How Sebi's new rules will impact your fund manager

Hi there, Good Morning. Welcome to ETMarkets Morning, the show about money, business and markets. I am Nikhil Agarwal. Let's start with the headlines first.

- Zee Entertainment to merge with Sony India
- Vodafone, Aditya Birla Group may put fresh equity into Vodafone Idea
- Tata Power plans to raise up to $750 million for green business
- HDFC cuts home loan rates to 6.7%

Now lemme give you a quick glance on the state of the markets.

Dalal Street is likely to have a negative start this morning. Nifty futures on the Singapore Exchange traded 30 points lower at 8:30 hours (IST). Asian stock markets opened mostly lower on Wednesday as the global market tried to digest the crisis at Chinese property giant Evergrande. Markets in Korea and Hong Kong were shut. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.30 per cent.

Elsewhere, the yield on 10-year Treasuries was at 1.34%. The dollar held below a near one-month high on Wednesday as investors focused on two key risks -- a default by Chinese property developer Evergrande and the expected pace of US monetary policy tightening. Oil prices rose around 1 per cent on Wednesday, extending overnight gains, after industry data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves. Brent crude futures climbed 68 cents, or 0.9 per cent, to $75.04 a barrel.

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That said, here’s what is making news.

The stock of Oil India has gained nearly 25% over the past month as investors expect the oil and gas producer to benefit from its recent acquisition of Numaligarh Refinery (NRL) in the form of embedded excise duty reimbursement and capacity expansion in the medium term. NRL became a subsidiary of Oil India after it acquired a stake from BPCL in April. Oil India currently owns a 72% stake in NRL after transferring an 8% stake to the Assam government on September 3, according to stock exchange filings. The acquisition may potentially add Rs 70-80 per share to the company’s fair value. At Tuesday’s closing price of Rs 209 on the BSE, the stock was traded at eight times the one-year forward earnings, which is a 16% discount to the long-term average valuation. It is one of the cheapest stocks among the global oil and gas explorers.

India’s potential weightage in the global bond indices, including those of Bloomberg-Barclays and JP Morgan, could be in a wide range of 0.3 to 10 percentage points as the quantum of outstanding securities eligible for unlimited purchases by overseas funds breaches the $200-billion threshold. Bonds foreign portfolio investors (FPIs) could purchase under the Fully Accessible Route (FAR) are now at about $203 billion (outstanding value) in 14 different tenors, show data from the Clearing Corporation of India (CCIL India). Maturities of those securities range from 2024 to 2050. India's likely inclusion in global bond indices may draw as much as $250 billion of inflows over the next decade and reduce the cost of borrowing by as much as 50 basis points for the government, forecasts Morgan Stanley.

The Securities and Exchange Board of India (Sebi) is in talks with other regulators on the transition from the traditional concept of ‘promoters’ to that of ‘controlling shareholders’ so that corporate control is accurately reflected. As a part of this process, the regulator is reaching out to the Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA) and Insurance Regulatory Development Authority of India (IRDAI) in an attempt to bring a uniform framework. The market regulator is of the view that the current concept of promoter and promoter group has become irrelevant for the new-age companies, especially start-ups since these are not family-owned businesses but backed by institutional investors.

LASTLY,

Mutual funds might struggle to retain or hire top talent at the middle and lower levels as they implement the capital markets regulator Sebi’s circular, which requires key executives to invest in their own schemes beginning October 1. While the move is aimed at ensuring that key employees of mutual funds have a stake in the funds, popularly known as ‘Skin in the Game’, industry officials said the implementation of the rule could hit the profitability of asset managers and impact individual financial decisions. Heads of mutual funds, who spoke to ET on condition of anonymity, said there could be a flight of talent to other financial services firms unless pay packages are increased.

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NOW Before I go, here is a look at some of the stocks buzzing this morning...


Torrent Power has signed a pact with CESC, Haldia Energy and other nominal shareholders to acquire 156 megawatts (mw) wind power projects for an enterprise value of Rs 790 crore, the Ahmedabad-headquartered company said on Tuesday.

HCL Technologies has bagged a multi-year deal from peer-to-peer lending platform Lendico, an ING Germany brand, to help create a digital platform that makes business banking faster and more convenient for small- and medium-sized enterprises (SMEs).

Indiabulls Housing Finance said it will raise $165 million by issuing foreign currency convertible bonds (FCCBs). The decision was taken at a meeting of the Securities Issuance Committee of the company held on September 21, 2021.

Infosys announced its collaboration with digital workflow company ServiceNow to provide enterprise-level service management for customers in manufacturing industries.


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Do also check out over two dozen stock recommendations for today's trade from top analysts on ETMarkets.com.

That’s it for now. Stay with us for all the market news through the day. Happy investing!