ISSUE: 547 2024 05 June 2024

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Sensex, Nifty crack 6% on election results:

Young investors should brace up for
volatility, focus on long-term goals: Stock
market indices closed nearly six percent lower on
June 4, even as the day-long exercise of counting of
votes cast in Lok Sabha 2024 elections inched closer
to completion. This is bound to come as a shock for
new retail investors who have only seen a bull run at the markets in the
last four years since COVID-19 hit Indian shores in March 2020.
However, despite the election result-induced market volatility that looms
large at present, retail investors should stay focused on their long-term
goals. While the sharp drop in the seats won by the Bharatiya Janata
Party-led National Democratic Alliance (NDA) has dampened market
sentiments, the formation seems to be coming back to power, albeit with
significantly reduced majority.
(Moneycontrol)
Big export push on top of govt agenda: The government is
considering setting up a dedicated overseas market development body–
IndTrade– and a national branding division to get to the goal of $ 2
trillion in exports by 2030. IndTrade would work for trade promotion and
the branding division will work along with the export strategy to promote
―Made in India‖ as a global brand, a senior official said. At present, there
are 14 export promotion councils under the Department of Commerce
which deal with different product groups. Besides, the Federation of
Indian Export Organisations (FIEO) functions as an umbrella
organsiation of exporters. IndTrade will not seek to replace them but take
a lead in ―outward looking market development‖ for all sectors, the
source said.
(Financial Express)

PNB Board approves 10% stake dilution in

Canara HSBC Life Insurance via IPO:
Punjab National Bank’s (PNB) Board on Tuesday
approved the initiation of process for divesting 10
per cent shareholding in its associate company
Canara HSBC Life Insurance through an initial
public offering (IPO) route. Currently, PNB holds
23 per cent stake in Canara HSBC Life Insurance.
―The Board in its meeting held today, i.e., 04.06.2024 has accorded its
approval for initiating the process of diluting 10 per cent stake of the
Bank in Canara HSBC Life Insurance Company, an associate company of
the bank, by listing the company in Stock Exchanges (BSE/NSE) through
Initial Public Offer (IPO). The same shall be subject to regulatory
approvals‖, said a PNB filing with the stock exchanges on Tuesday.
(Business Line)
Plan to take non-gold mix to 20% in 3-5 years: Muthoot Finance
MD: Muthoot Finance is planning to increase its non-gold loan mix to
20% in the next 3-5 years from 15% currently, managing director George
Alexander Muthoot said. In an interview with Ajay Ramanathan, he
further said there’s a need to unify practices between Kerala-based and
non-Kerala based gold financiers.
(Financial Express)
Tata Motors Finance to be merged with Tata Capital: Tata Motors
announced a merger of Tata Motor Finance with Tata Capital, approved
by their respective boards. This aligns with Tata Motors' strategy to focus
on core businesses and emerging technologies. Tata Capital will issue its
equity shares to Tata Motor Finance shareholders, giving Tata Motors a
4.7% stake in the merged entity. Tata Capital, a major NBFC in India, will
expand its presence in CV/PV financing, aiming to offer innovative
products and digital services. The merger is subject to regulatory
approvals and is expected to take 9-12 months to complete, with no
adverse impact on customers or creditors.
(Economic Times)

India Inc expects rework on policy priorities

in its most watched ballot count: Cupped chin
and distracted from routine business meetings,
many business leaders were either glued on to
television or peering into their mobile phone
tracking the trends in ballot counting. While many,
did not wish to be to named, they did see reason for
both concern and hope. The concerns, especially
high among those dependent on government project and hopes largely
from a blindingly clear message that there is need to recalibrate the policy
priorities on economy with the emphasis largely on measures to create
jobs, spur rural demand and address the challenge of income inequality.
(Financial Express)
5G spectrum auction put off again till June 25: This is the second
time the spectrum sale has been pushed back. It was originally scheduled
on May 20, and was initially deferred to June 6, in the wake of the general
elections. Now, mock auctions will be conducted on June 13 and 14, the
DoT said in its official notification amending the auction rules. This time
round, 5G airwaves in eight bands — the 800 MHz, 900 MHz, 1800 MHz,
2100 MHz, 2300 MHz, 2500 MHz, 3.3 GHz and 26 GHz bands — worth
over Rs 96,000 crore at base prices, will be on sale. Airtel and Vi are likely
to focus on specific bands in markets where they face spectrum renewals
while some analysts say Jio could virtually sit this one out as it has no
airwave renewals anytime soon.
(Economic Times)

Risk weighting slows unsecured loan growth:

The pace of expansion in unsecured credit, such as
personal loans and credit-card outstanding, has
continued to slide in India after the central bank
enhanced the risk weighting on such exposures to
minimise the likelihood of mounting delinquencies
in the banking system. Unsecured loan growth
slowed to about 18% in April, from 23% in
November 2023, when the central bank made it less attractive for lenders
to advance such credit, the latest data published by the Reserve Bank of
India (RBI) showed. Sequentially, personal and credit card loans
expanded less than a percentage point in the month, while consumer
durable loans shrank.
(Economic Times)
Government initiates parametric & hydroelectric insurance
pools for enhanced disaster protection: The government, led by
GIC chairman Ramaswamy Narayanan, is developing parametric and
hydroelectric insurance pools to enhance disaster protection. Parametric
coverage will pay claims based on predefined triggers like earthquakes,
while the hydroelectric pool will insure losses to power projects due to
natural disasters. These schemes draw inspiration from the successful
post-2004 terrorism insurance pool. The government plans to prioritize
these initiatives after the elections. Details like whether the coverage will
be at the state or district level are still being finalized.
(Economic Times)
RBI KEY RATES FOREX EQUITY
(RBI REF. ) /COMM. MARKET
Repo Rate: 6.50% INR / 1 USD : 83.5021 Sensex: 72079.05 (-4389.73)
SDF: 6.25% INR / 1 GBP : 106.8621 NIFTY: 21884.50 (-1379.40)
MSF /Bank Rate: 6.75% INR / 1 EUR : 91.0195 Bnk NIFTY: 46928.60 (-4051.35)
CRR: 4.50% INR /100 JPY: 53.5200
SLR: 18.00%
BUSINESS/FINANCIAL CONCEPTS
RESERVE CURRENCY
 A reserve currency is a large quantity of currency maintained by
central banks and other major financial institutions to prepare for
investments, transactions, and international debt obligations, or to
influence their domestic exchange rate. A large percentage of
commodities, such as gold and oil, are priced in the reserve currency,
causing other countries to hold this currency to pay for these goods.
 A reserve currency reduces exchange rate risk since there's no need for
a country to exchange its currency for the reserve currency to do trade.
 Since 1944, the U.S. dollar has been the primary reserve currency used
by other countries. As a result, foreign nations closely monitor the
monetary policy of the United States to ensure that the value of their
reserves is not adversely affected by inflation or rising prices.
 In 1944, following the Bretton Woods Agreement, delegates from 44
nations formally agreed to adopt the U.S. dollar as an official reserve
currency. Since then, other countries pegged their exchange rates to the
dollar, which was convertible to gold at the time. Because the gold-
backed dollar was relatively stable, it enabled other countries to
stabilize their currencies.
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