News Nook: Dec 20, 2024

Indian Sector Specific News:

A) BFSI:

1) SEBI Tightens Rules for SME IPOs

• Promoters in SME IPOs can sell only up to 20% of the issue size and no more than 50% of their total holding. SMEs must show at least ₹1 crore profit in two of the last three years to be eligible for an IPO.
• SEBI also capped general corporate expense use in SME IPOs to 15% or ₹10 crore, whichever is lower, and restricted using funds to repay promoter loans.
• Source: Economic Times

2) Key SEBI Announcements: New Laws and Reforms

• SEBI announced tighter norms for SME IPOs, including a minimum operating profit of ₹1 crore in two of the last three years, caps on general corporate expenses, and phased promoter lock-ins for excess holdings.
• Introduced the performance validation agency PaRRVA, allowing analysts and advisors to verify risk-return metrics. Public consultation will now be mandatory for regulatory changes, open for at least 21 days.
• Source: Moneycontrol

B) Automobile:

1) Indian EV Market to Reach Rs 20 Lakh Cr by 2030

• Union Minister Nitin Gadkari predicts the Indian electric vehicle (EV) market will be worth Rs 20 lakh crore by 2030, creating 5 crore jobs across the EV sector.
• The government is focusing on green energy, with solar power making up 44% of India's energy, and aims to address the shortage of electric buses in the country.
• Source: Economic Times

C) Pharma:

1) Senores Pharmaceuticals IPO: Key Details and Subscription Status

• Senores Pharmaceuticals IPO opened on December 20, offering shares at ₹668 to ₹704, with anchor investors including ICICI Prudential and SBI General Insurance. The IPO has been subscribed 1.78 times on Day 1, with high demand from retail investors.
• The company’s revenue surged significantly in FY24, and analysts find the IPO well-valued based on industry metrics, with strong growth potential in the pharmaceutical sector.
• Source: LiveMint

D) Telecommunication:

1) Airtel Prepares to Pay Off Rs 3,626 Crore Spectrum Dues

• Bharti Airtel has prepaid ₹3,626 crore to the Department of Telecom to clear all its spectrum dues from the 2016 acquisition, effectively reducing high-interest liabilities.
• This payment is part of Airtel’s broader strategy to reduce debt, having prepaid a total of ₹28,320 crore in 2024, and follows significant prepayments in previous years.
• Source: Telegraph India

2) Delhi High Court Rules Mobile Towers Eligible for Input Tax Credit

• The Delhi High Court has ruled that mobile/telecommunication towers are movable properties, allowing telecom companies like Airtel to claim input tax credit under the GST Act.
• The court clarified that telecom towers fall outside the restrictions of Section 17(5) of the CGST Act, making them eligible for tax benefits.
• Source: Live law 

E) Agriculture:

1) FAIFA Releases Agricultural Roadmap, Advocates for Digital Reforms

• The Federation of All India Farmer Associations (FAIFA) released a roadmap calling for enhanced digital infrastructure, sustainable farming, and private sector investment to boost agriculture. FAIFA projects a 5.5% annual growth for agriculture from 2025 to 2030, aiming for a total value of Rs 42 lakh crore by 2030.
• Short-term goals include strengthening e-NAM, expanding irrigation, and promoting natural farming, while long-term goals focus on universal irrigation and precision agriculture technologies.
• Source: Business Standard

F) Energy:

1) Oil Prices Dip as Fed Signals Slower Rate Cuts in 2025

• Oil prices fell as the U.S. Federal Reserve indicated it would reduce interest rates more slowly in 2025, potentially affecting fuel demand. Brent crude dropped 0.45% to $73.06 per barrel, while U.S. West Texas Intermediate crude fell 0.51% to $70.22.
• This decline reversed some of the previous day's gains, driven by a drop in U.S. crude stocks and an expected 25 basis point interest rate cut by the Fed. However, the Fed's hawkish outlook for 2025 weighed on market sentiment.
• Source: Economic Times

2) AG&P to Invest ₹8,000 Crore in Expanding City Gas Network

• AG&P Pratham, backed by I-Squared Capital, plans to invest ₹8,000 crore over the next three years to expand its city gas distribution network across India. This follows a $1 billion investment made by the company to build the network in authorized areas by December 2024.
• The company aims to facilitate the adoption of natural gas as a preferred fuel by further expanding infrastructure in the coming years.
• Source: Economic Times

G) IT:

1) Tech Mahindra Aiming for Bigger Share of Bank Tech Spend

• Tech Mahindra CEO Mohit Joshi aims to increase the company's revenue share from the banking, financial services, and insurance (BFSI) sector to 25% by March 2027, up from 16% currently, as part of a strategy to close the gap with larger peers who derive a higher percentage of revenue from this segment.
• This push is in response to the growing importance of the BFSI sector in the $254 billion Indian IT industry, where some competitors already generate up to a third of their revenue from BFSI.
• Source: Business Standard

2) Accenture Raises FY25 Growth Forecast, Signals Positive Trends for Indian IT Sector

• Accenture has raised its FY25 revenue growth forecast to 4-7%, up from the previous 3-6%, driven by a reduced negative impact from foreign exchange fluctuations, now expected to be around 0.5% instead of 1.5%.
• The company's strong performance, particularly in generative AI solutions, signals positive growth trends for Indian IT firms focusing on emerging technologies, especially as they prepare for Q3 FY25 earnings.
• Source: Financial Express

H) Infrastructure:

1) Record Institutional Investments in Real Estate

• In 2024, the real estate sector attracted a record $8.8 billion in institutional investments.
• Nearly half of the total inflow was directed towards the residential segment, highlighting strong investor interest.
• Source: Construction World

Indian Economy and Government Initiatives:

• The Government of India has launched the National Bioenergy Programme (NBP) to support bioenergy and waste-to-energy technologies, with financial backing for advanced bioethanol projects.
• New policies, including the Oilfields (Regulation and Development) Amendment Bill, 2024, aim to enhance domestic oil and gas production and reduce CO2 emissions, while boosting investment in energy exploration.
• Fiscal policy involves the government's approach to raising revenue and managing spending to maintain a healthy economy, controlling inflation, boosting investments, and reducing income inequality. It addresses deficits through borrowing or reserves, often increasing investment during economic downturns to stimulate growth.

Stock Market Update:

• Indian equity markets saw sharp losses on December 20, with Sensex down 1.49% and Nifty falling 1.52%, primarily due to a cautious stance on rate cuts by the US Federal Reserve.
• The broader market, including mid and small-cap stocks, also suffered significant declines, while IT stocks underperformed after expectations of quick rate cuts in 2025.
• This marked the steepest weekly decline for Sensex and Nifty since June 2022, reflecting weaker global sentiment and domestic challenges like high valuations and low earnings growth.

Bonus Briefs:

• The UAE is expected to maintain strong economic growth in 2025, with GDP forecasts ranging from 6.2% according to the Central Bank of the UAE.
• Global risks and economic data suggest a resilient US economy, which may strengthen the US Dollar ahead of potential Federal Reserve actions.
• Despite growing geopolitical tensions, crude oil prices have experienced a surprising annual decline.