Ola Electric’s S1 Air e-scooters are pictured inside its manufacturing facility in Pochampalli, Tamil Nadu. The company plans to launch its IPO next week.
| Photo Credit: Reuters

SoftBank-backed Ola Electric’s IPO will open for retail subscription on Aug. 2, the electric scooter maker said on July 27, 2024, a stock offering that according to two sources will value the company between $4.2 billion to $4.4 billion.

The issue, which will open for institutional investors a day earlier on Thursday, will close for retail subscriptions on Aug. 6, the final IPO prospectus filing showed. Ola founder Bhavish Aggarwal will offload 37.9 million shares in the IPO, around 20% lower than estimated in the draft IPO prospectus.

Ola’s expected valuation is about 18.5% to 22% lower than in its last funding round in September, which was led by Singapore’s investment firm Temasek and valued the country’s largest e-scooter maker at $5.4 billion.

“Some marquee investors are being offered the IPO at the lower end of the $4.2 billion-$4.4 billion valuation,” said one of the sources with direct knowledge of IPO planning.

Ola is planning the IPO at a lower valuation to ensure higher participation from investors bidding for the IPO shares, the two sources said.

Ola Electric’s IPO, a first for an Indian EV maker, is also one of the biggest in a year where the country’s equities markets have scaled multiple record highs and also overtaken Hong Kong to become the world’s fourth-largest bourse.

Fitch Ratings on Friday exuded confidence that the Government of India should be able to achieve its enhanced goal of reducing the fiscal deficit to 4.9% of GDP this year, and further below 4.5% of GDP next year, but noted that the post-election Budget did not provide much clarity on medium-term targets.

While the Budget did highlight “a desire to manage deficits to keep debt on a declining path”, Fitch Ratings reckoned that the long-term deficit target of 3% of GDP under the 2003 Fiscal Responsibility and Budget Management (FRBM) Act “no longer appears to be a guiding objective”.

“Public finance metrics in general remain a weakness in India’s credit profile; its fiscal deficit, interest-to-revenue and debt ratios are still high compared with ‘BBB’ category peers. Sustained fiscal consolidation that supports a downward trajectory in the government debt ratio over the medium term would support India’s credit profile and could ultimately contribute to upgrade potential for the rating, particularly when combined with the current positive momentum on macroeconomic performance and external finances,” the rating agency said.

Several Budget proposals could be positive for manufacturing investments and the public capex should bolster transport infrastructure, but land and labour regulations remain significant constraints, it noted.

“The budget highlighted that these will stay largely under state government purview, though the central government will incentivise reforms. This is broadly in line with our earlier expectations, as advancing such reforms is usually difficult, especially at the national level, and has likely become more politically challenging following the return to coalition government,” the rating major observed.

Covering a wide spectrum of Indian sectors, the first Union Budget of Modi 3.0 focused on MSMEs, employment, skilling, youth, and the middle class. Yet, the Budget as such has failed to address several concerns of the real estate sector, including direct incentives to boost the affordable housing sector. It was widely anticipated that affordable housing will get a major boost in the current Budget because its performance has been on a decline.

With an eye on the housing needs of the urban poor and the middle class, the government has announced that it intends to construct an additional one crore homes under PMAY Urban 2.0 with an outlay of ₹10 lakh crore. It remains to be seen how effectively this would work for the benefit of those in the affordable housing segment.

Mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth along these corridors and consequently boost real estate growth there. The Finance Minister also tried to rejuvenate the MSME (Ministry of Micro, Small and Medium Enterprises) sector, which does have a multiplier effect on overall economic growth — with the implied positives for real estate being a collateral beneficiary of such growth.

The credit guarantee scheme for MSMEs will help provide impetus to overall industrial development, and this can have a rub-off effect on the real estate sector. The pandemic had a catastrophic impact on the MSME sector, which slowed down the demand for affordable housing from 2020. Affordable housing demand may gain momentum once the economic impact of the pandemic subsides for this target audience.

