NSE to Pay SEBI INR1,000cr Disgorgement in Co-Location Case, M&M Discontinues Production of India's First Electric Car, Apple Reports Second Quarter Results et al.

NSE to pay SEBI INR1,000cr disgorgement in co-location case. Barred from accessing the securities market for six months. M&M discontinues production of the e2oPlus – India’s first electric car. Maruti reports c. 20% decline in domestic sales. India overtakes China to be Asia’s top fundraising hub for fintech. Online lending startups witness 20-30% jump in user acquisition costs. Apple reports second quarter results. 

 

Moving on to the top Business stories of the day. 

 

 NSE 

NSE to pay SEBI INR1,000cr disgorgement in co-location case. Barred from accessing the securities market for six months. 
 

Preferential Treatment!: The stock market regulator Securities and Exchange Board of India has ordered NSE to pay over INR1000cr and barred it from accessing the securities market for six months over a scandal which allowed some brokers to make money through gaining preferential access to the stock exchange servers. 
 

Shame!: The case goes back to 2015, when a whistleblower wrote a letter to SEBI alleging that NSE, India's largest stock exchange, gave preferential access to a few high-frequency traders and brokers to the exchange's trading platform.
 

Here’s a deep dive into the case.

 

 AUTO 

M&M discontinues production of the e2oPlus – India’s first electric car. Maruti reports c. 20% decline in domestic sales. 
 

A Thing of the Past: Mahindra & Mahindra (M&M), has discontinued the production of the e2oPlus – India’s first electric car on back of weakening sales and tightening safety regulations. 
 

As per the car manufacturer, the move is in line with its plan to “reorient the electric hatchback” segment.
 

e2oPlus will be replaced by the electric version of the KUV100 later this year.
 

The Fall: India's largest carmaker Maruti Suzuki on Wednesday reported 19% decline in its total domestic sales at 133,704 units in April 2019, as against 163,434 units in same month previous year. 
 

Sales of passenger vehicles (PV) in the domestic market went down by 19.6% at 131,385 units as against 163,434 units in same month previous year. 
 

Sales of utility vehicles (UV), however, registered a decent growth at 22,035 units vs 20,804 units last year.

 

 FINTECH 

India overtakes China to be Asia’s top fundraising hub for fintech. Online lending startups witness 20-30% jump in user acquisition costs.
 

Hub Tub: India has overtaken China to be Asia’s top fundraising hub for fintech, as per data provider CB Insights. 
 

China only saw $192m worth fintech funding in the Q1 – c. 89% less than last quarter. Meanwhile, India witnessed 27% more funding in the quarter to $286m.
 

Both countries saw 29 deals. This is a huge plummet for China, which had seen about 49 deals in last quarter whereas India stood with merely 18 deals in the same period.
 

The downfall in Chinese fintech industry can perhaps be on back of the recent crackdown by the Chinese govt following reports of defaults, sudden closures, and frozen funds. Last year, over four thousand P2P lending platforms failed (under investigation by police or unable to repay investors) after the Chinese regulator crackdown. 
 

In Other News: Online lending startups have witnessed a 20-30% jump in user acquisition costs over the last few months, as both banks and fintech companies aggressively chase consumers through social media channels.
 

The cost of acquisition has also increased due to higher borrowing costs. 
 

That has made fintech lending startups risk-averse, forcing them to be selective about their customer base.
 

Moreover, following the IL&FS default case last year, companies have been extremely careful about borrowers, leading to higher costs for attracting a limited set of good quality borrowers.

 

 MONEY 

What is financial wellness and how is it as important as physical wellness.
 

Did You Know?: Financial wellness is just as important as physical wellness. Surprisingly it has nothing to do with one’s income, net worth, size of the portfolio, asset allocation strategies, credit score, etc. What is financial wellness and how can one ensure that one is financially well. Read here
 

Goodreads: Listed equity shares or units of equity-oriented mutual fund, held for a year or more, are regarded as long-term capital assets. For unlisted equity shares and units of debt-oriented mutual fund, the holding period should be 24 months and 36 months or more, respectively, to be considered as long-term capital assets. 
 

Long-term capital gains (LTCG) in stocks and equity mutual funds are considered free of taxation if the gains are less than INR1L. LTCG tax at 10% will only apply to equity LTCG beyond INR1L.

Tax You Pay on Equity Investments: In case of LTCG, unlisted equity shares are taxable at 20%. STCG is taxable at slab rates or 30% (as the case maybe).


In case of debt funds, LTCG tax is at 20%, and STCG is taxable at slab rates or 30% (as the case maybe).

A deep-dive into the tax you pay on equity investments here.

 

 APPLE 

Apple reports second quarter results.

Q2: Apple posted quarterly revenue of $58bn in Q2, a decline of 5% vs last year. Profit dropped 16% to $11.56 bn.

Sales of the iPhones fell 17% to c. $31bn on back of increased replacement cycles and stiff competition from China which is offering lower-price, feature-rich handsets. 

The tech giant also announced a 5% increase in its quarterly dividend to 77 cents per share.
 

From the Horse’s Mouth: Read Apple’s Press Release here.