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Share Market Closing Note | Indian Stock Market Trading View For 28 Sept,2022

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 Share Market Closing Note

The bear-party, which started with the US Federal Reserve (US Fed) hiking rates by 75 basis points last week, continued for a sixth straight day on Dalal Street on Wednesday. The S&P BSE Sensex fell 509 points to close at 56,598, while the Nifty50 ended 149 points lower at 16,859. Both the frontline indices fell 0.89 per cent each.Share Market Closing Bell! Sensex, Nifty end on a positive note | Zee  Business

Axis Bank, ITC, Reliance Industries, HDFC twins, Bajaj Finserv, IndusInd Bank, Tata Steel, and SBI were the top large-cap losers, while Sun Pharma, Power Grid, Asian Paints, Dr Reddys Labs, M&M, and Tech M climbed on the bourses. 

In the broader markets, the BSE MidCap, and SmallCap indices lost 0.4 per cent each. Among sectors, the Nifty Metal, and PSU Bank indices dipped 2 per cent each, while the Nifty Pharma index gained 0.6 per cent.

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Topic :- Time:3.10 PM

Nifty spot close above 16860 level will result in some further upmove in coming sessions and if it closes below above mentioned level then some sluggish movement can be seen. Avoid open positions for tomorrow due to F&O expiry.

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Topic :- Time:2.30 PM
Just In:
Saudi Arabias crown prince Mohammed bin Salman named prime minister.

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Topic :- Time:2.00 PM

Nifty is highly rangebound and is likely to remain volatile in a range. Nifty spot if manages to trade and sustain above 16700 level then expect some upmove in the market and if it breaks and trade below 16920 level then some decline can follow.

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Topic :- Time:1.00 PM

Nifty spot if manages to trade and sustain above 17020 level then expect some upmove in the market and if it breaks and trade below 16960 level then some decline can be seen. As nifty is approaching expiry so trade in limited quantity.

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Topic :- Time:12.00 PM

News Wrap Up:
1. Sensex, Nifty50 turn flat; Pharma, Auto stocks shine
2. Delhi HC grants bail to Ramkrishna, Subramanian in NSE co-location case
3. SEC fines Oracle $23 mn for bribing officials in India, Turkey, and UAE
4. Rupee hits new low, inches towards 82 per dollar on hawkish US Fed
5. Telecom may be first strategic sector to be picked up for privatisation
6. India rules out tax policy changes for inclusion in global indices
7. JSW Energy plans to raise $30.60 million through 3-year bonds
8. Torrent Pharma to acquire Curatio Healthcare for Rs 2,000 cr; stock down 6%

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Topic :- Stocks under F&O ban on NSE

1. Vodafone Idea
2. Zee Entertainment Enterprises

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Topic :- Stocks in News

Mahindra CIE Automotive: Mahindra & Mahindra has sold 82,42,444 shares or 2.173 percent shareholding in associate company Mahindra CIE Automotive. The sale has been executed through the bulk deal window at a gross price of Rs 285 per share. After the sale, the shareholding of the company in Mahindra CIE has come down from 11.427 percent to 9.254 percent. Participaciones Internacionales Autometal Dossociedad Limitada acquired 87.20 lakh shares in Mahindra CIE at an average price of Rs 284.88 per share.

H G Infra Engineering: Subsidiary H G Khammam Devarapalle Pkg-1 Private Limited has received financial closure for Greenfield highway project in Telangana, from the National Highways Authority of India.

Bharat Heavy Electrical: The company has received an order for setting up the 2x660 MW Talcher thermal power project Stage-III on EPC (engineering, procurement & construction) basis from NTPC.

Motherson Sumi Wiring India: The company said the board of directors will meet on September 30 to consider a proposal for the issuance of bonus shares to the equity shareholders of the company.

Supriya Lifescience: The board has appointed Rajeev Kumar Jain as Chief Executive Officer and Key Managerial Personnel of the company. Rajeev will be joining as CEO on October 3, 2022, to take Supriya on the next phase of its growth journey. Shireesh Ambhaikar has resigned as Chief Executive Officer of the company citing personal reasons.

GOCL Corporation: The company has completed the sale of the balance 12.25 acres of land for Rs 125.11 crore. Earlier it had sold 32 acres out of 44.25 acres of land.

Bharat Petroleum Corporation: Life Insurance Corporation of India has acquired an additional 2.01 percent stake in the company via open market transactions. With this, its shareholding in the company increased to 9.04 percent, up from 7.03 percent earlier.

Torrent Pharmaceuticals: The company has acquired Curatio Healthcare, which has a strong presence in the cosmetic dermatology segment with a portfolio of over 50 brands, for Rs 2,000 crore. It has entered into definitive agreements to acquire 100 percent in Curatio which reported revenue for FY21-22 at Rs 224 crore.

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Topic :- Investors Meetings on September 28

Shoppers Stop: Officials of the company will be meeting representatives of Invesco Asset Management.

Tech Mahindra: Officials of the company will attend Equirus Virtual Annual Conference.

Blue Star: Officials of the company will meet Aditya Birla Sun Life AMC.

