Weekly Dossier – India – China tension to AGR issue of Telecoms
This week started with a negative trend on Monday, which indicates the worry of investors about the increasing covid19 cases across the country. This also reflects the global market trends. And also the fear of the second wave of infections in Beijing affected the markets across. It seemed like some time is needed for the market to digest the news of increasing cases.
Important Events of Last week
Tamil Nadu has taken the step ahead and announced complete strict lockdown across 4 places to combat the increasing coronavirus cases. Right now Tamil Nadu stands second in terms of a number of positive covid19 cases registered across the country.
Beijing, China has reported more than 50 Positive coronavirus cases on Sunday and this created fear among the global countries about the chance of the second wave of infections. Already many countries are slowly trying to come back to the normal situation by relaxing restrictions across the country, but this news is worrying because countries are not in a position to face the second wave of infection if it occurs. And over the week, the number of cases is increasing in Beijing. But the news does not have much effect on the stock markets of the world. We will discuss the reason for this.
Now, this week the tension at the LOC between China and India seemed to escalate. 20 Indian army soldiers were martyred last week during the clashed with China’s People liberation army. The army claimed that China has entered the Indian territory and during the clash between the two armies 20 soldiers were martyred, out of which few soldiers were injured and succumbed to death due to below 0-degree temperatures. Now when this news has broadcasted, stock markets reacted and fell. But very soon within a few hours, the markets recovered with the hope that the tensions will be de-escalated through diplomatic talks. But the trade tension will have a huge impact on the behaviour of the stock market and this scenario is an important matter to observe over the next week as no consensus has been reached between the two armies and nations.
Now coming to the financial news that we have covered over the last week,
The tale of Indian E-commerce Giants – Who is ahead
Ecommerce industry till now has passed three stages. The first stages are somewhere between the mid-’90s to 2005, the second phase till 2015 and we are presently in the 3rd phase. The remarkable boost in the third phase is the promotion digital world, the promotion of online transaction or digital transaction, which made the eCommerce industry boom in the market.
The era we are in the new era of Digital Revolution. A new India, where at every step online transactions are being promoted, digital services are promoted, and slowly we are entering the digital age. Where everything will happen in just a click on our mobile phone. This is where eCommerce is leading in the third phase. In this phase due to the increased number of people preferring online commerce and more people coming online daily, there is a considerable increase in the online transactions. This also leads to the emergence of new players in the market. Read full here
How RBI controls the rupee value – Appreciation and depreciation of the rupee
Indian rupee value is of major concern for many. People started to discuss in normal conversation that rupee has fallen a certain percentage with respect to the dollar. and Rupee has increased its value a certain percentage with respect to the dollar. But why does the rupee value fall and how RBI is empowered to control the value of the rupee?
To understand how the rupee value is controlled by RBI lets go back digging history a little bit and how rupee had dropped to the present value when compared to the dollar.
Though we might have experienced a plethora of economic reforms for the past few years and past few decades, one that is remembered in the history of India is the Economic reforms after 1991. The year 1991 was an unforgotten crisis in the Indian economy and at the same time a revolutionizing event as we may call it. It was during this year a great economic crisis is in front of India, and the forex reserves that are available with India at that point of time are enough for just one more week of imports as quoted by many reports. Read full here
The intangible asset sale for the Indian government – Air India
The crisis of India’s third biggest Air Carrier Air India is a headache for Indian government. The carrier is been in the news for its debt-ridden problems for the past few years.
Unable to meet with the problems arisen from the government revenues, the government has been trying to sell the Company to private investors. But finding a prospect buyers is not seen as a possible scenario in the near future. The effort to draw bidders has been tried in the year 2018 but the attempt was unsuccessful with no possibilities in that year.
The Modi government is also tried to reduce the eligibility criteria to attract more buyers bidding for the carrier and leaseback of aircraft. But why there have been no interested buyers for the past few years for the third biggest carrier in India. The story is an interesting one. Let us dig deep. Read full here
Increasing Foreign Reserves
During the present pandemic, the economy of India is suffering and the exports of the country fell to a record low. There is an unprecedented fear among the people and the organizations about the economy in the future post-pandemic. The fear of uncertainty is visible in the volatility among the stock markets. Among these situations, RBI is on the move in increase the forex reserves. This made people think about what is the importance of forex reserves for India, and why in the present pandemic situations RBI is on this move to accumulate the forex reserves. We simplify the move to make you understand the consequences of this move and what is ahead for India. Read full here
The saga of AGR in Telecom Industry Explained
AGR stands for Aggregated gross revenue. This has been introduced in the year 1999 when the telecom industry is moving towards a new method of sharing revenue with the government which is in contrary to the earlier fixed license fee model. Before 1999, Telecom industries used to pay a fixed amount as a license fee to the government. But from the year 1999, telecoms are to pay a percentage of the total revenue to the government. This is termed as Profit sharing model and AGR is the total revenue of the Telecom Industry. Read full here
That’s it for this week. We have tried to cover different financial news this week. And we come up with more in the coming weeks.
And also keep a look at Week Ahead to understand what is ahead for the Indian Economy and Stock Market. It will be published every Sunday and will be mailed if you have subscribed to us.
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Have a safe and wonderful weekend at your home.