Morning Scan: All the big stories to get you started for the day

A round-up of top newspaper stories.

#1. India’s stock markets scale new peaks as overseas investors continue buying

Indian equities continued to rise for the fifth straight trading session, with benchmark gauges touching new peaks. The Sensex hit a fresh high of 65,672.97 points, up 0.42 percent from the previous close. The Nifty also scaled a new high of 19,434.15 points, a rise of 0.34 percent from the previous close. The market capitalization of BSE-listed firms touched a fresh record of over Rs 298.57 lakh crore as foreign portfolio investors continued to pour money into local equities.

Why it’s important: The stellar performance of the stock markets in the June quarter continues in July despite high interest rates, global recessionary fears, and geopolitical tensions. There would be concerns about overheating if the markets continue to rise.

#2. Foreign portfolio investors turn net buyers of Indian debt after three years

Foreign portfolio investors have become net buyers of Indian debt for the first time in four years. Overseas investors bought a net Rs 16,722 crore worth of government and corporate bonds from January till June. They net sold Indian bonds worth Rs 1.31 lakh crore in the past three years ending 2022. The last time they were net buyers was in 2019 when they acquired Rs 25,882 crore worth of bonds.

Why it’s important: The purchase of Indian debt has been driven by low volatility in bond yields, a stable currency, expectations of a sovereign rating upgrade and inclusion in a global bond index.

#3. Air India, Vistara merger won’t impact competition negatively, regulator told

Air India and Vistara have told the Competition Commission of India that there will be no adverse impact on competition due to their merger as rivals are present on most routes that the combined entity will fly. The antitrust regulator’s scrutiny will not have any material business impact, although it could have an effect on the timeline of the merger, according to company executives.

Why it’s important: India’s antitrust regulator has not provided expedited approval to the airline consolidation and asked the two firms to show reasons why their merger would not impact competition. It is likely to approve the merger only after detailed scrutiny.

#4. Poll predicts Indian rupee to face stronger headwinds this month as dollar strengthens

After a 0.16 percent rise in the past six months, the rupee may face headwinds in July due to the strengthening of the dollar as central banks hint at more rate hikes. The median of a Business Standard survey of 10 respondents puts the rupee at 82.05 versus a dollar at the end of July. A majority see the Indian currency depreciating up to 82.25 by the end of July.

Why it’s important: There is an expectation that the dollar index will appreciate, which would weigh upon the Indian currency. Foreign inflows into local equities could provide some support though.

#5. Income-tax department turns scanner on around 60 entities for non-compliance

Some 50-60 reporting entities, mainly co-operative banks, forex dealers, and sub-registrars dealing in immovable properties have come under the scanner of the income-tax department. Taxmen have prepared a list of reporting entities that have failed to file specified financial transaction reports in the past two financial years for spot and physical verification. These reporting entities did not file the transaction reports regarding certain high-value dealings for 2021-22 and 2022-23, and calendar years 2021 and 2022.

Why it’s important: The latest scrutiny of reporting entities comes after unusual defaults in filing certain transactions, particularly those related to cash deposits and credit card purchases in the past 2-3 years.

#6. Regulator asks for more information from custodians of alternate investment funds

The Securities and Exchange Board of India has asked the custodians of larger private equity, venture capital and domestic hedge funds to state the names of investee companies, the quantum of each investment, the investible surplus on the day of the investment, and whether the investee firm is an associate of the fund. The regulator is believed to be keeping a close watch on alternative investment funds, which have received close to Rs 2 lakh crore of commitments from investors in 2022-23 and Rs 1.9 lakh crore in the previous year.

Why it’s important: The increased disclosures could reveal breaches in investment limits and conflicted deals by the alternative investment firms as the market regulator turns the heat on to curb money laundering and roundtripping.

#7. Indian Banks’ Association plans a common customer care center for all state-owned lenders

The Indian Banks’ Association is working on a proposal to establish a common customer care center to serve all its 12 public sector banks to save on costs and offer a consistent customer experience. The idea is to provide a single helpline number that customers across banks can dial for queries and complaints. The centralized center will likely be implemented by PSB Alliance, a company owned by the state-run banks.

Why it’s important: A common customer care center would save time and effort for banks that will have a centralized screening to answer customer queries and then divert those to call centers when needed.

#8. Supreme Court asked to curb the power of the Enforcement Directorate to probe financial crimes

Senior counsel Harish Salve has sought the Supreme Court’s intervention in curbing the drastic powers of the Enforcement Directorate in money laundering probes when he appeared for arrested M3M group directors Basant Bansal and Pankaj Bansal. Salve argued that there was no violation of anticipatory bail conditions by the directors of the realty group to prompt such action. Justice MM Sundresh, a part of the top court bench, agreed.

Why it’s important: The Supreme Court has recently upheld the validity of the stringent provisions of the anti-money laundering law, including the Enforcement Directorate’s power to arrest, search and seize ill-gotten wealth that posed a threat to the economic stability and integrity of the country.

#9. ICICI Bank tells CBI no wrongful loss in Videocon loans involving former CEO Chanda Kochar

ICICI Bank has reiterated to the Central Bureau of Investigation that there has been no wrongful loss caused to the bank while granting its sanction to prosecute former managing director and CEO Chanda Kochhar. The conclusion of the bank’s board was in line with the opinion of a former judge, ICICI Bank said in a communication to the federal agency.

Why it’s important: The Videocon loans case has caused a fall from grace for Chanda Kochar, once one of the brightest lights in India’s financial sector. It remains to be seen whether she is able to clear her name.

#10. Chinese restrictions on critical metals to pose hurdles to India’s chip ambitions

China, one of the world’s leading producers of critical minerals, has announced export controls on two technology-critical elements, gallium (Ga) and germanium (Ge), sending shockwaves through the global market. Although it is a retaliation against moves of Western nations, it may impact India’s ambition of becoming a semiconductor hub and impact its burgeoning telecom and electric vehicle industries.

Why it’s important: The demand for these critical minerals is still limited in the country but will surge if India becomes a semiconductor hub. Over six global semiconductor firms have shown interest in the Rs 76,000 crore India’s chipmaking program.