Blue Dart: Officials of the company will meet ICICI Prudential Asset Management, Motilal Oswal AMC � PMS, L&T Mutual Fund, Helios Capital, Mirae Asset Management (India), and SBI Funds Management.

Alkem Laboratories: Officials of the company will meet Nine Rivers Capital.

Polycab India: Officials of the company will meet Government of Singapore Investment Corporation, M&G Group, Somerset Capital, Helios Capital, and Nikko Asset Management in Singapore.
Greaves Cotton: Officials of the company will interact with Pine Bridge.
ICICI Bank: Officials of the bank will interact with Jefferies Global Fund Managers.
Sapphire Foods India: Officials of the company will interact with Sundaram Mutual Fund, HDFC Securities, Bajaj Allianz Life Insurance, IIFL Holdings, and Chrys Capital.
CarTrade Tech: Officials of the company will attend Kotak PCG Virtual Conference.
Bharat Forge: Officials of the company will meet Van Eck Associates Corporation.
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Topic :- Nifty Opening Note

Nifty to turn volatile as the day progresses. Trade as per market trend.
Nifty spot if manages to trade and sustain above 17080 level then expect some upmove in the market and if it breaks and trade below 16940 level then some decline can be seen in the Nifty.
Please note this is just opening view and should not be considered as the view for the whole day.

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India’s potash demand languishes as world reels from high prices

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Potash consumption will probably fall to 3 million tons in the year through March 2023 from 5 million a year earlier, according to P.S. Gahlaut, managing director of Indian Potash Ltd.,India's potash demand languishes as world reels from high prices

 the country’s top importer of the crop nutrient. Farmers have been using less of it to grow crops like rice, wheat and sugar.India, one of the world’s biggest potash importers, is facing demand destruction due to high prices and the loss of critical supplies from Belarus and Russia.

Potash consumption will probably fall to 3 million tons in the year through March 2023 from 5 million a year earlier, according to P.S. Gahlaut, managing director of Indian Potash Ltd., the country’s top importer of the crop nutrient. Farmers have been using less of it to grow crops like rice, wheat and sugar.

While prices have cooled lately, they remain elevated

Potash is a fertilizer that helps plants withstand drought and diseases. Prices soared earlier this year after the invasion of Ukraine, with many shippers, banks and insurers avoiding trade with Russia even though fertilizers are not directly targeted by sanctions. The industry is also contending with US and European Union sanctions on potash sales from Belarus, as well as China’s move to restrict exports to protect its domestic market.

Indian Potash has agreed to buy the crop nutrient from Israel, Canada, Jordan and Germany this year at $590 a ton including freight charges, up from around $445 last year. Supplies from Russia and Belarus, two of the three biggest exporters, have come to a standstill because of payment issues, Gahlaut said.

Our potash availability is comfortable,” Gahlaut said in an interview last week. “The sad part is potash demand has gone down because of high prices.”

Indian Potash will begin annual price talks with suppliers including Russia’s Uralkali PJSC, Israel’s ICL Group Ltd., Arab Potash Co. in Jordan and Canada’s Canpotex Ltd. in November, he added. “People are giving us visits but we’re in no hurry to finalize the price.”

Russia and Belarus Account for 40% of Potash Trade | World exports of potash, 2020

Gahlaut expects global fertilizer prices to decline by 10% to 12% next year due to high stockpiles. Prices will fall further in 2024 as supplies improve, he said.

In India, some farmers have skipped potash application but that’s not having a major impact on crop yields -- at least for now -- as there’s available supply in the soil. It may start affecting agricultural production if they skip potash use continuously for two or three planting seasons, Gahlaut said.

India’s potash consumption fell by about 50% in five months through August from a year earlier, while demand for NPK fertilizers -- the three main nutrients in commercial fertilizers that represent nitrogen, phosphorus and potassium -- has shrunk 20% over the same period, he estimates.

Demand will likely stay flat this winter sowing season unless the government increases the subsidies for fertilizer companies, Gahlaut said. The authorities have said they won’t allow those firms to increase their prices. India is set to announce subsidies soon for the winter season.

“We hope the government is going to increase subsidies. It should be available at an affordable price to boost consumption,” Gahlaut said.

Real Estate | Construction sites cannot remain death traps for workers

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Safety laws are ignored, except in large organisations, and Indian workplaces remain the most unsafe in the worldReal Estate | Construction sites cannot remain death traps for workers

Indian construction workforce constitutes 7.5 percent of the global workforce, but accounts for 16.5 percent of the fatal global occupational accidents. (PTI/File image/Representative)

In mid-September, two workers fell to their death while working on a lift installation at a construction site. Earlier, seven workers were killed when a scaffolding fell at a construction site in Ahmedabad, Gujarat. The Gurugram Police released a report that at least 20 construction workers in the city have lost their lives in the city till July this year. Similar accidents have been reported from Chennai as well. The common thread in all these is the lack of safety measures that might have prevented these needless accidents.

global study in 2015 found that the Indian construction workforce constitutes 7.5 percent of the global workforce, but accounts for 16.5 percent of the fatal global occupational accidents. It also found that about 40 percent of the fatalities were due to falls, over 8 percent were struck by objects, and about 8.5 percent by electrocution. Clearly, a little precaution could have reduced the fatalities.