This is certainly pertinent — the affordable homes category (less than ₹40 lakh) has been seeing a decline in overall sales since the pandemic, to approximately 19% in H1 2024 from over 38% in the period before the pandemic in 2019. Consequently, this segment’s percentage share of the total housing supply in the top 7 cities also fell to 18% in H1 2024 from nearly 40% in 2019. Any boost to this vital segment is therefore welcome.

For individual taxpayers under the new tax regime, the increased standard deduction limit to ₹75,000 from the previous ₹50,000 along with the new income tax slabs implies savings, but hardly enough to boost housing demand.

With regards to the withdrawal of indexation benefits announced in the Budget, factors such as the amount of appreciation will determine whether the new tax (minus indexation) will be advantageous or disadvantageous for sellers. It is best to consult a tax expert for this, but as it seems now, when the difference between the purchase price and the sale price (in a 10-year period) is higher (say, more than 2-2.5 times), then the new tax regime without indexation is more lucrative for the buyers.

However, when the difference between the purchase price and sale price is lower, then the old tax regime with indexation is more lucrative for the buyers.

The writer is Chairman, ANAROCK Group.

The All India Gem and Jewellery Domestic Council has appealed to the GST Council to reduce the rate on jewellery from the current 3% to 1%. 
| Photo Credit: AP

“The gold jewellery industry is advocating a ‘One Nation, One Rate’ policy, starting with a unified rate for Eastern India from August,” an official said on July 26.

Samar. Kr. De, President of the Swarna Silpa Bachao Committee, said, “All stakeholders have shown interest in the idea of a unified gold rate across the country.”

“We will begin with a single rate for West Bengal and eastern India from August and have onboarded bullion sellers for this initiative,” Mr. De added.

Saiyam Mehra, Chairman of the All India Gem and Jewellery Domestic Council (GJC), said, “The idea is to create a level playing field for all stakeholders and prevent undercutting.” Mr. De said that they aim to extend the ‘One Gold Rate’ policy nationwide within the next six months and are in discussions with large national jewellery retail chains. He also noted that the recent 9% duty cut was unexpected by the industry.

Union Finance Minister Nirmala Sitharaman in the recent Union Budgetslashed import duties on gold and silver from 15% to 6%. Industry players said that the sharp duty cut will help eliminate illegal imports.

“Gold smuggling is estimated to be 100 tonnes out of the total import of some 950 tonnes,” said Sunny Dholakia, a diamond importer.

However, there is a concern about whether the government has any other plan regarding the Goods and Services Tax (GST) concerning gold, according to industry sources.

The GJC has appealed to the GST Council to reduce the rate on jewellery from the current 3% to 1%.

Tech Mahindra saw its revenues decline by 1.2% to ₹13,005 crore during the reporting quarter.
| Photo Credit: Reuters

Shares of IT services firm Tech Mahindra slumped nearly 6% on July 26 after the company’s revenues declined by 1.2% during the June quarter.

The stock tanked 5.52% to ₹1,445.50 on the Bombay Stock Exchange (BSE). At the National Stock Exchange (NSE), it tumbled 5.60% and was trading at ₹1,444.25 per share.

Also Read: Sensex, Nifty tumble in early trade on weak global cues

The stock emerged as the biggest laggard among the Sensex and Nifty firms. Tech Mahindra on July 25 reported a 23% jump in consolidated net profit to ₹851 crore for the June 2024 quarter.

The Mahindra Group company posted a net profit of ₹692.5 crore in the past year. The company, which began a three-year strategic restructuring under a new head recently, saw its revenues decline by 1.2 % to ₹13,005 crore during the reporting quarter.

The new managing director and chief executive Mohit Joshi said the performance in FY25 will be better than the previous period.

A tumble in the heavyweight stocks that have powered markets higher this year is highlighting Wall Street’s vulnerability to any weakness in the Big Tech trade and causing concerns that over-stretched stocks are in for more turbulence.

