ETMarkets Morning Podcast: Delhi High Court puts Future Retail-RIL deal on hold

Hi there! Welcome to ETMarkets Morning, the show about money, business and markets. I am Sandeep Singh, and here is what we have to start your day.

>> Delhi HC puts Future-RIL deal on hold
>> VPF still offers sweetest deal despite Budget sting
>> Tax on past M&A deals goes up
AND
>> Rating agencies flag ‘higher-than-expected’ fiscal deficit in Budget

And there is more. But first, a quick glance at the state of the markets..

>> Nifty futures on the Singapore Exchange traded 46 points or 0.3% higher near 14,750 at 8:30, signalling further gains on Dalal Street

ELSEWHERE
>> Most Asian stocks rose on Wednesday, extending a global rally amid a slew of corporate earnings and a crumbling of the retail trading frenzy that fueled swings in heavily shorted shares. Shares outperformed in Australian and Japan, though dipped in China and Hong Kong.

>> Wall Street rallied overnight on renewed hopes for US President Joe Biden’ proposed $1.9 trillion Covid-19 aid bill. The Dow rose 475.57 points, or 1.57%, the S&P500 gained 52.45 points, or 1.39%, and the Nasdaq added 209.38 points, or 1.56%

IN CURRENCIES
>> The rupee gained 6 paise to settle at 72.96 against the US dollar on Tuesday tracking weak American currency and heavy buying in domestic equities.

>> The dollar retreated. The yuan edged lower by 0.1% as the People’s Bank of China drained some funds from the financial system. The euro bought $1.2045. The yen was at 105.00 per dollar.

IN OIL MARKET
>> Oil traded at its highest in over a year on tightening global supplies and signs of strength in physical markets. WTI crude climbed 0.2% to $54.86 a barrel.

AND IN BULLION
>> Gold futures fell by 1.18 per cent to Rs 48,146 per 10 gm on Tuesday as participants offloaded their holdings on low spot demand. Silver futures declined by Rs 3,076 to Rs 70,590 a kg. In global markets, gold traded at $1,840.30 an ounce, while silver futures added 2.5% to $27.05 after slumping 10% on Tuesday.

All in all, the trade setup on Dalal Street looked strong. On Tuesday, the bulls continued to build long positions, and Nifty formed another big bullish candle. Analysts said the 14,750 level will now be crucial in deciding which way the index moves.

LET ME NOW GIVE YOU A HEADS-UP on some of the top news we are tracking at this hour.

… The budget’s new tax on interest from Provident Fund contributions above Rs 2.5 lakh a year has taken some sheen off this tax-free haven, but the Voluntary Provident Fund is still among the best fixed income options. Only the Public Provident Fund offers higher interest than the VPF. But PPF has an investment limit of Rs 1.5 lakh in a year. If you want to invest more, the VPF is your best bet. In the 30% tax bracket, it would still give 5.85% returns, which is higher than what other fixed income options offer.

… In preparation for the mega IPO, the government has proposed sweeping changes to several critical clauses of the LIC Act of 1956 that pertains to the capital structure, composition of the board, dividend payments to policyholders and the governing norms of the state-owned life insurance behemoth ahead of its much-anticipated public listing.

… Global rating agencies on Tuesday flagged “higher-than-expected” fiscal deficit figures and a gradual pace of consolidation announced by finance minister Nirmala Sitharaman in her budget presentation even as they said increased capital expenditure will support an economic recovery. Gene Fang at Moody’s Investors Service said nominal GDP growth will remain critical for future deficit reduction. Both S&P and Fitch noted that the increased capital expenditure is expected to support economic recovery, which is likely to gather more pace as Covid-19 cases decline amid the rollout of the vaccination programme.

… The buying frenzy that sent silver to an eight-year high is showing signs of stalling. Silver futures in New York fell as much as 9.3% as traders closed out positions after CME Group hiked margin requirements, while Reddit posters turned their attention to GameStop Corp losses amid a growing backlash against the silver trade. iShares Silver Trust, the short-squeeze target of retail traders on Reddit last week, slumped more than 6%.

… The government is expecting a much lower dividend payment from RBI next financial year, validating the market belief that the central bank’s income is likely to dwindle due to the cost for absorbing surplus liquidity. The government has budgeted Rs 53,511 crore in FY22 as dividend receipt from RBI, public sector banks and financial institutions, 40% less than the initial budget estimate of Rs 89,649 crore for FY21, and about 14% less than the revised estimate of Rs 61,826 crore.

… Many companies will have to fork out higher tax on past M&A deals while some may renegotiate valuations of ongoing and future transactions with the budget ending Corporate India’s age-old practice on ‘goodwill’ accounting. In a balance-sheet, goodwill is typically captured as the extra amount a company pays —either as stock or cash — over the net worth of the entity that is acquired. After the acquisition or merger, the goodwill is treated as an ‘intangible asset’ and the depreciation claimed on it lets the acquiring company or resulting or surviving entity lower its taxable income.

LASTLY, AN UPDATE ON ALL THE STOCKS BUZZING THIS MORNING

The Delhi High Court has put on hold the deal to sell Future Group’s retail assets to Reliance Retail and also stated that the emergency award passed by the Singapore International Arbitration Centre is enforceable in India.

HDFC on Tuesday said its profit before tax rose 27% in the quarter ended December 2020 from a year ago after adjusting for one-off gains from the sale of subsidiary Gruh Finance

Automaker Mahindra & Mahindra (M&M) on Tuesday said it has launched compact SUV XUV 300 with automatic transmission.

The finance ministry expects the remaining three public sector banks (PSBs) — IOB, Central Bank of India and UCO Bank — to be out of the RBI’s prompt corrective action (PCA) framework in two months as their financial health has improved.

HDFC Bank said RBI has appointed an external IT firm for carrying out a special audit of its IT infrastructure in the aftermath of repeated service outages

That’s it for now. For all the market news through the day, do track ETMarkets.com. Have a great day ahead! Bye-bye