Subsequently, safety became a very important chapter of the National Building Code (NBC). NBC Vice Chairman V Suresh told this author that the NBC 2016 provisions were built around structural, health, fire, construction, public, and life safety. The NBC has a very comprehensive coverage in Part 2 (Administration on Regulatory Responsibilities), and Part 7 (Construction Management Practices and Safety ...for Construction and Demolition).

Why then do construction sites in India remain one of the riskiest in the world?

Construction activities have grown by 80 percent in the past four years; from Rs 7.8 crore in 2013 to Rs 14,000 crore in 2022. With an accident rate of 165 out of every 1,000 workers in India injured, it is important to address this issue urgently.

Large companies are increasingly more or less compliant. Companies such as Hiranandani, L&T, Tata Projects, Gammon India, Hindustan Construction, Simplex, and Shapoorji Pallonji, are all Integrated Management System (IMS) certified. All workers have to wear all personal protective equipment (PPE), such as helmet, shoes, body harness, etc. They follow safety issues, and construction worker concerns force organisations to train them for safety, and quality control issues.

This also comes with the mandate of enforcement staff, a cost that is not factored into small and medium projects. As a result, the cost of compliance becomes very expensive for smaller companies. The supervisory staff to ensure safety have to remain vigilant, and maintain logistics records, on the fly. While a good reputation is a plus for large clients, for small and medium developers, it is a wasteful and an impractical effort, when the deciding factor is cost.

Residential construction accounts for over 55 percent of India’s construction profile. A very large part of this is un-engineered or is supervised by masons-turned-contractors. They rely on unskilled migrant labour that moves from job to job. Per-day productivity is the criterion of selection here, and the harness actually reduces their productivity. Also, when they leave one site and go to the next, there is no authority that inspects security on work sites. So workers themselves don't often opt for safety equipment.

The NBC has laid down safety in excavation, with the right level of supervision in all elements of foundation construction. All safety provisions for construction processes, and the right physical barriers at construction sites: scaffolding and underpinning, safety of construction workers with PPE, and work area protection, as well as health and hygiene factors and facilities for construction workers are clearly spelt out. The special requirements for foundation and basement construction with right encasement protection from landslide, etc. are covered. Working at heights with inclement weather for high winds and rainfall, and slippery work front, safe operation of construction equipment, and machineries, have also been covered.

However, these are precisely the roles where accidents occur.

Many building by-laws have incorporated the provisions of the NBC, which are guidance documents in local building rules and development control rules. But the local authorities under whose jurisdiction the enforcement falls, are under-staffed, with construction worker-safety not on high priority. That said, there are some cases of enforcement. After an accident in Porur in Chennai in 2014, all those responsible for the project were arrested for criminal negligence.

But these are few and far between. Most site owners pay the families of injured/deceased workers a compensation to settle the problem. The rural migrant families are not aware of their rights nor are they powerful enough to fight the system. State governments offer compensation to the families too. But there are few efforts at ongoing supervision and training to ensure that these fatalities are reduced. With migrant manpower freely available, and municipal governance in construction sites still at a nascent stage, things have not hit a critical level for the industry yet. Till then, worker safety will remain an afterthought in majority of India’s construction sites.


Share Market Closing Note,Indian Stock Market Trading View For 27 Septmber 2022

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Indian benchmark indices ended on a flat note in the highly volatile session on September 27. After a positive start, the market remained in positive mode for most of the session. However, last-hour selling erased all the gains and the market ended with marginal losses.Stock market holiday: BSE, NSE to remain closed today on 'Diwali  Balipratipada' | Mint

At close, the Sensex was down 37.70 points or 0.07 percent at 57,107.52, and the Nifty was down 8.90 points or 0.05 percent at 17,007.40.

The Sensex and Nifty touched a high of 57,704.57 and 17,176.45, intraday, respectively.

Cipla, Tata Consumer Products, BPCL, Power Grid Corporation and Shree Cements were among the top gainers on the Nifty. Losers included Hero MotoCorp, Adani Ports, Titan Company, Tata Steel and Kotak Mahindra Bank.

Among sectors, Nifty auto, bank and metal indices shed 0.5 percent each, while buying was seen in pharma, FMCG and IT names.

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Topic :- Time:3.00 PM

Nifty spot if manages to hold above 16960 level on closing basis then expect some further upmove in coming sessions and if it closes below above mentioned level then some sluggish movement can be seen.

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Topic :- Time:2.30 PM

GOLD Trading View:

GOLD is trading at 49364.If it manages to trade and sustain above 49400 level then expect some quick upmove in it and if it breaks and trade below 49340 level then some decline can follow in it.

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Topic :- Time:1.45 PM

Just In:

Adani Group to invest $100 bn in a decade, focus on energy transition.

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Topic :- Time:1.15 PM

Just In:

Pharma firms may face legal action for unethical marketing practices.

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Topic :- Time:1.00 PM

Nifty is recovering from its lows. Nifty spot if manages to trade and sustain above 17100 level then expect some further upmove in the market and if it breaks and trade below 17060 level then some decline can follow in the Nifty.

