Inflation and its impact on an overall economy
Retail Inflation in April is 4.3% which is well within the range of RBI. Inflation is measured by the CPI and the wholesale price index (WPI). The CPI measures changes in prices of essential commodities at the consumer level, while the WPI notes changes at the producer level.
The commodities considered for measuring the WPI are manufactured products (63.75% weightage), primary articles such as food (20.02%), and fuel and power (14.23%).
For the CPI, the commodities are food and products (45.86%), housing (10.07%), clothing (6.53%), and fuel among others. Inflation is indicative of the decreasing purchasing power of the country’s currency and vice versa.
Inflation is indicative of decreasing purchase power of the country’s currency and vise versa.
It is basically the cost of production which is passed on to the consumers.
In the Monetary Policy Committee meeting of February 2021, Government specified that for the next 5 years they will not be focusing on maintaining the inflation rate. There is a possibility in the near future for the inflation rate to go higher.
In increasing inflationary conditions, the RBI adopts a contractionary monetary policy. In case of a slow-down, it adopts an expansionary monetary policy, which leads to the increased money supply, lower interest rates, lower borrowing costs, and increasing aggregate demand thereby giving a boost to the economy.
RBI has increased Gsec buying in the past 2 weeks
The central bank of India net purchased Rs. 34,175 crore of sovereign papers between April 22 and May 4 from the secondary market to ensure lower borrowing cost in the second wave that would derail the economic recovery.
The usual efforts through Open market Operation and Government Security Acquisition Program is a corrective measure that the government has been taking to control the rise in bond yields and lower the borrowing cost. The Government principal money manager is said to have bought T bills and long-term papers in 7 tranches in the past two weeks.
Due to the following action, the bond yields have reduced to 0.03 basis points to 6.02%.
Tata Motors Posts $1 billion loss as Jaguar Costs hot bottom line
Tata Motors announced a ₹ 7,600 crore ($1 billion) loss on Tuesday despite a strong performance in the first quarter of 2021 as restructuring costs related to its British luxury car brand Jaguar Land Rover (JLR) hit the automaker’s bottom line.
The company reported losses for three consecutive quarters last year, as the pandemic hammered demand in domestic and international markets.
The standalone business including joint operations reported profit at Rs 1,645.69 crore in Q4FY21 against a loss of Rs 4,871.05 crore in the year-ago quarter and clocked a massive 106 percent year-on-year growth in revenue at Rs 20,045.9 crore during the quarter, driven by strong passenger vehicle demand and recovery in commercial vehicle demand.
The commercial vehicle business consistently posted sequential quarter-on-quarter growth on the back of improved consumer sentiments, buoyancy in e-business, firming freight rates, and higher infrastructure demand including road construction and mining.
WFH promotes tier 2 cities as talent hub and Unemployment in Rural India
Due to work from home policy tier, 2 cities like Kochi, Guwahati, Jaipur, Indore, and Mysore are said to have emerged as talent hubs.
According to Talent500, there has been a 30-40% increase in demand for workforce in tier-2 cities within tech teams across sectors.
Covid has made us all work remotely. In a post-pandemic world, remote won’t just be the new normal, but instead, be a strategic advantage for companies as they build out their teams.
On the other hand, we see rural unemployment has nearly doubled in a week as lockdowns and surging covid infections in villages brought economic activity to a halt. Rural unemployment shot up to 14.34%. The MSMEs (micro, small and medium enterprises) are in bad shape, and the informal jobs market, as well as self-employment in rural India. The situation may get worsened over the next few weeks if we don’t manage to tackle the pandemic in rural India.
Competition Commission of India (CCI) agreed to the proposal of acquisition of an additional 25% stake of Adani Krishnapatnam Port Ltd By Adani Port SEZ
Adani Port SEZ holds 75% shareholding; the proposed combination will lead to acquiring 100% shareholding and complete control.
In April, Adani Ports and Special Economic Zone had said it had acquired a 25 percent stake of Vishwa Samudra Holdings in Krishnapatnam Port for Rs 2,800 crore. Krishnapatnam Port, located on the east coast of India in the Nellore district of Andhra Pradesh, is an all-weather, deep water port with a multi-cargo facility with a current capacity of 64 million tonnes per annum.
12 Drugmakers and Healthcare companies are planning IPO in 2021
Covid-19 has increased investor demand for promising companies in sectors like Pharmaceuticals, healthcare, and related businesses that are beneficiaries of the pandemic.
