With the government clearing the decks for direct listing at the Gujarat International Finance Tec-City (GIFT City) International Financial Services Centre (IFSC), issuers will wait for the ecosystem to develop further before firming up their listing plans. In the meantime, most companies may continue to prefer listing in the onshore market, even as the new avenue provides key benefits such as tax waivers and reduced foreign exchange risk. Sources said that a few key things need to be ironed out further.
After an extremely stable 2023, the Indian rupee started 2024 on a promising note and has turned out to be the best-performing Asian currency so far in January, appreciating 0.1 per cent despite 2 per cent rise in the dollar index. All other Asian currencies depreciated by around 1.4-4 per cent during the month. The local currency regained its ground against the greenback on the back of foreign portfolio inflows, said market participants.
Alternative investment funds (AIFs) have not seen any significant redemptions from financial institutions even though the 30-day timeline provided by the Reserve Bank of India (RBI) to liquidate their holdings or make full provisions ends recently. Sources said the industry is awaiting certain relaxations or extensions based on the recommendations submitted to the banking regulator. On December 19, the RBI restricted financial institutions and banks from investing in AIFs where there is any downstream link or exposure to a debtor firm.
Funds raised by India Inc. through offshore loan syndication hit a 15-year high in 2023 with companies and banks raising $21.4 billion, the highest since 2007. The momentum is expected to continue in 2024 as well with over $4 billion fund raising expected in the first three months of this year. Companies raise funds, both onshore and offshore, depending on interest rates and activities. Funds raised offshore can be deployed in overseas activities.
Foreign portfolio investors' (FPIs') net investments in the domestic debt market surged in December, marking a 77-month high, that is, since July 2017. According to market participants, this significant uptick in FPI inflows can be attributed to the post-domestic policy outcome and the US Federal Reserve's dovish stance at the December policy. FPI inflows into debt stood at Rs 18,393 crore in December against Rs 14,106 crore in November, according to data on the National Securities Depository Limited.
Investors may have to wait a little longer for Unified Payments Interface (UPI)-based block mechanism in the secondary market even as the market regulator has set the effective launch date as January 1, 2024. Several brokerage firms said they may take a few months more to implement it. Investors will be able to register for this facility only if the stock broker has opted for the UPI block facility.
Market participants attribute the stability to the Reserve Bank of India's timely intervention in the foreign exchange market, both in terms of selling and buying dollars.
Banks submitted bids amounting to Rs 4.75 trillion, around 2.5 times of the notified amount of Rs 1.75 trillion, at the Variable Rate Reverse Repo (VRR) auction conducted by the Reserve Bank of India (RBI) on December 22, a day after the liquidity deficit in the banking system widened to Rs 2.5 trillion. In the most recent VRR auction held by the RBI on December 15, bids totaling 2.7 times the notified amount were received. Banks secured Rs 1 trillion at a weighted average rate of 6.63 per cent.
The Securities and Exchange Board of India (Sebi) is contemplating the implementation of a same-day settlement cycle, known as T+0, in two phases. This is seen as a preliminary step towards instantaneous settlement. The shorter T+0 settlement cycle is being considered for the equity cash segment as an optional mechanism, in addition to the current T+1 (Trade plus one day) cycle.
The top 50 exposures, amounting to Rs 7.8 trillion, of government-registered non-banking financial companies (G-NBFCs) constitute about 40 per cent of corporate credit within the NBFC sector, indicating concentration risk, according to the Reserve Bank of India's report "Trend and Progress of Banking in India 2022-23". Notably, all the 50 are tied to the power sector, a domain fraught with inherent challenges, the report said. The report highlighted recognising the escalating systemic importance of G-NBFCs, the Prompt Corrective Action (PCA) framework had been expanded to include G-NBFCs excluding those falling within the base layer.
The Securities and Exchange Board of India (Sebi) might relax the disclosure norms around rumour verification to help smooth implementation and ease compliance amid pushback from India Inc, said people in the know. The rule has been notified following amendments to the Listing Obligations and Disclosure Requirements (LODR) by Sebi. However, its implementation has been deferred until February.
