E-Cigarettes Ban in India, Indian Stock Market Falls, Indian Economy Can Worsen Further

E-cigarettes banned. PhonePe to enable UPI-based IPO bidding. Startups in India seek change in listing requirement. Indian stock market falls following rise in crude oil prices. Indian economy can worsen further, says Marc Faber.

 

POLICY

Govt approves ban on e-cigarettes.

In Thin Air: The Union Cabinet today approved an ordinance prohibiting the manufacturing and sale of e-cigarettes in India.
 
According to a draft ordinance, the storage of e-cigarettes shall now also be punishable with imprisonment up to six months or fine up to INR50,000 or both.
 
Shares of ITC gained 1.8%, Godfrey Phillips India soared 7.8%, VST Industries rose 1% and Golden Tobacco were up 4.5% on back of the news.

Landholdings to be assigned unique land parcel number.

A Name on Every Stone: In an attempt to bring about transparency in land ownership, facilitate real estate transactions, help resolve property taxation issues, amongst other things, the Ministry of Rural Development has started work on assigning a standardised unique number for each surveyed plot.  
 
The unique number will have details of the state, district, tehsil, block level and street information, wherever applicable, and information about the plot including size and ownership details, and could subsequently be linked to the Aadhaar and revenue court system.

PhonePe to enable UPI-based IPO bidding.

A Click Away: Digital payments platform PhonePe has announced a new service which would enable users to participate in initial public offerings (IPO) using their BHIM UPI ID.

The development comes following National Payments Corporation of India’s (NPCI) order which mandated retail investors to invest in the IPO via Unified Payments Interface (UPI) based Applications Supported by Blocked Amount (ASBA). This will make PhonePe the first non-bank to facilitate such transactions, since initially only banks were given the mandate to facilitate these transactions.

Startups in India seek change in listing requirement.

Change is the Only Constant: Top startups in India including unicorns such as Ola, Lenskart, PolicyBazaar and Oyo shall be meeting SEBI policymakers to push for a change in the current listing requirements, which mandate 20% promoter holding for listing in India. 
 
The founders of Lenskart, Ola and PolicyBazaar have stakes ranging between 4% and 15%, following dilution in their holdings after multiple rounds of funding.

 

INDIAN MARKETS

Indian stock market falls on back of rising crude oil prices, erasing gains. Indian economy could worsen further, says Marc Faber.

All Loss, No Gain: BSE Sensex plunged 642.22 points, or 1.73%, to 36,481.09 on Tuesday on back of the rising crude oil prices following the drone attack on Saudi Aramco’s oil facilities on Saturday. 
 
This, coupled with a slowdown in GDP growth, has prompted investors to seek safe havens. Likewise, foreign portfolio investors have been on a selling spree. They have sold Indian shares worth $524mn so far in September. Between January and July, they were net buyers of close to $11.5bn, but have sold $4.66bn since then.
 
And the Indian economy can worsen further, says Marc Faber, Editor and Publisher of The Gloom, Boom & Doom Report in an interview with the Business Standard. Read the exclusive interview here.

 Flying taxis are preparing to take off

OIL

Asia feels the burn after attacks on Saudi oil facilities.

Oil Be Right Here Waiting For My Order: The recent attacks on Saudi Aramco’s oil facilities in the eastern part of the Kingdom threaten to reverberate across Asia. The strikes knocked out half of Saudi Arabia’s crude production. And because supply lines are so long, the effects of the shortfalls would be days or weeks away.
 
The effects are being particularly felt in Asia, where 72% of Saudi’s crude exports (c. 5mn barrels/day) go to. Already, Saudi is telling Indian and Chinese buyers it won’t be able to ship as much light-grade crude as ordered. Four of the top five crude oil importers in the world are in Asia (China, India, Japan, South Korea). Moreover, as US sanctions have targeted Venezuela and Iran, many Asian countries have increased reliance on Riyadh.

Surging oil prices might be bad news for slowing Indian economy.

Arabian Frights: A significant casualty of the attack on Saudi oil facilities could be India’s economic growth, which is already floundering and gasping for breath. The Kingdom cut oil production by half and oil prices experienced their highest surge in about three decades. This could have a negative impact on India, which imports 80% of its oil requirements, counts Saudi as its second-largest oil supplier, and whose economy is currently undergoing a slowdown.

 Flying taxis are preparing to take off

US RATES

Federal Reserve widely expected to cut rates for second time on Wednesday.

Cut Me Once, Cut Me Twice: The Federal Reserve is widely expected to cut interest rates for the second consecutive time on Wednesday. Global economic slowdown, concerns that US growth may be losing steam, the trade war, and geopolitical uncertainties vis-à-vis Iran and Saudi Arabia may be factors that the Central Bank takes into account to justify further monetary easing.
 
Whether the Fed will continue issuing rate cuts in the future is unknown and would depend on future developments, especially the outcome of the trade talks between Washington and Beijing. President Trump, however, would be more than happy if the easing continues to even negative interest rates as in Europe so as to weaken the Dollar and make American exports more competitive.

A US rate cut could likely boost fund flow to Indian equities.

Washington to New Delhi: A US rate cut could likely be good news for Indian markets as it could result in more fund flow to Indian equities and debt, minimise outflow from FPIs, and prompt rate cuts from India’s own Central Bank.

 

COMPANIES

Zomato and OYO face brand image problems.

There Have Been Better Times: Zomato and OYO have two things in common – they are among India’s most successful startups, and they have developed some serious brand image problems of late. Zomato was hit by the #LogOut movement wherein restaurants left the platform over its deep discounting policies. It was also struck by protests by delivery agents in Bengaluru and Mumbai over pay cuts. OYO, meanwhile, is battling legal complaints from a Bengaluru-based hotelier who accused its founder of cheating and break of trust. And, up until a month ago, OYO also faced hoteliers boycotting it. These controversies have hurt the brands’ images and public perceptions. More on this here.

WeWork’s IPO fiasco doesn’t bode well for SoftBank’s other real estate investments.

This Isn’t (We)Working: With its valuation plummeting from $47bn to somewhere between $10bn and $15bn, WeWork’s IPO has been delayed. The fiasco that has been the coworking space company’s public listing aspirations has reflected not only a repudiation of its business model but also SoftBank’s (WeWork’s biggest investor) valuation philosophy. This might not bode well for the Japanese conglomerate’s other real estate investments.

 

FIN.

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