Top Stories | Lok Sabha nod for Finance Bill, markets rebound, Vinesh Phogat faces heartbreak, and more
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First up, the Lok Sabha just passed the Finance Bill, 2024 with Finance Minister Nirmala Sitharaman making headlines for restoring indexation benefits for properties bought before July 23. The big change was first reported by CNBC-TV18 and is a huge positive for property investors. In markets, the Sensex and Nifty have broken a three-day losing streak riding on the back of positive global cues. The Sensex jumped nearly 900 points and the Nifty surged over 300 points. The rupee is still struggling, hitting a record low for the sixth consecutive session.
Tomorrow, all eyes will be on the RBI’s MPC meeting outcome and most expect no immediate changes in key rates, with bets on on a rate cut only in December.
In Bangladesh, a new interim government is set to be sworn in tomorrow evening. The transition comes as opposition leader Khaleda Zia makes a rare public appearance after seven years.
On the tech front, YouTube’s CEO Neal Mohan is praising India’s booming creator economy and revealing some exciting investments in generative AI.
And lastly, it’s a tough break for wrestler Vinesh Phogat, who’s been disqualified from the 50 kg category finals after missing the weigh-in by just 100 grams.
1. Lok Sabha Passes Finance Bill 2024 with Indexation Amendment
The Lok Sabha passed the Finance Bill 2024 on Wednesday, following significant amendments to the capital gains tax provisions. Finance Minister Nirmala Sitharaman introduced the amendment to address concerns raised about the initial proposal’s potential negative impact on real estate investments. The new provision gives taxpayers the option to choose between a reduced long-term capital gains (LTCG) tax rate of 12.5% without indexation or sticking with the previous rate of 20% with indexation benefits.
The indexation benefit adjustment allows taxpayers to factor in inflation when calculating the cost of their property, thereby reducing the taxable gains. This change is particularly relevant for properties purchased before July 23, 2024, giving them the flexibility to opt for the tax treatment that best suits their financial situation.
The Finance Bill will now advance to the Rajya Sabha, where it is expected to be approved. According to constitutional provisions, the Rajya Sabha cannot reject a money bill but may return it with recommendations. If the Rajya Sabha does not act within 14 days, the bill will be considered approved.
FM Sitharaman Addresses GST on Health Insurance
During a parliamentary session on Wednesday, Finance Minister Nirmala Sitharaman addressed the growing calls for the removal of the 18% GST on health and medical insurance. Sitharaman underscored that the GST was implemented to mirror state tax laws and that any changes should be pursued with state finance ministers, who hold significant influence over the GST Council’s decisions.
Sitharaman noted that the introduction of GST has led to higher insurance premiums, making it more expensive for policyholders. Since the shift from a 15% service tax to an 18% GST in July 2017, many Indians have faced increased costs for their insurance coverage.
She also highlighted the composition of the GST Council, which includes two-thirds representation from state governments, suggesting that advocates for a rollback should engage with their state officials. Sitharaman emphasised that addressing the issue at the state level could be a more effective approach.
2. Higher Gold Prices Make Sovereign Gold Bonds a Headache for the Government
Gold has not been the govt’s best friend. Between 2015 and August 2024, the average domestic price of gold has risen 171%. For the government, this has made Sovereign Gold Bonds (SGB), which were launched in September 2015 and are priced basis the movement in domestic gold prices, a very costly proposition. So costly, that the SGB Scheme may not be financially viable in its current form.
After 67 SGB tranches, the enthusiasm with which the scheme was launched seems to be wearing off, at least for the government and the RBI. Five months into this financial year, and not a single tranche has been announced. There is buzz that the RBI is taking a long, hard look at the scheme itself, and is likely to discuss if, and how, the scheme should continue.
Sources indicate this is an agenda item at the meeting in Sept, when the government’s borrowing calendar for the second half of the year will be taken up. This indicates that should the RBI and the government decide to keep the scheme alive in its original form, we may not see another tranche of bonds being issued before October.
When it was launched, the scheme made sense. For the government, a rising Current Account Deficit was a problem; one it was desperate to contain to “within sustainable limits”. High gold imports were a big reason for the stubbornly high deficit. Gold prices had also been declining for the previous 3 years: between 2012 and 2015, gold prices had fallen 15%, from ₹3,105/g to ₹2,634/g.
3. Indian Markets Rebound; Rupee Hits Record Low
Indian share indices experienced a rebound on Wednesday, ending a three-day losing streak and closing near their session highs. The Nifty 50 index regained the 24,300 level, reflecting a broad-based rally with gains across 44 stocks. This recovery was supported by positive movements in key sectors, including autos and real estate.
Despite the positive market performance, the rupee continued its decline, reaching a record low of 93.96 against the dollar. The currency's depreciation has added to market volatility and investor concerns. The weakening rupee has been a contributing factor to the broader market fluctuations observed in recent days.
The auto sector saw notable buying interest, with companies like Bajaj Auto and Maruti among the top performers. Additionally, realty stocks benefited from the government's decision to allow indexation benefits on capital gains from real estate sales, contributing to the overall positive sentiment in the market.
4. RBI MPC Expected to Hold Rates in Upcoming Meeting
The Reserve Bank of India’s monetary policy committee (MPC) is expected to maintain the current interest rates during its meeting scheduled for August 8. A recent poll conducted by CNBC-TV18 of ten economists indicates that the MPC will likely keep the repo rate steady at 6.5% and retain the "withdrawal of accommodation" stance.
Economists predict a 4-2 vote in favor of maintaining the repo rate, reflecting a cautious approach amid ongoing food inflation and steady economic growth. Barclays forecasts that the MPC will continue with its current policy stance, with potential adjustments in the monetary policy stance not expected before October.