Disappointing quarterly reports from Tesla and Google-parent Alphabet sparked a crushing market selloff on Wednesday, with the tech-heavy Nasdaq Composite falling 3.6% in its worst day since October 2022. The benchmark S&P 500 slumped 2.3%, with the earnings reports causing concerns about upcoming results from the other big tech firms.

“This was the hair trigger for people saying, ‘Wow, I’ve got way too much exposure to information technology and growthier type companies,'” said Thomas Martin, senior portfolio manager at GLOBALT, about Tesla’s results, after the electric vehicle automaker posted its lowest quarterly profit margin in five years. “The trade … is to get more diversified.”

The rout comes after optimism about artificial intelligence technology fueled a months-long rally in a handful of massive technology and growth companies including chipmaker Nvidia , Microsoft and Amazon, pushing the S&P 500 to record highs this year.

The megacap stocks – dubbed, with Meta Platforms and Apple, the Magnificent Seven – have accounted for around a third of the S&P 500’s 14% gain in 2024, making their trajectories a key factor in how broader markets will perform.

As share prices soared, concerns grew over companies’ stretched valuations and comparisons to the dotcom bubble of more than two decades ago became more frequent. The S&P 500 is trading near 22 times expected earnings, its highest in over two years, and well above its 10-year average of 18, according to LSEG data.

Signs of nervousness around tech stocks began to creep up in recent weeks, as the blistering rally in many of the market leaders seemed to run out of gas. One signal came from the rise in the Cboe Volatility Index, known as Wall Street’s fear gauge because it measures demand for portfolio protection. The measure shot to its highest level in three months on Wednesday.

Hedge funds have been reducing their exposure to markets for the last two weeks, prime brokers at both Goldman Sachs and Morgan Stanley said in notes last week, amid fears that gains from earlier this year could evaporate if sentiment around tech stocks changed.

Andrew Volz, chief operating officer at prime broker Clear Street, said hedge funds continued to deleverage their portfolios on Wednesday, selling long positions and covering bearish bets.

“There were definitely general liquidations of things like Nvidia, Tesla, all the big seven tech companies,” said Volz.

Earnings optimism over-done?

Though the S&P 500 is still just 4% below an all-time high hit earlier this month, some investors worry that Wall Street may have become too optimistic about earnings growth, leaving stocks vulnerable if companies are unable to meet expectations in coming months.

One example could be seen on Wednesday, when Alphabet’s shares fell more then 5%. While the company reported better-than-expected revenues, investors grew wary that rising investments in AI infrastructure would squeeze margins and YouTube was facing tough competition for ad dollars.

“We set the bar too high on earnings,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “Even Alphabet’s earnings beat, but the market obviously wasn’t impressed and they didn’t beat by enough.”

Many other Magnificent Seven stocks saw sharp declines on Wednesday. Tesla shares fell more than 12% in their worst daily drop since 2020, while Nvidia’s lost 6.8%. Microsoft shares fell 3.6% and Apple lost 2.9%.

Wednesday’s selloff is likely to leave investors on tenterhooks in coming weeks, as more tech earnings come in. Meta, Microsoft and Apple are all scheduled to report next week, potentially ramping up volatility if any one of them disappoints or assuaging investor fears if the results are strong.

“We’re in a little bit of a pullback. But to me, it’s really just a short-term thing,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “If we see some good numbers in the coming days, it could reverse just as quickly.”

File.
| Photo Credit: Reuters

The rupee recovered from its all-time low level and appreciated 9 paise to 83.69 against the US dollar in early trade on Friday, amid a positive trend in domestic equities.

Forex traders said foreign fund outflows from Indian equities following the government’s decision to hike the tax rate on capital gains weighed on the local currency and restricted the upmove.

At the interbank foreign exchange market, the local unit opened at 83.72 against the American currency, then rose to 83.69 against the American currency, registering a rise of 9 paise from its previous close.

On Thursday, the rupee dropped by 7 paise to close at an all-time low of 83.78 against the US dollar.