In the past five years, only seven companies involved in the sector have hit the IPO
Companies like Glenmark Lifesciences, Supriya Lifesciences, Krsnaa Diagnostics, Krishna Institute of Medical Sciences KIMS, Tatva Chintan Pharma, Sigachi Industries Windlass Biotech have already filed their draft paper switch SEBI.
The four companies i.e Emcure Pharma, Wellness Forever, Vijaya Diagnostic, and Star Health Insurance have initiated the process for filing IPO.
It looks like there will be a massive change in the Indian Healthcare system because of covid -19 and demand for drugs, vaccines, diagnostic medical equipment, hospital, and other related services will increase over the period.
The Monetary Policy Committee is entrusted with the responsibility of deciding the different policy rates including MSF, Repo Rate, Reverse Repo Rate, and Liquidity Adjustment Facility. Monetary Policy Committee (MPC) has six members and the main objective of this body is to maintain price stability and boost up the growth rate of the country’s economy.
The MPC also maintained an accommodative stance “as long as necessary to sustain growth on a durable basis” and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward
The RBI MPC decided to keep the repo rate unchanged at 4 percent on the back of rising COVID-19 cases, imposition of restrictions, and lockdown in the state of Maharashtra. The reverse repo rate remained changed at 3.35 percent and the marginal standing facility (MSF) rate and the bank rate at 4.25 percent. The projection of real GDP growth for FY22 is retained at 10.5 percent because of the ongoing vaccination program, the gradual release of pent-up demand, and the investment-enhancing and growth-supportive reform measures taken by the government
The Government Security Acquisition Programme GSAP will reduce some of the uncertainties created by long-term bonds. It is very simple to understand that the Government wants to acquire high yield long-term bonds to reduce the debt burden for a longer period of time and also this will help to pump into the ecosystem.
Related Article: Rules that will knock your pocket from 1st April 2021
RBI has extended NEFT and RTGS facilities to non-bank payment system operators. So far, only banks were allowed to use these facilities. With RBI’s announcements, prepaid payment instrument (PPI) issuers, card networks, White label ATM operators, and Trade Receivables Discounting System (TReDS) platforms can also use these facilities. Also in an attempt to promote digital transactions, RBI has proposed to increase the limit of the outstanding balance to Rs 2L from Rs. 1L
In order to maintain Liquidity RBI Governor announced liquidity support of Rs 50,000 crore for fresh lending during 2021-22. RBI will provide Rs 25,000 crore to Nabard (National Bank for Agriculture and Rural Development); Rs 10,000 crore to National Housing Bank (NHB); and Rs 15,000 crore to Sidbi (Small Industries Development Bank of India).
The entire RBI Monetary policy indicates that the Government is focusing on maintaining liquidity that seems necessary for economic activity. It is striving to keep the cost of funds low by anchoring bond yields. These measures are aimed at keeping financial conditions agreeable, ensure orderly evolution of the yield curve and support the ongoing recovery.
Adani Group checks into Mumbai Airport by acquiring 23.5% stake; on way to 74% ownership of MIAL
The Adani Group has formally checked into Mumbai International Airport Ltd. by acquiring a 23.5 %stake in it held by two foreign firms ACSA and Bid Service Division Mauritius Ltd (Bidvest) Rs 1685.2 cr.
Adani Group is going to acquire a 74% stake in MIAL, by getting the right to develop the upcoming Navi Mumbai Airport which includes the entire 50.5%stake of outgoing promoter GVK Group
Adani had taken over the Mangaluru, Lucknow, and Ahmedabad airports and is planning to take over Jaipur, Guwahati, and Thiruvananthapuram airports by this July. It will develop, manage and operate these six airports for the next 50 years. Adani Group will be the biggest private airport operator in India in terms of the number of airports handled. Suggested to keep a check on Adani Port share price.
Tesla buys $1.5 billion in Bitcoin, plans to accept it as payment
To bring in more flexibility to further diversify and maximize return on our cash. Bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
This has briefly pushed the price of a cryptocurrency by 20%.
Government to include 4-day week ESIC facilities in Final rules
The labour ministry will give flexibility to employers to enable four-days a week of work with a ceiling of 48 hours in a week in the final rules that would be notified soon. However, employers will have to give three days’ of paid leaves to such workers and 12 hours a day of work in such cases will be after the consent of the employee. Currently, employers have to take the consent of the government to reduce the number of workdays in a week which has been fixed at 48 hours for a workweek of six days and eight hours of work each day.
Ministry of Defence, Bharat Electronics Ltd sign a contract worth over Rs.1000 crore to procure morder radio system.
