News Nook: Jan 3, 2025

Indian Sector Specific News:

A) BFSI:

1) Bank and Financial Services Mutual Funds Lag in 2024

• Bank and financial services mutual funds had an average return of 11.28% in 2024, with 11 funds seeing double-digit returns and 7 experiencing single-digit returns.
• Invesco India Financial Services Fund was the best performer, with a return of 19.62%, followed by SBI Banking & Financial Services Fund at 19.12%. 
• Source: Economic Times

2) NBFCs Seek Reforms for Better Liquidity and Faster Resolution of Stressed Accounts

• The Finance Industry Development Council (FIDC) has suggested that the rules for handling bad loans should be changed to help Non-Banking Financial Companies (NBFCs) recover money faster. 
• Currently, the law allows NBFCs to take legal action only for loans above ₹20 lakh, which delays the process of resolving bad loans, sometimes taking up to five years. 
• FIDC wants to lower this limit to ₹1 lakh, making it easier and quicker for NBFCs to address bad loans, reduce their losses, and lower legal costs. 
• Source: Business Standard

3) ICRA Predicts Subdued Credit Growth for Banks in FY26

• ICRA has lowered its credit growth estimate for FY25 to 10.5-11% from 11.6-12.5%, with growth expected to ease further to 9.7-10.3% in FY26 due to high credit-to-deposit (CD) ratios and changes in liquidity coverage ratio (LCR) framework.
• Banks are focusing on reducing exposure to unsecured retail and NBFCs, while higher interest rates and slower credit growth may impact their margins. Return on assets (RoA) is expected to remain healthy at 1.1-1.2% in FY26. 
• Source: FE Bureau

4) SEBI Uncovers Front-Running Scam Involving Ketan Parekh, Impounds Rs 65.77 Crore

• SEBI uncovered a front-running scam orchestrated by Ketan Parekh and Singapore-based trader Rohit Salgaocar, leading to unlawful gains of Rs 65.77 crore, involving 22 entities.
• Parekh, previously imprisoned and debarred for the 2000 scam, and Salgaocar, along with Ashok Kumar Poddar, were found guilty of facilitating the scam and are now restrained from engaging in securities transactions. 
• Source: Moneycontrol

5) SEBI Rejects Zee Entertainment's Settlement Applications, Orders Further Probe

• SEBI rejected settlement applications by Zee Entertainment and Punit Goenka, referring the matter for further investigation, which includes the allegations in previous show cause notices.
• The regulator merged the show cause notice findings with the ongoing investigation, impacting Zee's former Chairman Subhash Chandra and CEO Punit Goenka. 
• Source: ETMarkets

B) Automobile:

1) Government to Begin Disbursing PLI Incentives for Auto Sector in 2025

• The government is set to start disbursing incentives under the Rs 25,938 crore PLI scheme for automobiles and auto components in the January-March quarter of FY 2025.
• The scheme aims to boost domestic manufacturing of advanced automotive technology products and attract investments, offering incentives ranging from 8% to 18% based on product type. It has already attracted Rs 20,715 crore in investment as of September 2024. 
• Source: Autocarpro

C) Pharma:

1) Indian Pharmaceutical Sector Growth in 2025

• The Indian pharmaceutical industry is projected to grow by 9-11% in FY26, driven by product launches, price hikes, and stronger exports, with a current value of USD 58 billion.
• Emerging innovations in CAR-T cell therapy, mRNA vaccines, and biologics manufacturing are expected to boost the sector, with the market reaching USD 120-130 billion by 2030.
• Source: Financial Express

2) Government's Vigilance on Pharma Violations in 2025

• The Indian government is expected to tighten regulations on pharma companies in 2025, with a focus on enforcing compliance with GMP standards and the Uniform Code of Pharmaceutical Manufacturing Practices (UCPMP).
• The government is also addressing challenges like vacant drug inspector posts and the overuse of over-the-counter medicines, while continuing actions like the AbbVie Healthcare case to ensure stricter industry oversight. 
• Source: Express Pharma

D) Agriculture:

Importance of Agricultural Extension Services in Empowering Farmers

• Dr. Amrik Singh emphasizes that investing in agricultural extension services is key to improving productivity and sustainability, helping farmers adopt new technologies and better practices.
• In Punjab, where farmers face challenges like climate change and outdated practices, extension services play a crucial role in bridging the gap between research and real-world farming.
• Source: The Indian Express

E) Energy:

1) Oil and Gas Demand Outlook for FY26

• India Ratings projects strong oil and gas demand in FY26, with stable credit profiles for downstream companies due to healthy demand and marketing margins, despite lower refining margins from weak global demand.
• Upstream companies' earnings may be affected by falling oil prices, and capex in the City Gas Distribution sector could face pressure. 
• Source: Economic Times

2) Power Grid Secures $200M Green Loan

• Power Grid Corporation of India has signed a JPY-denominated green loan agreement with Sumitomo Mitsui Banking Corporation (SMBC), securing funds equivalent to USD 200 million, with an additional greenshoe option. 
• Source: Construction World

Indian Economy and Government Initiatives:

• Congress President Mallikarjun Kharge criticized the Modi government for creating economic turmoil, citing rising gold loans, increasing NPAs, slowing private consumption, stagnant wage growth, and a weak rupee, accusing the government of having no solution to these issues.
• The Union Budget 2025-26 is expected to prioritize improving port infrastructure, shipping, and inland waterways to support India's manufacturing and export ambitions, aiming to enhance supply chain efficiency and global competitiveness.
• Finance Minister Nirmala Sitharaman held her seventh pre-Budget consultation with financial sector and capital market stakeholders to discuss the upcoming Union Budget 2025.

Indian Stock Market Update:

• On January 3, 2025, Indian stock market benchmarks, Sensex and Nifty 50, experienced significant losses due to profit booking and a strengthening US dollar.
• The Sensex dropped over 700 points, closing at 79,223.11, while the Nifty 50 fell 184 points to end at 24,004.75.
• Selling pressure was seen across multiple sectors, contributing to the market downturn.

Bonus Briefs:

• South Korea's economy faces challenges in 2025 due to political uncertainty and a tragic plane crash, but macro policies will focus on stabilizing markets and reviving the domestic economy, with exports remaining crucial.
• U.S. stock market growth is expected to slow in 2025, with S&P 500 gains predicted at around 9.8%, and reduced dominance from tech giants.
• Risks like inflation, Federal Reserve rate changes, and political uncertainty, including a potential Trump administration, could increase market volatility.