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Topic :- Time:12.00 PM

Nifty spot is trading at 17046.If it manages to trade and sustain above 17060 level then expect some further upmove in the market and if it breaks and trade below 17020 level then some decline can follow in the Nifty.

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Topic :- Time:11.30 AM

News Wrap Up:

1. Sensex drops 150pts, Nifty50 below 17,000; Metal index down 2%

2. Robust demand for luxury products exposes widening inequality in India

3. Car makers on road to pre-Covid profit as festival season sales soar

4. Powering 5G services: Telcos may spend up to $2.5 billion on optical fibres

5. Metro Brands extends rally on strong outlook; zooms 69% in 2 months

6. SmallCap World Fund buys nearly 550k Mastek shares worth over Rs 96 cr

7. Aurobindo slips 6% in a week after arm receives EIR from USFDA

8. NBFCs recovery to be hit after RBI action against M&M Financial Services

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Topic :- Nifty Opening Note

Indian Stock Market Trading View For 27 Sept,2022:

Nifty to trade volatile and is likely to follow global cues. Bullions and USDINR to be monitored closely.

Nifty spot if manages to trade and sustain above 17060 level then expect some further upmove in the market and if it breaks and trade below 16960 level then some decline can follow in the market. Please note this is just opening view and should not be considered as the view for the whole day.

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Why India will remain relatively insulated from US Fed action

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While the US is almost certain to see a contraction as large hikes ripple through the economy at a record pace, in India’s case, the impact on growth trajectory is likely to be less onerousWhy India will remain relatively insulated from US Fed action

The Reserve Bank of India (RBI) possibly does not get enough credit for the kind of challenges it faces, both internal and external. The RBI is encumbered with a rather thankless task of maintaining fiscal stability while ensuring a fertile environment for growth. Yet, it has done a stellar job, particularly over the last couple of years in the wake of the global pandemic, and is likely to again be the bearer of firewood, as we brace for economic winter.

The global economy may soon be about to see a third phase of contraction since the 2009 Great Financial Crisis (GFC), something that even US Federal Reserve Chairman Jerome Powell admitted to be a possibility given the pace of rate hikes that the Fed has embarked upon. The US markets have been in a heightened state of activity, with the Fed following through, for now, with its narrative of tightening the liquidity conditions through quantitative tightening (QT, or the process of sucking excess liquidity from the system) and with a hike to the Fed funds rate.

The interconnectedness of the global economy, underpinned by the reserve currency status of the US Dollar, has forced central banks around the world to follow suit, irrespective of the state of their economies. While curtailing inflation has been a priority across the globe, many tend to forget that this inflation has been imported from the US on account of the latter’s loose monetary policies of the last decade.

Policy Moves

The last Federal Open Market Committee (or FOMC) meeting saw Powell show resolve in increasing rates to tame inflation, with an increase in the benchmark rate to a 3-3.25 percent range, the highest since 2008.

While India has not been immune in the past to the US monetary policy movements, 2022 has been a relative period of quiet. The relative resilience of the Indian Rupee and by corollary the economy has been attributed to better access, demographic dividend, start-ups, and government policies. While all these factors have contributed, the role of the RBI policy stance goes largely underappreciated.

The RBI approach to rate hikes is a great example to buttress the above point. The RBI has raised the repo rate by 140 bps, since the beginning of 2022, on a base of 4 percent. In sharp contrast to the US Fed raising its target rate by 3 percent on a base of near zero, the RBI’s repo rate hike trajectory has been a lot less steep.

Instead of trying to follow the US Fed’s cue on rate hikes, the RBI has taken a slightly different course, and paced the hikes to focus on the challenges of the Indian economy. While the Fed’s need to rein in debt is evident, the data of the last two decades points towards the futility of this exercise.For every one percent rise in the interest rates, the interest burden will shave off nearly 4 percent from the US GDP, which emboldens Powell’s assertion about a likely recession.

Also, one cannot ignore the six-to-nine-month lag in monetary policy transmission, and the cascading effect it will have on the economy. While the US is almost certain to see a contraction as large hikes ripple through the economy at a record pace, in India’s case, the impact on growth trajectory is likely to be less onerous. Furthermore, a near normal monsoon, and the upcoming festival season without the COVID-19 restrictions of the last couple of years should further bolster the sentiment.

While the Fed is trying to make the world believe that QT has set in, the sustained level of the Fed balance sheet along will increasing rates will only add to the interest burden of the US.

As the RBI’s monetary policy committee meets from September 28, the committee will be looking at inflation, considering seasonally tighter monetary conditions in September and the impact of the lag in policy transmission while hiking rates. The current rupee depreciation may be less of a concern if the imminent US Fed rate cut cycle’s impact on the calendar year-end exchange rates is considered.

Considering where the US mortgage rates are, the smart money should be lining up to enter India, which, while benefitting the Indian markets, will also possibly contribute to the imported inflation. Once again, we will expect another measured intervention from the ever-reliable RBI.

