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Latest business, finance and stock market news today at 10am on June 5, 2024
Transcript of today’s latest business news at 10am on June 5, 2024
Let’s start, until Tuesday morning, India was debating whether the National Democratic Alliance would be able to do what it said about ‘abki bar 400 par’ and whether the Congress would be able to maintain its strength of 52. A few hours Later, the 400 figure seemed like a bad joke as a stunned nation was busy assessing whether the BJP would be able to form a government on its own. That hope was also dashed once it became clear that the party will have to depend on at least two of its main allies, Chandrababu Naidu’s Telugu Desam Party and Nitish Kumar’s Janata Dal United. While the TDP led with 16 seats, the JD(U) led with 12.
Turning to Economic news, the new government at the Center may be slow on some pending key reforms, including in labor and agriculture, as well as privatization of state-owned enterprises, given the reduced majority of the National Democratic Alliance, analysts said. The BJP, which itself does not reach the majority mark, will have to unite its allies in important decisions. The 117-member NDA is just four away from the majority mark of 121 in Rajya Sabha currently. The setback in the Lok Sabha polls could make the majority in the Upper House tenuous in the coming months. The Modi government has made several attempts to carry out structural reforms in the economy, but has had to back down on many occasions.
In other news on the economic front, the National Democratic Alliance government, which is expected to return to power for the third time, albeit with a reduced majority, could boost capital expenditure and specific welfare programs while undertaking greater consolidation Supervisor. In the next Budget session, the Center may promote pending reforms, including creation of a national register of financial information, liberalization of the insurance sector and further simplification of the insolvency framework. The higher-than-expected dividend of Rs 2.11 trillion from the Reserve Bank of India, compared to the budget estimate of Rs 80,000-90,000 crore, will enable the Center to reduce its market borrowings in the current fiscal year. The extra transfer from the RBI is almost 0.4% of GDP and could help the Center further reduce it to 4.8-4.9% of GDP.
Turning to markets, the India VIX volatility index witnessed its biggest single-day jump in nine years, rising nearly 52% to hit an intraday high of 31.71. The surge was observed after counting trends showed unexpected gains in votes for the INDIA bloc in the general elections even as the BJP-led NDA managed to cross the majority mark. The index closed nearly 24% higher at 25.89 on Tuesday. In August 2015, the VIX rose 79.1% during intraday trading. Over the past three months, the VIX Index has soared sharply by almost 74%. Going forward, market experts expect volatility to persist until the announcement of the Union Budget. The current VIX levels of around 26-28 suggest strong uncertainty and probability of a negative trend.
Now Latest Update on Adani Shares Shares of Adani Group companies took a severe blow on Tuesday with their market valuation falling by Rs 3.6 trillion as vote count for the Lok Sabha polls showed a fiercer competition than market expectations. The combined market valuation of all 10 listed companies stood at Rs 15.78 trillion at the end of the trading session. Shares of Adani Group companies fell in the range of 10-22% and were among the worst-hit stocks in the market. Adani Ports and Special Economic Zone and Adani Enterprises were the worst-hit stocks in the Nifty index, falling 21.3% and 19.4%, respectively. Eight of the 10 companies in the group reached the lower limits of the circuit during the day.
The banking sector’s next, Tata Motors Finance, the vehicle finance subsidiary of Tata Motors, will be merged with Tata Capital through an NCLT scheme of arrangement, after the boards of all the companies gave their approval on Tuesday . In consideration for the merger, Tata Capital will issue its shares to the shareholders of Tata Motors Finance, which will result in Tata Motors effectively holding a 4.7% stake in the merged entity. Tata Capital is the financial services company of Tata Sons and is one of the largest diversified non-banking financial companies in India with assets under management of Rs 1.6 lakh crore. Tata Motors Finance, which has an AUM of Rs 32,500 crore, predominantly provides financing solutions.
Lastly, let’s take a look at today’s focus stocks – Infosys, Wipro, HAL, Tata Motors and CCI. Infosys on Tuesday announced its collaboration with Nihon Chouzai, Japan’s dispensing pharmacy chain, to expand access to healthcare in Japan with enhanced online medication guidance services and payment solutions. On the other hand, Wipro announced the appointment of Bruno Schenk as Country Head and Managing Director for Switzerland, with immediate effect.