Business News at 10:00 am on 8th July, 2024

Let’s begin, the Union Budget for 2024 may announce a set of measures to placate the middle class, and the low-income population, which are hit by sticky food inflation and an income stagnation. While policymakers are working out the incentives, official sources said these could include personal income tax reliefs, higher retention level of Agniveers in the regular defence services, and more government support for urban housing to boost labour-intensive constriction sector. The government will also likely announce steps including an assured pension option as part of the increasing pensionary benefits to the government staff under the National Pension System. Quote Besides the poor, the budget will likely announce measures to soothe the middle class who are probably miffed unquote an official said.
Moving to Industry news, India Inc is expected to post good profit numbers for the April-June quarter, with sectors like automobiles, banking, metals, capital goods and pharmaceuticals doing reasonably well during the period. Information technology players are also expected to chip in with a decent performance thanks to an improving demand environment and better deal execution. Tata Consultancy Services will kick off the earnings season on July 11. Excluding oil marketing companies, Kotak Institutional Equities expects the universe of companies it tracks to post a 9.3% year-on-year increase in net profits. For the Nifty 50 set of companies, profits may stay flat y-o-y and decline 10.7% sequentially. For BSE-30 companies, the brokerage expects profits to go up by 8.1% y-o-y, but fall 8.4% sequentially.
Over to Tech, six months since its launch, PhonePe’s Indus Appstore, an alternative to Google Play Store continues its fight for large-scale adoption by smartphone manufacturers and consumers. The app store has recorded two million downloads since its launch, which is just 0.3% of the country’s smartphone users. As per analysts, the pace needs to quicken if it has to dent Google s near monopoly in the segment. The biggest hurdle Indus faces is convincing smartphone manufacturers to pre-install it on their devices. Users have to download it from the company’s website, and also see a warning from Google’s Android that the file may be unsecured. Google Play Store comes pre-installed in all Android phones. Most smartphone manufacturers are evaluating PhonePe’s proposal to pre-install Indus Appstore.
Next from Industry news, after tasting success in urban centres, quick commerce startups are now looking at Tier 2 and 3 markets as the next growth frontier. Replicating their Tier-1 success in smaller towns and cities, however, could take as long as five to seven years. And while the opportunity is huge, it will come with region-specific challenges, say analysts. Quote While convenience as a value proposition should hold in Tier 2 and 3 cities as well, lower AOV (average order value) and concentration of demand due to lower population density and a slow change in consumer behaviour, could adversely impact unit economics unquote Pankaj Makkar, managing director, Bertelsmann India Investments, told FE. The e-commerce market share of these geographies has been steadily increasing.
Over to Budget, The Centre may push some pending legislative reforms, including liberalisation of the insurance sector, creation of a national financial information registry and streamlining of provisions of the Companies Act, in the upcoming Budget session, officials have said. Streamlining of the insolvency framework may, however, be pushed to the winter session of Parliament, they said. The Budge session is scheduled to commence on July 22 and conclude on August 12. During the session, the government may take up the National Financial Information Registry Bill, which seeks to provide a 360-degree information system to lending institutions to expedite the process and reduce the cost of credit. For individuals or enterprises wanting a lower interest rate, banks will ask for their consent to access data.
Next, Banks are likely to witness a 10-15-basis-point (moderation in the net interest margin , a key indicator of profitability, and higher agriculture sector-related stress in the first quarter of the current fiscal, analysts say. HDFC Bank and YES Bank will kick-off the sector’s earnings season as they will announce Q1 results on July 20. Quote We continue to believe that the growth-NIM conundrum may persist and the strain will sustain. Banks may continue to see a moderation in incremental spread, unquote said Elara Securities in a report. NIM will likely be impacted on three counts – continued repricing on deposits, sticky incremental deposit costs as a few banks raised rates in Q4FY24 and higher interest income reversal given higher agriculture-related slippages for some lenders.
Lastly, let’s have a look at stocks in focus today. These are Bandhan Bank, Titan Company, IndusInd Bank, Adani Wimar, KPI Green, Coforge, Nykaa and Marico. Bandhan Bank has announced the appointment of Ratan Kumar Kesh as the Interim Managing Director and Chief Executive Officer, effective July 10, 2024 whereas Titan jewellery domestic operations grew by nearly 8%.