Govt bans mapping and export of sensitive locations under data regime

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The central government has released a list of economic and national security-related strategic and sensitive locations that cannot be mapped and exported

Maps, geospatial, GPS, taj mahal

In a bid to meet the requirements of the liberalised geospatial data regime that was released last year, the  has released a list of economic- and national security-related strategic and sensitive locations that cannot be mapped and exported, reported BusinessLine on Tuesday.

These sensitive locations include bulk oil and gas depots, and nuclear and military installations among others.

The Central Board of Indirect Taxes and Customs in a notification released on Friday said, “The export of maps and geospatial data with sensitive attributes will be restricted.”

The central department, which comes under the Finance Ministry, said, the transgression of the threshold values the Department of Science and Technology had mentioned in its guideline issued on February 15, 2021, will not be allowed for mapping and collection of location data of the identified installations and facilities, reported BusinessLine.

“For the maintenance of the security of India, it is necessary so to do, hereby prohibits the export of Maps and Geospatial data of spatial accuracy and value finer than the threshold values as specified in Annexure-I,” the department stated.

The threshold values, as per the notification, are: “On-site spatial accuracy - one meter for horizontal or planimetry and three meters for vertical or elevation,” and “gravity anomaly - one milli-gal”. It further added the threshold value in the case of “vertical accuracy of bathymetric data ( study of underwater depth) in territorial waters - ten meters for up to five hundred meters from the shore-line and one hundred meters beyond that”, reported BusinessLine.

The government tagged 52 security installations and secured facilities as 'sensitive attributes' and added that each carries 'stipulated regulations' to prohibit them from mapping and location data sampling.

The directive has listed out 51 “security installations/ features and secured facilities” that have been tagged as “sensitive attributes” with each carrying “stipulated regulations” to prohibit them from mapping and location data sampling.

The notification, for instance, added that all missile test ranges, be it for launch and firing, will 'not to be labelled in geospatial data and map.'

Other locations that are prohibited to be labelled in geospatial data and maps are: oil bulk depots/ storage tanks; LPG/ LNG storage area/tanks; operational control rooms of oil and gas terminals; seizing up of glacier lake depth; all nuclear installations in India; the nation's intelligence agencies and its governance architecture; the space centre and space port; international boundaries with neighbouring countries, reported BusinessLine.

The central intelligence agencies and governance architecture that are barred from mapping include Aviation Research Centre (ARC), Intelligence Bureau (1B),  Council Secretariat (NSCS), Research & Analysis Wing (R&AW), and Cabinet Secretariat.

Blocking aberrant promoters from insolvent companies is a challenging task

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The recent ownership battle in McDowell Holdings has revived debates on the strength or weaknesses of the IBC

Should promoters be banned altogether from participating in the revival of companies which went sick under their guard? Or should they face restrictions only if the sickness was due to specific wrongs they have committed? These questions have troubled insolvency regulators and lawmakers alike.

Indeed, alarmed by attempts by errant promoters to acquire back the companies they ran, and that too at deep discounts, the lawmakers made urgent amendments in 2017 itself, the second year of life of the Insolvency & Bankruptcy Code (IBC), and barred such promoters from participating in revival of such companies. The bar was widely worded and covered promoters and even other persons on multiple counts.

There have been several cases where the question was whether such disqualified persons were trying to take back their companies through various means. The Supreme Court in 2018 elaborately ruled on such issues in the case of revival of Essar Steel. It highlighted the fact that the IBC contains widely-worded restrictions barring not just errant promoters and other persons, but also persons acting in concert with them or connected with them. Even the seemingly opaque corporate veil would not stop the court — and hence the insolvency regulators — from seeing the underlying reality. The controversies never seem to stop though.

A Nuances, Commercial View

But before we examine the issues in more detail, we come back to the more fundamental question. Should promoters of such companies in insolvency be barred from participating in their revival?

The cynical arguments in favour would seem strong. Surely the promoters have taken care of themselves and siphoned funds — in India or abroad? Or they have ‘enriched’ relatives, and connected persons through loaded transactions leaving a hollow shell of the company? Even if they did not indulge in such things, the argument goes, surely the promoter is incompetent and, if given a second chance, drown the lenders and creditors once again?

The law, however, took a nuanced and commercial view. At the outset, while promoters are not given any preference, they are not discriminated wholesale either. A specific list of disqualifications have been made. Those entering into ‘preferential’ transactions whereby related parties are enriched at the cost of the company are barred. So are wilful defaulters. Also those who have been barred by SEBI from accessing the capital markets. So on.

While generally, these disqualifications are about those who have carried out illegal/harmful activities, promoters and others are not disqualified solely because they took that, or another company, into insolvency. Yet there is one more disqualification which borders on punishing business failure. If a person is connected to a business which has become a non-performing asset, and a year has passed but such default is not cured, such person is also disqualified. Even this bar can be justified on the ground that if a person is already in financial trouble, how can they expect to enter into yet another venture?

It may also be remembered that the scheme of the IBC gives primacy to the wisdom of the Committee of Creditors. Barring such disqualifications, they have wide freedom in accepting or rejecting a particular proposal on merits, and at their choice.

