Morgan Stanley India MD Ridham Desai says throwing some money around in the Budget and hoping that people will spend it is not going to create sustainable economic recovery. Instead, a greater focus on structural reforms -- be it liberalising investment environment or getting manufacturing companies to set up real capacities – will not only help revive the economy but also ensure sustainable growth. The economy, he says, needs more than just caffeine shots.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded 25 points higher at 7 am (IST), signalling strength on Dalal Street a day ahead of the Union Budget. Asian share markets were fighting to stabilise at the end of a punishing week as investors clutched at hopes China could contain the coronavirus.
HERE'S WHAT TO WATCH  | MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%, but was still down 3.8% on the week so far. Its 2.3% dive on Thursday had been the sharpest one-day loss in six months. Japan's Nikkei bounced 1.8%. |
| In overnight trade, Wall Street recouped its losses and ended higher in the wake of the WHO comments. Dow finished 0.43% higher, while the S&P500 gained 0.31% and the Nasdaq 0.26%. |
| Oil prices bounced on short covering, having hit its lowest in three months as the global spread of the coronavirus threatened to curb demand for fuel. US crude regained $1.08 to $53.22 a barrel, while Brent crude futures rose $1.01 to $59.30. |
| The rupee lost 22 paise to close at a three-week low of 71.49 against the US dollar on Thursday tracking heavy sell-off in domestic equities amid rising concerns over coronavirus outbreak. |
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Deposit Protection… The government is discussing a proposal to double the insurance cover on bank deposits to ?2 lakh and an announcement to this effect may be made in the February 1 budget, said several people with knowledge of the matter. The move comes after the government and RBI faced flak over their handling of the closure of PMC, which downed shutters last September, leaving thousands of depositors high and dry.
Read More FDI Booster… The Centre is likely to drop the clause that mandates control of insurance companies by Indian promoters as it seeks to enhance FDI limit in the industry to 74% from 49%, said people with knowledge of the matter. The government has held several meetings with the insurance regulator, insurers and consultants on higher FDI in the sector. Many global insurers, such as Metlife and Generali, have not raised their stakes in Indian operations due to the clause that was introduced in 2015.
Read More RBI-Kotak Peace Deal… Kotak Mahindra Bank's billionaire founder Uday Kotak and the Reserve Bank of India (RBI) have yielded ground on their respective stances in the dispute over the bank's promoter shareholding paving way for the banker to own a higher stake than what the regulator had stipulated earlier. As per the agreement, the promoter will be allowed to own 26%. This brings to an end the 13-month-old court dispute that began after the banking regulator had nudged Kotak to reduce his stake to 15% as part of the licensing guidelines.
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Skewed Portfolios… Mutual funds have been progressively increasing exposure to the top ten Nifty stocks to reduce underperformance and generate alpha. In 2019, as much as 60.62% of mutual funds' equity investments were in these from the Nifty50 stock by weightage, which was a decadal high. That figure stood at 50.09% in 2017 and 49.7% in 2018.
Read More | Wipro CEO Abidali Neemuchwala steps down >>> |
MNC Esops Under Lens… Esops that multinationals such as Microsoft, HP and Oracle grant their employees in India have come under the tax department's lens, said people with knowledge of the matter. It has sent notices questioning the valuation of such Esops and how parent companies cross charge the cost of Esops with their Indian arms, they said.
Read More Sustainable Airfare!… Civil aviation minister Hardeep Singh Puri called for sustainable and rational airfares that would ensure viability of the sector, while adding that it was a free market and the government has no plan to regulate ticket pricing. He said airlines were free to decide prices themselves, but the government will follow a policy of 'administrative encouragement'.
Read More Meanwhile... Brother to the rescue… BK Modi, a younger brother of the late KK Modi, has expressed willingness to be an "adviser" in helping offload the KK Modi Family Trust fund, which includes a 47% stake in cigarette maker Godfrey Phillips India. The KK Modi group has transferred all family shareholdings into the trust and made a provision for offloading all trust fund if the trustees — Modi's wife Bina and children Lalit, Charu and Samir — fail to unanimously decide on the management of family-controlled businesses.
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