Funds raised by banks through certificates of deposit in December clocked the highest in the financial year 2023-24 as liquidity remained tight in the system with the Reserve Bank of India (RBI) infusing Rs 2.01 trillion on Monday, the highest in the current financial year. The liquidity deficit in the banking system widened to more than Rs 2 trillion on Monday on the back of advance tax outflows, market participants said. Around Rs 4 trillion worth of outflows are expected because of advanced tax and goods and services tax (GST) payments in December.
Social stock exchange (SSE) saw its first listing on Wednesday, with SGBS Unnati Foundation becoming the first entity to take this route to avail financing. The foundation - engaged in vocational training of youth - raised Rs 1.8 crore from four investors. These include brokerage firm Zerodha and National Bank for Agriculture and Rural Development (Nabard).
The National Stock Exchange (NSE) of India is going to indefinitely defer the internal deadline set for extending trading hours, according to sources in the know. The exchange aimed to introduce a three-hour evening session exclusively for index derivatives by March 2024, contingent upon regulatory clearance from the Securities and Exchange Board of India (Sebi). Sources indicate that the market regulator has not provided a favourable indication, dimming optimism surrounding the proposal.
Market participants do not expect any immediate impact on the rupee from the Reserve Bank of India's (RBI's) a "comprehensive" master direction aimed at strengthening the framework for hedging foreign exchange risks. RBI Governor Shaktikanta Das, in his monetary policy statement, revealed that the central bank is poised to issue a master direction to consolidate guidelines for all types of forex transactions. But this development, according to market players, is more of a directional guidance than a mandatory directive.
The market capitalisation of Adani Group companies rose by nearly Rs 73,000 crore on Monday as investors lapped up shares of the power-to-port conglomerate after BJP's electoral wins in three states, spurring hopes of regime continuity at the Centre. The Gautam Adani group's market map once again neared the Rs 12-trillion mark, following sharp gains made over the past week. "Two big overhangs for the Adani Group have receded somewhat following the state election results, there is more certainty that the BJP will win a third time next year.
The Securities and Exchange Board of India (Sebi) may allow non-resident Indians (NRIs) and Overseas Citizens of India (OCIs) greater exposure to domestic equities if their investments are sent through foreign portfolio investors (FPIs) registered at the GIFT City International Financial Services Centre (IFSC). The proposal will be taken during Sebi's board meeting on Saturday along with other key agenda items such as easing of voluntary delisting mechanism and introduction of a regulatory framework for real estate fractional ownership platforms, said people in the know. At present, the combined holdings of NRIs and OCIs in a global fund have to be less than 50 per cent, while that of a single NRI or OCI is capped at 25 per cent.
The contribution from asset management companies (AMCs) has surpassed the Rs 3,000 crore target for the creation of a Rs 33,000 crore backstop facility for debt mutual funds (MFs). The initial corpus for the Corporate Debt Market Development Fund (CDMDF) is nearly Rs 3,100 crore, according to multiple government officials and AMC executives. "The fund is operational now. "The required corpus has been raised by AMCs and the remaining part (Rs 30,000 crore) is in the form of a guarantee from the government which will be activated only in case of a credit event," explained D P Singh, joint CEO and deputy MD, SBI MF.
Foreign portfolio investors' (FPIs') net investment in the domestic debt market in October was the third highest during the current calendar year as foreign investors rushed to lock in higher returns amid global uncertainty and geo-political tensions, market participants said. FPI inflows in debt stood at Rs 6, 322 crore in October against Rs 768 crore in September, according to data on the National Securities Depository Limited (NSDL). Market participants said that the majority of the inflows were channelled through corporate bonds.
Alternative investment funds (AIFs) are yet to fully demat the outstanding units even as the deadline ended on October 31. Industry players say they are working on the transition from physical to electronic with the depositories Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NDSL). Some said they are hoping for some relaxation from the market regulator Securities and Exchange Board of India (Sebi), given the teething problems they are facing.
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