The Armed forces are in need of transition from the single purpose radio of the past to more flexible Software Defined Radios (SDRs) to serve most of their wireless communication needs. These SDRs will be backwards compatible with existing Indian radios. Different Service groups require different form factor radios for specific platforms and waveforms/applications. India’s Ministry of Defence (MoD) and Defence Public Sector Undertaking (DPSU) Bharat Electronics Limited (BEL) have signed a contract for procurement of Software Defined Radio Tactical (SDR-Tac) worth over ₹1,000 crores.
Go Air revives IPO Plans, Wadia Group may dilute 30% stake in the Airline
Go Air is planning to raise Rs 3,000 crore in an IPO and has appointed Citigroup, ICICI Securities, and Morgan Stanley as the bankers. The Wadia Group, which operates businesses including Bombay Burmah, Bombay Dyeing, Britannia, National Peroxide, and Bombay Realty, will likely dilute 30% of its stake in GoAir. The airline operates more than 300 daily flights and has an 8.6% share of domestic passenger traffic. The airline flies to 36 destinations, including 27 domestic cities. The IPO is for a long term raising fund and reduces the debt.
What you can look at in the near future?
The aviation sector in India will witness consolidation in 2021 as the government expects to complete the sale of Air India in FY22 and Jet Airways’ new owners are in the process of re-starting its operations. Meanwhile, the Tata Group invested $37.7 million to buy an additional 32.7% stake in AirAsia India.
It will be worth seeing the kind of response that GoAir will experience. the industry structure is going to be a key theme for investors this year since the potential change in industry structure could lead to a significant change in the competition.
- Bad Banks plan back on the table to tackle NPA’s as covid assistance businesses come to an end, The government is considering the idea of bad banks. A bad bank is an entity that purchases non-performing asset (NPA) from banks at market price, clearing the balance sheet, and improving fundraising capabilities. The government is examining the entity-based model – in which acquiring NPA of the entity they support. The final call will be taken close to the budget event.
- India’s Life Insurance industry seeks Tax break on protection this request has been repeatedly set forth by the industry, Insurance penetration in the Indian market is still very low, and lowering the cost will significantly boost the sector. The Life Insurance Council has recently represented both the insurance regulator IRDA and the Finance Ministry to reduce the existing tax rates on protection based product to 5%
- Finance Minister Nirmala Sitharam Chairs review meeting of the National Infrastructure Pipeline This was a second review meeting by the Finance Minister to monitor the accelerated NIP Project. In the meeting, 24 projects worth Rs.80,915 crore under the ministry of Health and Family Welfare and 10 projects worth Rs2,79,604 crore under Department & Ganga Rejuvenation were discussed to Infra spending and annual achieved and targeted expenditures by the ministries.
- 50% premium cut by Maharashtra Government a masterstroke after the steep, temporary reduction in stamp duty charges, The 50% reduction in premium payment until December 2021 will benefit the supply side in the Realty sector immensely. This will essentially result in a reduction of several premiums that developers have to pay as part of the development of a project. As of date, 22 premiums are collected in Mumbai under various heads — including FSI, staircases, lift well, lobbies, etc. It is a direct incentive for homebuyers too and results in a win-win for developers and end-users
- ICRA on January 6 said slippages from the restructured book of non-banking finance companies (NBFCs) are estimated at 4-6 percent of their total loans. This will keep the overall stressed assets of NBFCs elevated in FY2022 after an increase of up to 200 bps in FY2021.
- Bandhan Bank rises over 3% on growth in Advances Loans and Advances grew by 23% YOY to Rs.80255 crore in the third quarter. The bank total’s deposit increased by 30% Rs. 71,188 crores against Rs. 54,908 in the corresponding last year.
- Tata plans to infuse Rs. 3,500 crore in Tata Cliq Tata Unistore Ltd, which owns Tata Cliq said the board of Directors has recommended an increase in the authorized share capital of the company through the issue of the equity share, considering funding required to enable it to run the business effectively.
- FII and DII data Foreign institutional investors (FIIs) net sold shares worth Rs 483.64 crore, while domestic institutional investors (DIIs) net sold shares worth Rs 380.41 crore in the Indian equity market on January 6, as per provisional data available on the NSE.
- Foreign institutional investors (FIIs) net sold shares worth Rs 483.64 crore, while domestic institutional investors (DIIs) net sold shares worth Rs 380.41 crore in the Indian equity market on January 6, as per provisional data available on the NSE.