Half of the poll respondents anticipate that any change in the MPC’s stance may not occur until October, while others foresee possible changes by December or February of the following year. The cautious hold reflects concerns about inflation and economic stability.
5. YouTube CEO Highlights India's Growth at Brandcast 2024
At YouTube Brandcast 2024, YouTube CEO Neal Mohan stated that India is the fastest-growing market for video-sharing platforms and is leading global trends in the creator economy. Mohan noted that India is the largest market for YouTube Shorts, which competes with other short-form video platforms like Instagram Reels and TikTok.
Mohan emphasized that YouTube Shorts, launched in India four years ago, has garnered trillions of views, and many trends and fandoms originate from the Indian market. Additionally, YouTube has introduced monetization options for smaller creators through the YouTube Partner Program (YPP) since last year, expanding opportunities for content creators.
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6. Government Considers Selling Stake in Hindustan Zinc
The Indian government is revisiting plans to sell its stake in Hindustan Zinc, according to sources who spoke exclusively to CNBC-TV18. The government is now considering a staged divestment approach through an Offer for Sale (OFS).
As of the end of June, the government held a 29.54% stake in Hindustan Zinc, a company majority-owned by Vedanta with a 64.92% share. Vedanta recently reduced its pledged holdings by approximately 4% through an institutional share sale. Hindustan Zinc's management indicated that the timing of the OFS will be determined by the government, which is actively preparing for the divestment.
7. Vinesh Phogat Disqualified from Paris Olympics
Indian wrestler Vinesh Phogat has been disqualified from the Paris Olympics after exceeding the weight limit for her 50 kg gold medal bout. Sources revealed that Phogat was nearly 100 grams over the permissible limit, disqualifying her from the competition.
Phogat was compliant with the weight limit for her bouts earlier in the week, but athletes must meet weight requirements on both competition days. Phogat was found to be nearly two kilograms overweight on the night before her bout, resulting in her disqualification from both the gold and silver medal positions in the 50 kg category.
8. Nobel laureate Muhammad Yunus — New Head of Bangladesh's Interim Government
Nobel laureate Muhammad Yunus has been appointed as the head of Bangladesh’s interim government by President Mohammed Shahabuddin, according to the president’s press secretary.
The announcement followed a meeting between President Shahabuddin and the coordinators of the Anti-Discrimination Student Movement, with the heads of the three armed forces also in attendance.
The remaining members of the interim government will be finalised after consultations with various political parties, the press secretary stated.
Yunus, who is currently abroad, welcomed the ouster of Sheikh Hasina’s regime, describing the development as the “second liberation” of the country. He will begin his role on August 7, 2024, following the resignation of former Prime Minister Sheikh Hasina.
Bangladesh Crisis: Marico says market conditions 'gradually improving', medium-term prospects intact
From 51% in financial year 2022, Marico aims to bring down Bangladesh's share in its international business to less than 40% by the end of financial year 2027, as per its June quarter investor presentation.
The FMCG major informed the exchanges on Wednesday that the operating conditions within the Bangladesh market are 'gradually improving'. The update comes after the recent spate of violent protests, that led to the resignation of former Prime Minister Sheikh Hasina, who fled the country and is currently in India.
Marico wrote in its update that it remains watchful of the evolving situation and continues to priorities the safety of its employees, factory workers, distributors and other stakeholders.
9. How Tim Walz’s midwestern dad vibe changed the Democrats’ election campaign even before his nomination
Those watching Tim Walz for the first time at the Philadelphia rally on August 6 got a taste of the easy and optimistic demeanour of the 60-year-old Minnesota Governor, who went from being a history teacher and high school football coach and an army veteran to now becoming Kamala Harris' running mate in the upcoming US election.
"In Minnesota, we respect our neighbours and the personal choices that they make. Even if we wouldn't make that same choice for ourselves, there's a golden rule: mind your own damn business," said Walz — a practising Lutheran Christian born in Nebraska — on the issue of abortion rights, an intensely polarising issue in the US.
In an interview soon after, Pete Buttigieg, the US Secretary of Transportation, called it a classically Midwestern way to make a simple point. In the hours after he was named the Vice Presidential candidate, political commentators described Tim Walz as affable, charismatic, progressive, and' a smart choice' by the Democratic Party.
The Democratic Party would hope that Walz's average dad vibe will swing votes in the midwestern states like Wisconsin and Michigan, which are known to be Republican strongholds.
10. Iran-Israel tensions: IDF kills Hezbollah commander, Turkey requests to join lawsuit against Israel
Israeli forces issue new evacuation orders to Palestinians in areas of north Gaza. “Hamas and terrorist organisations are firing rockets from your area towards the State of Israel. The IDF will act forcefully and immediately against them,” Army spokesperson Avichay Adraee stated.
Concerns of renewed conflict have risen following the recent killing of key figures from militant groups Hamas and Hezbollah. This includes an attack on a US base in Iraq on Monday, injuring five American troops and two contractors, which US Defense Secretary Lloyd Austin attributed to Iran-backed groups.
In response to Israel's killing of senior commander Fuad Shukr, Hezbollah launched a series of drone and rocket attacks on two military sites in northern Israel. Israel retaliated by striking two Hezbollah facilities in southern Lebanon, resulting in several civilian injuries near Nahariya.
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Great to see the Finance Bill’s indexation benefits for property investors making waves! This shift could really bolster the property market and provide some much-needed stability. For startups and B2B businesses navigating financial landscapes, understanding these changes is crucial. Feel free to check out my page for insights on how digital strategies can help you adapt to market shifts and grow effectively!