Tough To Establish Links

However, the question is not whether any of the statutory disqualifications are unjustified. The question is whether they are so widely worded that they could cause several problems in practice. The disqualification, for example, applies not only to the errant persons themselves, but also to ‘persons acting in concert’ with them. This term, apparently borrowed from the SEBI Takeover Regulations, has a wide connotation, and covers several persons who may not even have formal links. Even persons ‘connected’ in the specified manner are disqualified, and this word too has been given a wide meaning.

These deeming and widely worded restrictions could end up covering even independent persons and groups who by the fortuitous circumstance of being related to or otherwise have some sort of joint arrangement in a business becoming disqualified.

The other problem is the proving of such connection or acting ‘in concert’. In the Essar Steel case before the Supreme Court, there was fairly deep investigation carried out and connections even in countries such as Bermuda was unearthed. Further, the background of entities such as discretionary trusts were also unravelled. Such inquiry and investigation, however, is a costly affair, and often faces roadblocks of non-cooperating countries that swear to secrecy.

That apart, India particularly is known for informal arrangements between parties where trust, relations, and community network often substitute formal agreements. Tax evasion/avoidance has almost been like a national sport and industry, as most recently the demonetisation exercise demonstrated. Detection of such connections and ‘acting in concert’, and then proving it before an impartial adjudicator can be very difficult indeed.

More Likely Than Not

That said, multiple laws, rulings, and legal principles laid down do help. There is a rich set of judicial precedents under the SEBI Takeover Regulations, the SEBI Insider Trading Regulations, and even under competition law. Courts have, for example, laid down useful principles one of which is the benchmark of ‘preponderance of probability’. In cases of securities fraud and similar acts, a well-accepted principle is that the level of proof applicable is whether it is more likely than not that such a wrong has taken place. This is contrasted with the principle applied for criminal proceedings of proving beyond reasonable doubt. The term ‘persons acting in concert’ also specifically covers even unwritten agreements, and understandings. This too helps the adjudicating authority, and the courts to take a view from the underlying circumstances that there indeed is a connection which disqualifies the parties.

To conclude, adjudicating authorities and courts may well adopt these principles, and apply them in insolvency cases too to disqualify those who attempt to use legal and other subterfuges. At the same time, courts may also help in those cases where parties get unintentionally disqualified due to the wide wording, albeit with the difference that the onus of proof of not being connected may be shifted to such party. All in all, the law, with all its admitted overreach, and even vagueness, is still apt to India’s circumstances. Even if its application in actual cases may continue to be a challenge, the principles are available.

Blocking aberrant promoters from insolvent companies is a challenging task

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The recent ownership battle in McDowell Holdings has revived debates on the strength or weaknesses of the IBC

Should promoters be banned altogether from participating in the revival of companies which went sick under their guard? Or should they face restrictions only if the sickness was due to specific wrongs they have committed? These questions have troubled insolvency regulators and lawmakers alike.

Indeed, alarmed by attempts by errant promoters to acquire back the companies they ran, and that too at deep discounts, the lawmakers made urgent amendments in 2017 itself, the second year of life of the Insolvency & Bankruptcy Code (IBC), and barred such promoters from participating in revival of such companies. The bar was widely worded and covered promoters and even other persons on multiple counts.

There have been several cases where the question was whether such disqualified persons were trying to take back their companies through various means. The Supreme Court in 2018 elaborately ruled on such issues in the case of revival of Essar Steel. It highlighted the fact that the IBC contains widely-worded restrictions barring not just errant promoters and other persons, but also persons acting in concert with them or connected with them. Even the seemingly opaque corporate veil would not stop the court — and hence the insolvency regulators — from seeing the underlying reality. The controversies never seem to stop though.

A Nuances, Commercial View

But before we examine the issues in more detail, we come back to the more fundamental question. Should promoters of such companies in insolvency be barred from participating in their revival?

The cynical arguments in favour would seem strong. Surely the promoters have taken care of themselves and siphoned funds — in India or abroad? Or they have ‘enriched’ relatives, and connected persons through loaded transactions leaving a hollow shell of the company? Even if they did not indulge in such things, the argument goes, surely the promoter is incompetent and, if given a second chance, drown the lenders and creditors once again?

The law, however, took a nuanced and commercial view. At the outset, while promoters are not given any preference, they are not discriminated wholesale either. A specific list of disqualifications have been made. Those entering into ‘preferential’ transactions whereby related parties are enriched at the cost of the company are barred. So are wilful defaulters. Also those who have been barred by SEBI from accessing the capital markets. So on.

While generally, these disqualifications are about those who have carried out illegal/harmful activities, promoters and others are not disqualified solely because they took that, or another company, into insolvency. Yet there is one more disqualification which borders on punishing business failure. If a person is connected to a business which has become a non-performing asset, and a year has passed but such default is not cured, such person is also disqualified. Even this bar can be justified on the ground that if a person is already in financial trouble, how can they expect to enter into yet another venture?

It may also be remembered that the scheme of the IBC gives primacy to the wisdom of the Committee of Creditors. Barring such disqualifications, they have wide freedom in accepting or rejecting a particular proposal on merits, and at their choice.

