mere months after they were onboarded, even as some industry experts claimed the downsizing resulted from companies taking on more people than they needed during the pandemic. About 2 per cent of around 200,000 recruits from engineering colleges in 2022-23 might not clear these tests. Typically, freshers who fail to clear the screening tests are around 1 per cent of the total hires.

Why it’s important: India’s software firms will use every means to restrict workforce numbers in the coming months as they brace for muted demand in their main markets in the West. The hiring pace for new projects has significantly fallen over the past two months as well.

Indonesian export curbs on palm oil stokes inflationary concerns in India

International palm oil prices have turned volatile a day after Indonesia, the world’s largest exporter of the commodity, said it will suspend some export permits to ease domestic cooking oil prices ahead of next month’s Ramzan. Around a third of the total quota for exports could be used now, while the rest could be used after 1 May, government officials said.

Why it’s important: India is the largest palm oil buyer from Indonesia and depends heavily on its imports. A long-term curb could drive up prices in India, stoking retail inflation.

Apax Partners set to purchase up to 40 per cent stake in Quest Global

Private equity group Apax Partners will acquire a significant minority stake in Quest Global Services, an engineering outsourcing firm, after outbidding the only other contender, the Carlyle Group. Binding bids went in last week but TA Associates, the third party in the race, did not participate. Apax is looking to acquire up to 40 per cent stake from Advent International and Bain Capital, valuing the company at $2. 1 billion. The two funds together own around 33 per cent of the company.

Why it’s important: Quest Global is a profit-making start-up that has attractive valuations and potential for rapid growth. Investor churn is only to be expected in such a company.

New competition law may levy penalty on a company’s global turnover

The government is likely to tweak the Competition Amendment Bill 2022 to propose that penalties on companies be calculated as a percentage of their global turnover, instead of the current practice of levying it on their turnover within the country. Further alterations to the draft legislation, which will soon be introduced in Parliament, include a change in the definition of turnover for the purpose of penalties as global turnover derived from all products and services sold by an enterprise.

Why it’s important: The tweak would mean much larger penalties than currently imposed by the antitrust regulator. At present, penalties can rise up to 10 per cent of a firm’s turnover but is limited to the national figure and the product or service in question.

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