“The rupee remains under significant pressure, hovering near all-time low levels. This strain is due to the government’s recent decision to hike the tax rate on capital gains, sparking major outflows of Foreign Institutional Investments (FIIs).

“However, the Reserve Bank of India (RBI) has been actively capping the downside, preventing further depreciation by maintaining the rupee at around 83.75,” CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 104.30, lower by 0.05 per cent.

Brent crude futures, the global oil benchmark, rose 0.18 per cent to USD 82.52 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 291.71 points, or 0.36 per cent higher at 80,331.51 points. The broader NSE Nifty was up 114 points, or 0.47 per cent, to 24,520.10 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 2,605.49 crore, according to exchange data.

People walk past the Bombay Stock Exchange (BSE) building in Mumbai. File
| Photo Credit: Reuters

Equity market benchmark indices Sensex and Nifty rebounded in early trade on July 26 after staying on the back foot for the past five straight sessions, helped by value buying at lower levels and rally in blue-chips Infosys, Tata Consultancy Services and Reliance Industries.

The 30-share BSE Sensex climbed 235.23 points to 80,275.03 in early trade. The NSE Nifty went up 86.6 points to 24,492.70.

From the Sensex pack, Bharti Airtel, Tata Steel, Infosys, JSW Steel, Bajaj Finance, HCL Technologies, Tata Consultancy Services and Reliance Industries were the biggest gainers. Tech Mahindra, HDFC Bank, Nestle and Maruti were among the laggards.

The unique feature of the bull market in India is its ability to climb all walls of worry. The market dismissed all concerns relating to elections, the Budget and the correction in the mother market U.S. The buy on dips strategy which has played out well in this rally continues to hold good, said V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

After a sharp fall in intra-day trade on July 25, the BSE benchmark managed to recover some of the lost ground to settle 109.08 points or 0.14% lower at 80,039.80. The NSE Nifty dipped 7.40 points or 0.03% to 24,406.10. In five days, the BSE benchmark Sensex tumbled 1,303.66 points or 1.60%, while the Nifty declined 394.75 points or 1.59%.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,605.49 crore on Thursday, according to exchange data.

In Asian markets, Seoul, Tokyo, and Hong Kong were trading higher while Shanghai quoted lower. The U.S. markets ended mostly lower on July 25. Global oil benchmark Brent crude climbed 0.19% to $82.53 a barrel.

“The US economy’s 2.8% growth in Q2 confirms it won’t slip into recession, and we expect the Federal Reserve to start cutting interest rates by September due to easing inflation,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

India’s Finance Minister Nirmala Sitharaman holds up a folder with the Government of India’s logo as she leaves her office to present the union budget in the parliament in New Delhi, India, July 23, 2024.
| Photo Credit: ALTAF HUSSAIN

Union Finance Minister Nirmala Sitharaman, on Tuesday, presented the first Union Budget of the third term of the Narendra Modi-led NDA government. The Hindu Data team has compiled a series of graphs to analyse the impact of the Budget on select sectors and schemes. 

Data shows that expenditure as a share of the total budget on infrastructure has increased. In contrast, expenditure on major schemes in the social sectors, which includes education, pension and health, have either stagnated or declined. Spending on agriculture too, when considered as a share of the total budget, has stagnated. 

Before delving into individual sectors and schemes, the graph below provides an overview.

The graph below depicts the budgeted expenditure (Rs crore) for FY25BE and the change from FY24RE in percentage points. The bigger the rectangle, the higher the allocation for a sector. The deeper the blue, the higher the increase compared with FY24RE. The deeper the red, the higher the decrease compared with FY24RE. 

As usual, interest payments garnered a lion’s share of the budget this year. In absolute figures, Rs 11,62,940 crore was allocated for interest payments. If expressed as a share of FY25BE’s total Budget, it comes to 24.12%, which is 0.62 percentage points more than its share in FY24RE. Apart from interest payments, the transport sector formed the bulk of the expenditure in FY25BE at 11.29%. However, transport’s share in the total Budget came down by 0.4% points from last year.