- Warburg Pincus puts $100 million in Indian consumer electronics firm boAt, known for its budget-friendly Bluetooth speakers and wireless earbuds, was last valued at nearly $283 million after a $59.6 million funding round in December. U.S. private equity firm Warburg Pincus has invested about $100 million in India’s boat
- IRDA gave approval for the merger of Bharti Axa General with ICICI Lombard. The deal would help ICICI Lombard become the third-largest non-life insurer. The merged business will have a market share of around 8.7 percent on a Pro-forma basis. Bharti Enterprises currently owns a 51 percent stake in Bharti AXA General Insurance, while French insurer AXA has 49 percent. Post demerger, Bharti AXA General Insurance will cease to be a going concern, and both Bharti and AXA will be public shareholders.
- Four entities – Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management and SC Lowy – submitted bids for DHFL in October. Billionaire Gautam Adani’s roads-to-mining group outbid with a Rs 33,000 crore. With the total liabilities of the DHFL group estimated at over Rs. 85,000 crore lenders to the NBFC are likely to seek bids that maximize the funds they can recover. Since DHFL does not technically have any assets to its name, the lenders would be seeking to recover instead of looking for maximization of the assets.
- The SBI investors, French giant Amundi have announced that it would sell off its SBI green bonds if the bank grants a Rs 5,000 crore loan to Adani’s Carmichael coal mine in Australia. According to them Financing the mining business is totally in contradiction to the ideology of SBI green bonds. Amundi made social and environmental responsibility one of its four founding pillars. It was one of the founding signatories of the Principles for Responsible Investment. The Adani Carmichael project has been opposed by climate activists due to the issue of carbon emissions.
- The Supreme Court directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid up to ₹2 crores in view of the coronavirus pandemic under the Disaster Management Act, 2005. The eight categories of loans are MSME (Micro, Small & Medium Enterprises), Education, Housing, Consumer durable, Credit card, Automobile, Personal, and Consumption.
- Crude Oil prices fell on Monday, there is a meeting of producer group OPEC+ to decide whether to extend large output cuts to balance global markets, but vaccine hopes helped keep them on track to raise more than a fifth in November. The group is expected to come to some sort of agreement on relaxing the current production quotas that OPEC+ is currently tasked with meeting.
- Motilal Securities’ most preferred stock in the steel sector is Jindal Steel & Power and JSW Steel due to strong profit margin and high deliverables project in the medium term. Jindal Steel and Power to log an 11% annual growth in year Fy 2020-2022 which help the company with compounded annual growth of 20% on other hand JSW Steel the company has strong project pipeline. The steel sector will stay strong due to demand recovery and higher regional prices
Government is being Aggressive for Air India Privatization
Bid allowed on basis of Enterprise Value Due to uncertainties caused by Covid – 19, Bidding norms for the privatization of Air India is changed. Now we will see bidding on the basis of its Enterprise Value (EV).
The EV will comprise of 15% cash payment to the government and debt takeover up to 85%. Earlier, The buyer was required to take over the airlines estimated debt of Rs. 23,286 crore which brought down to Rs.17,464 crore due to prevailing situation in the domestic and international aviation industry and worsening of Air India’s performance. The deadline for submission of expressions of interest (EoIs) has been extended from October 30 to December 14. The qualified interested bidders will be intimated by December 28 and given some time for submission of financial bids. The Center is keen that the transaction be closed by March 31, 2021.
Mistry firms offer cashless separation to Tata’s in lieu of stake in group firms
Shahpoorji Pallonji group, which owns 18.4% stake in Tata Sons, on Thursday filed a scheme of separation in Supreme Court proposing to swap its entire holding in the group holding company for equivalent shares in listed entities of Tata group and along with a pro-rata share of Tata brand value (adjusted for net debt against) payable by cash or listed securities.
Earlier where it was considering accepting staggered payments from Tata Sons over an extended period of time. This proposal will help reduce the possibility of any additional debt on Tata group. Management and the legal team is currently examining the settlement application. But this proposal is vastly different from the initial stated intent of complete separation from the Tata group. This would in fact give the Mistry family, which is the single largest shareholder in Tata Sons, more say in the listed companies by virtue of their shareholding. This seems to be strategized proposal by Mistry for splitting of promoter stake in Tata Consultancy Services ( TCS), which is the most valuable company in the Tata stable and enduring source of capital for Tata Sons
Government allows exports under a new scheme to boost API production
The Department of Pharmaceuticals on Thursday announced amendments to production linked incentive scheme for promotion of domestic manufacturing of critical key starting materials (KSMs), drug intermediates (DIs) and active pharmaceutical ingredients (APIs) in India. In the scheme for bulk drugs, the government has replaced the criteria of ‘minimum threshold’ investment with ‘committed’ investment. This is a big opportunity for us to remain competitive in the export market and potentially record substantial growth. This will increase momentum in domestic production and speed up the Indian pharma industry’s journey to become self-reliant
Quarter 2 results
Maruti Suzuki witnessed significant demand improvement in the quarter and rose volume due to spiked demand in domestic market. Maruti registered net sales of Rs 17,689.3 crore last quarter, which is higher by 9.7 per cent compared to the same period the previous year.
