Namaste! Aaj ka news roundup, Newswala style!

MARKETS

Markets: The US Fed has indicated a rate cut in September, causing US Treasury yields and the dollar index to fall, which has sparked a rally in global markets. Indian markets have reached new highs due to a shift in foreign institutional investors' stance from negative to positive and sustained strong inflows from domestic institutional investors.

TOP STORIES

Banks Turn to Short-Term Deposits to Fill Funding Gaps

What happened?

Indian banks are tapping into certificates of deposit (CDs) like there's no tomorrow, as they face challenges in attracting deposits. CDs are very similar to fixed deposits, it's just that they have shorter tenures, whereas FDs come with varying investment tenures.

• According to the Reserve Bank of India (RBI), the issuance of CDs surged by a whopping 38% in July, reaching ₹4.3 lakh crore.
   

• In comparison, system-wide deposits only grew by 11.8% to ₹186.8 lakh crore during the same period. 
  
  

Leading the charge were Punjab National Bank, Bank of Baroda, and HDFC Bank, who all turned to CDs to patch up funding gaps. 

Why it matters

The rise in CD issuances points to a significant shift in how banks are managing their short-term funding needs. With traditional fixed deposits not flowing in as quickly as they’d like, banks are leaning heavily on CDs, which offer higher interest rates and attract big-ticket investors like money market funds and corporations. 

The surge in CD issuances could also signal some jitters about the future—banks might be unsure about how sustainable the current credit growth is, or they might be banking on being able to secure long-term deposits later.

• Punjab National Bank and Bank of Baroda, for instance, have collectively raised over ₹1.15 lakh crore through CDs.

The future forecast

While this strategy has provided a short-term boost, the heavy reliance on shorter-tenure CDs could be a sign of underlying uncertainty in the market. The surge in CD issuances could also signal some jitters about the future—banks might be unsure about how sustainable the current credit growth is, or they might be banking on being able to secure long-term deposits later.

PAISON KA KHEL

Reliance Capital lenders wary of Hinduja’s ₹7,300 crore debt deal

Reliance Capital’s lenders are sweating over Hinduja Group's IndusInd International Holdings Ltd (IIHL) and their ₹7,300 crore debt plan. The National Company Law Tribunal (NCLT) approved IIHL resolution plan for Reliance Capital back in February. But now, months later, the plan is stuck in a bit of a traffic jam.

IIHL needs to raise ₹7,300 crore to pay off Reliance Capital’s debts, but the lenders aren’t too happy with the conditions tied to this fundraising. For instance, IIHL wants to pledge shares, delist existing debentures, and even put a lock on some assets. These are no small asks, and many of these conditions can't be fulfilled until the plan is fully executed.

BHEL bags ₹11,000 cr deal with Adani Power for mega projects

Bharat Heavy Electricals Limited (BHEL) has landed a hefty ₹11,000 crore contract with Adani Power and its subsidiary, Mahan Energen. BHEL’s task? Delivering boilers, turbines and generators and overseeing the installation. The timelines are as ambitious as the projects: Kawai Phase-II to be completed in 49 months, Phase-III in 52 months, and Mahan Phase-III in 55 months. Let’s just say BHEL’s calendar is fully booked!

TOP STORIES

Q-commerce Boosts Gig Jobs Beyond the Festive Season

What happened

Quick commerce (q-commerce) companies like Zepto, Swiggy Instamart, and Blinkit are shaking things up. This year, they hit a new high by handling 2 million orders on Holi, and they’ve kept up the pace with record sales during Raksha Bandhan. These top players together have about 50,000 contractual workers and 400,000 to 500,000 delivery partners. With the festive season behind us, TeamLease Services predicts that this workforce could grow by 20-50% over the next few months.

Why it matters

The ability of q-commerce to maintain and even expand its workforce post-festive season highlights a shift from past practices. Traditionally, companies would downsize after the holiday rush. However, the rapid growth and persistent demand in q-commerce suggest a more stable employment landscape is on the horizon.

The industry is projected to maintain a robust compound annual growth rate (CAGR) of 40-45% over the next three years, which could lead to long-term job security and better compensation for delivery partners. With companies like Flipkart and Ola entering the fray, the competition and potential for growth are expected to drive higher wages and improved benefits.

Zoom out

With experts forecasting a 30-40% increase in online retail demand this festive season, delivery partners might see more opportunities to earn through incentives and bonuses. If the trend holds, the gig economy in q-commerce could become a more reliable and lucrative field well beyond the festive buzz.

GLOBAL NAZARA

Canada joins the tariff tango with China

Canada is now charging ahead with a 100% tariff on Chinese-made electric vehicles, matching the U.S. and Europe. Along with this, Canada will also slap a 25% tariff on Chinese steel and aluminum.

The move comes as the U.S. has already set high tariffs on Chinese EVs, arguing that Chinese subsidies give their cars an unfair price advantage. China might hit back by targeting Canadian exports like barley and pork. It’s a tough trade game, and Canada is playing hardball!

Jio Financial Services expands foreign investment cap to 49%

Jio Financial Services has just secured approval to boost its foreign investment limit to 49%. This green light from the Ministry of Finance aims to draw in hefty international capital and ramp up growth. The broader outlook remains promising as Jio partners with BlackRock to revolutionise wealth management in India.

• Jio Financial's profit for the March 2024 quarter rose 6% to ₹311 crore, a solid uptick from ₹294 crore the previous quarter.

TOP STORIES

Vedanta powers up with ₹30,000 Cr to slash debt

What happened

Vedanta Ltd, led by Anil Agarwal, has amassed a hefty ₹30,000 crore to fuel its debt reduction and growth ambitions. The funds were raised through a combination of qualified institutional placement (₹8,500 crore), an offer for sale (₹3,200 crore), and dividends (₹5,100 crore), alongside existing cash reserves of ₹13,000 crore. 

The mining giant aims to use this money to cut down its debt, fund major projects and set itself up for future growth. Plus, it’s also targeting an EBITDA of ₹80,000 crore.

Why it matters

With debt standing at ₹6,130 crore as of June 30, reducing this burden will improve the company’s balance sheet and enhance its finances. 

Moreover, the company’s ongoing investment in key projects , such as record-breaking alumina production and zinc output, shows its commitment to operational efficiency and value creation. The planned demerger is also crucial, aiming to unlock value and attract significant investments, transforming Vedanta into a sector-focused, independent entity.

Zoom out

By simplifying its corporate structure and focusing on efficiency, the company is positioning itself to attract big-ticket investors, both domestic and global. With a ₹30,000 crore war chest in hand, Vedanta seems ready to march forward, ensuring its financial stability while keeping an eye on future growth and expansion.

MIRCH MASALA

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