Tough To Establish Links

However, the question is not whether any of the statutory disqualifications are unjustified. The question is whether they are so widely worded that they could cause several problems in practice. The disqualification, for example, applies not only to the errant persons themselves, but also to ‘persons acting in concert’ with them. This term, apparently borrowed from the SEBI Takeover Regulations, has a wide connotation, and covers several persons who may not even have formal links. Even persons ‘connected’ in the specified manner are disqualified, and this word too has been given a wide meaning.

These deeming and widely worded restrictions could end up covering even independent persons and groups who by the fortuitous circumstance of being related to or otherwise have some sort of joint arrangement in a business becoming disqualified.

The other problem is the proving of such connection or acting ‘in concert’. In the Essar Steel case before the Supreme Court, there was fairly deep investigation carried out and connections even in countries such as Bermuda was unearthed. Further, the background of entities such as discretionary trusts were also unravelled. Such inquiry and investigation, however, is a costly affair, and often faces roadblocks of non-cooperating countries that swear to secrecy.

That apart, India particularly is known for informal arrangements between parties where trust, relations, and community network often substitute formal agreements. Tax evasion/avoidance has almost been like a national sport and industry, as most recently the demonetisation exercise demonstrated. Detection of such connections and ‘acting in concert’, and then proving it before an impartial adjudicator can be very difficult indeed.

More Likely Than Not

That said, multiple laws, rulings, and legal principles laid down do help. There is a rich set of judicial precedents under the SEBI Takeover Regulations, the SEBI Insider Trading Regulations, and even under competition law. Courts have, for example, laid down useful principles one of which is the benchmark of ‘preponderance of probability’. In cases of securities fraud and similar acts, a well-accepted principle is that the level of proof applicable is whether it is more likely than not that such a wrong has taken place. This is contrasted with the principle applied for criminal proceedings of proving beyond reasonable doubt. The term ‘persons acting in concert’ also specifically covers even unwritten agreements, and understandings. This too helps the adjudicating authority, and the courts to take a view from the underlying circumstances that there indeed is a connection which disqualifies the parties.

To conclude, adjudicating authorities and courts may well adopt these principles, and apply them in insolvency cases too to disqualify those who attempt to use legal and other subterfuges. At the same time, courts may also help in those cases where parties get unintentionally disqualified due to the wide wording, albeit with the difference that the onus of proof of not being connected may be shifted to such party. All in all, the law, with all its admitted overreach, and even vagueness, is still apt to India’s circumstances. Even if its application in actual cases may continue to be a challenge, the principles are available.

Blocking aberrant promoters from insolvent companies is a challenging task

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The recent ownership battle in McDowell Holdings has revived debates on the strength or weaknesses of the IBC

Should promoters be banned altogether from participating in the revival of companies which went sick under their guard? Or should they face restrictions only if the sickness was due to specific wrongs they have committed? These questions have troubled insolvency regulators and lawmakers alike.

Indeed, alarmed by attempts by errant promoters to acquire back the companies they ran, and that too at deep discounts, the lawmakers made urgent amendments in 2017 itself, the second year of life of the Insolvency & Bankruptcy Code (IBC), and barred such promoters from participating in revival of such companies. The bar was widely worded and covered promoters and even other persons on multiple counts.

There have been several cases where the question was whether such disqualified persons were trying to take back their companies through various means. The Supreme Court in 2018 elaborately ruled on such issues in the case of revival of Essar Steel. It highlighted the fact that the IBC contains widely-worded restrictions barring not just errant promoters and other persons, but also persons acting in concert with them or connected with them. Even the seemingly opaque corporate veil would not stop the court — and hence the insolvency regulators — from seeing the underlying reality. The controversies never seem to stop though.

A Nuances, Commercial View

But before we examine the issues in more detail, we come back to the more fundamental question. Should promoters of such companies in insolvency be barred from participating in their revival?

The cynical arguments in favour would seem strong. Surely the promoters have taken care of themselves and siphoned funds — in India or abroad? Or they have ‘enriched’ relatives, and connected persons through loaded transactions leaving a hollow shell of the company? Even if they did not indulge in such things, the argument goes, surely the promoter is incompetent and, if given a second chance, drown the lenders and creditors once again?

The law, however, took a nuanced and commercial view. At the outset, while promoters are not given any preference, they are not discriminated wholesale either. A specific list of disqualifications have been made. Those entering into ‘preferential’ transactions whereby related parties are enriched at the cost of the company are barred. So are wilful defaulters. Also those who have been barred by SEBI from accessing the capital markets. So on.

While generally, these disqualifications are about those who have carried out illegal/harmful activities, promoters and others are not disqualified solely because they took that, or another company, into insolvency. Yet there is one more disqualification which borders on punishing business failure. If a person is connected to a business which has become a non-performing asset, and a year has passed but such default is not cured, such person is also disqualified. Even this bar can be justified on the ground that if a person is already in financial trouble, how can they expect to enter into yet another venture?

It may also be remembered that the scheme of the IBC gives primacy to the wisdom of the Committee of Creditors. Barring such disqualifications, they have wide freedom in accepting or rejecting a particular proposal on merits, and at their choice.