Click to subscribe to our Data newsletter

The allocation to agriculture remained stagnant at around 3.1% of the total budget. Allocation to flagship schemes such as Pradhan Mantri Fasal Bima Yojana (PMFBY) and Pradhan Mantri Kisan Samman Nidhi (PMKSN), as a share of total budget, declined in FY25BE.

Defence expenditure as a share of the total Budget declined to 9.43%, the lowest in at least nine years. In fact, defence expenditure in absolute terms has also declined. Allocations to the departments of Space have stagnated, while the Science and Technology ministry’s share in total Budget has improved slightly to 0.17%.

Allocations to all the schemes under the Space sector, as a share of total budget, have stagnated. 

Allocations for various social sectors such as health, rural development and education as a share of the total budget have stagnated or declined, with the social welfare sector being the only exception – whose share improved to 1.17% of the total budget in FY25BE.

Also read: Budget 2024: The government’s focus is on ease of paying taxes 

Outlays to schemes under social sectors such as MGNREGA, Samagra Shiksha, Ayushman Bharat, old age pension, widow pension, Swasthya Suraksha, have all declined in the recent years. Allocation to Ayushman Bharat has remained more or less the same in recent years after a sharp increase seen in FY23. 

The Transport sector on the other hand has formed a bulk of this year’s expenditure. Allocation to the Ministry of Road Transport and Highways (MORTH) and the telecom department has remained consistently high. Allocations to the power sector too have improved marginally from last year. 

While the outlays to implement housing in urban & rural areas, and other basic amenities in urban areas improved marginally in FY25BE, allocations to smart city missions, as a share of the total Budget, has plunged. 

In FY25BE, the Railway Ministry outlay in the overall budget continued to be over the 5% mark. Allocations for the signalling and telecom works, under which KAVACH (automatic train collision system for trains) is included, increased compared with FY24RE

However, allocations for the Aviation Ministry which has remained consistently low in recent years declined marginally. The outlay for the Shipping Ministry has also stagnated.

Source: Budget Documents

Also read:How Chennai’s areas and streets voted in the 2024 Lok Sabha polls: A searchable list

The I-T department has seen a substantial rise in number of transactions. Photo: incometax.gov.in

The July 31 deadline for filing Income Tax (I-T) returns is unlikely to be extended. The Central Board of Direct Taxes (CBDT) has intervened to fix recent glitches and downtimes reported on the I-T portal by ramping up its back-end capacity to cope with a higher workload experienced this year.

Acknowledging taxpayers’ concerns about delayed generation of TDS (Tax Deduction at Source) and Form 16 certificates, and the “slowness” of the I-T portal, CBDT chairperson Ravi Agarwal told The Hindu these issues have now been resolved, and as many as 28 lakh tax returns were filed on Wednesday with no downtime reported.

“Even per-hour filings are now at an all-time high. So therefore, I think we can say with confidence that over the next six days, we should be able to take care of it. Most of the problems have been addressed and sorted out, and yesterday, there was no apparent reporting of any of these problems like downtime, and even today, there is no issue so far,” he said late Thursday afternoon.

The I-T department has seen a substantial rise in number of transactions reported this year, Mr. Agarwal said, and some of the government officials in charge of issuing such deduction certificates were also occupied with election duty, delaying some issuances.

“Then there was a report of slowness on the website and people were finding it difficult. So now, some corrective measures have been taken in terms of ramping up the hardware, and also putting those solutions in place,” the CBDT chief assured.

“There has been a 15% growth in TDS transactions and about 30% growth in third-party transactions, and that has to get populated in the pre-filled I-T forms and the corresponding TDS certificates also have to be issued. Now, what happened was that because of elections, the deductors from the government side were engaged in the election duty… so all that got delayed, and then all of a sudden, we got that filing in bulk as far as TDS statements are concerned.”

“To process those statements and convert them into TDS certificates, was taking time, and involved a lot of data. But we have been able to resolve that, and we are up to date on the issue of TDS certificates not being downloaded or not being made available,” Mr. Agarwal said.