Tough To Establish Links

However, the question is not whether any of the statutory disqualifications are unjustified. The question is whether they are so widely worded that they could cause several problems in practice. The disqualification, for example, applies not only to the errant persons themselves, but also to ‘persons acting in concert’ with them. This term, apparently borrowed from the SEBI Takeover Regulations, has a wide connotation, and covers several persons who may not even have formal links. Even persons ‘connected’ in the specified manner are disqualified, and this word too has been given a wide meaning.

These deeming and widely worded restrictions could end up covering even independent persons and groups who by the fortuitous circumstance of being related to or otherwise have some sort of joint arrangement in a business becoming disqualified.

The other problem is the proving of such connection or acting ‘in concert’. In the Essar Steel case before the Supreme Court, there was fairly deep investigation carried out and connections even in countries such as Bermuda was unearthed. Further, the background of entities such as discretionary trusts were also unravelled. Such inquiry and investigation, however, is a costly affair, and often faces roadblocks of non-cooperating countries that swear to secrecy.

That apart, India particularly is known for informal arrangements between parties where trust, relations, and community network often substitute formal agreements. Tax evasion/avoidance has almost been like a national sport and industry, as most recently the demonetisation exercise demonstrated. Detection of such connections and ‘acting in concert’, and then proving it before an impartial adjudicator can be very difficult indeed.

More Likely Than Not

That said, multiple laws, rulings, and legal principles laid down do help. There is a rich set of judicial precedents under the SEBI Takeover Regulations, the SEBI Insider Trading Regulations, and even under competition law. Courts have, for example, laid down useful principles one of which is the benchmark of ‘preponderance of probability’. In cases of securities fraud and similar acts, a well-accepted principle is that the level of proof applicable is whether it is more likely than not that such a wrong has taken place. This is contrasted with the principle applied for criminal proceedings of proving beyond reasonable doubt. The term ‘persons acting in concert’ also specifically covers even unwritten agreements, and understandings. This too helps the adjudicating authority, and the courts to take a view from the underlying circumstances that there indeed is a connection which disqualifies the parties.

To conclude, adjudicating authorities and courts may well adopt these principles, and apply them in insolvency cases too to disqualify those who attempt to use legal and other subterfuges. At the same time, courts may also help in those cases where parties get unintentionally disqualified due to the wide wording, albeit with the difference that the onus of proof of not being connected may be shifted to such party. All in all, the law, with all its admitted overreach, and even vagueness, is still apt to India’s circumstances. Even if its application in actual cases may continue to be a challenge, the principles are available.

S&P projects India's FY23 GDP growth at 7.3%, pegs inflation above 6%

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S&P Global Ratings projected India's economic growth at 7.3% in current fiscal with downside risks and said inflation is likely to remain above RBI's upper tolerance threshold

Economic growth, GDP

S&P Global Ratings on Monday projected India's economic growth at 7.3 per cent in the current fiscal with downside risks and said  is likely to remain above RBI's upper tolerance threshold of 6 per cent till the end of 2022.

In its Economic Outlook for Asia Pacific, S&P said India's growth next year will get support from domestic demand recovery after the coronavirus pandemic.

"We have retained our India growth outlook at 7.3 per cent for the fiscal year 2022-2023 and 6.5 per cent for the next fiscal year, although we see the risks tilted to the downside," it said.

Other agencies have cut India's GDP growth forecast amid higher  and rising policy interest rates. Earlier this month, Fitch Ratings slashed the growth estimate to 7 per cent for the current fiscal from 7.8 per cent pegged earlier. India Ratings & Research too had reduced its projections to 6.9 per cent from 7 per cent earlier.

Asian Development Bank has cut the projection to 7 per cent from 7.5 per cent earlier.

The  (RBI) expects the  to grow 7.2 per cent in the current fiscal (April-March). The growth last year (2021-22) was 8.7 per cent.

 expanded 13.5 per cent in the April-June quarter, sequentially higher than 4.10 per cent growth clocked in the January-March period.

On inflation, S&P Global Ratings pegged the average rate in the current fiscal at 6.8 per cent and projected it to fall to 5 per cent in the next fiscal beginning April 2023.

"India headline Consumer Price  (CPI) is likely to remain outside the Reserve Bank of India's upper tolerance limit of 6 per cent until the end of 2022. That's amid substantial weather-induced wheat and rice price increases as well as sticky core inflation. And food inflation may rise again," it said.

Retail or consumer price inflation has remained above RBI's upper tolerance threshold of 6 per cent for the eighth month in a row and was at 7 per cent in August. Wholesale price inflation remained in double digits for the 17th straight month and was at 12.41 per cent in August.

According to S&P Global Ratings, elevated core inflation would drive up policy rates further in India, and projected policy interest rates to be 5.90 per cent by the end of this fiscal.

To tame stubbornly high inflation, the central bank has already hiked benchmark interest rates by 1.40 percentage points to 5.40 per cent. In its monetary policy review on September 30, RBI is expected to hike rates by another 50 basis points to a three-year high level of 5.90 per cent.

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