It sold a total of 393,130 vehicles during the quarter, higher by 16.2 per cent compared to the same period the previous year. Sales in the domestic market stood at 370,619 units, higher by 18.6 per cent, while exports were at 22,511 units, lower by 12.7 per cent. The company posted a 1 per cent increase in net profit at Rs 1,371.6 crore for the quarter on the back of growth in volumes, lower sales promotion and marketing expenses.
Vodafone Idea posted a consolidated net loss of Rs 7,218 crore for the quarter ended September 30. The telecom player had posted a loss of Rs 50,921 crore in the corresponding quarter last year.
Revenue from operations declined marginally by 0.49 per cent YoY to Rs 10,791.20 crore. Average revenue per user (ARPU) increased to Rs 119 in Q2FY21 from Rs 114 in the preceding quarter. Vodafone Idea revenue grew 1.2 per cent QoQ as economic activities have gradually started to resume. The subscriber base declined to 271.8 million in Q2, as compared to 279.8 million in Q1.
The broadband site count stood at 457,386 as of Q2FY21 compared to 446,131 in Q1FY21, with 4G coverage to around 1 billion Indians.
Bharat Petroleum Corporation reported consolidated net profit at Rs 2,589.52 crore, jumping 58 per cent year-on-year due to lower expenses, including material and finance costs. There was 16% drop in total expenses Finance cost for the company was down 86 per cent, while the cost of material declined 45 per cent, reflecting the lower cost of crude oil. Revenue from operations for the quarter, however, was at Rs 66,331.22 crore, down 12 per cent. The strategy to buy cheaper crude oil in April and May helped the company improve Gross Refining Margins to $5.8 per barrel from $3.8 per barrel a year ago. They have opted a strategy to not export diesel and avoid the import of petrol. They are running refinery only to meet our local demand, And also increased petrol production at the Kochi refinery. Sales in October have recovered to pre covid levels, with petrol and diesel registering a growth of 4-5 per cent in sales volume in the current month over the corresponding period last year.
Coca-Cola India witnessed around 2 per cent fall in its consolidated net profit to Rs 619.43 crore for the financial year 2019-20. Coca-Cola India’s revenue from operations rose 2,741.54 crore in 2019-20, up 18.63 per cent during 2019-20 as compared with Rs 2,310.92 crore a year ago. The marginal drop in the profit is on account of marketing expenditures to meet its goals.
The performance in the last financial year was led by strong volumes across portfolio, with better operational execution and availability of consumer demands
Shriram Transport Finance reported a 10.5 per cent decline in net profit at Rs 684.56 crore in July-September quarter of 2020-21. Total income rose 4.68 per cent to Rs 4,351.26 crore during the quarter from Rs 4,156.92 crore in the same period a year ago. However, net interest income fell 1.67 per cent to Rs 2,021.86 crore from Rs 2,056.11 crore in the year-ago quarter. The prolonged lockdown due to COVID-19 pandemic has affected its business operations and it has considered an additional expected credit loss (ECL) provision on loans of Rs 416.65 crore and Rs 1,372.80 crore on account of pandemic during this quarter. However, ECL stood at Rs 2,282.44 crore.
America’s largest technology companies are thriving despite the economy’s woes, according to earnings posted by Google-parent Alphabet, Amazon, Apple and Facebook
Alphabet revenue of $46.17 billion, an increase of roughly 14% year over year. This marked to be a strong quarter, consistent with the broader online environment.
Revenue: $46.17 ($42.88 billion expected, according to analysts surveyed by Yahoo Finance)
Earning Per Share (EPS) : $16.40 ($11.21 expected, according to analysts surveyed by Yahoo Finance)
Net Income : $11.25 billion
Google Cloud Revenue : $3.44 billion
YouTube ad revenue : $5.03 billion
Amazon continued to benefit from shopping trends during the pandemic, reporting record profit and revenue during the third quarter. The company reported a $6.3 billion profit in the three months ending September 30, nearly triple that of the previous-year period. Amazon Web Services sales of $11.6 billion for the quarter, up 29% year over year
Revenue : $96.1 ( $92.7 billion expected, according to analysts surveyed by Yahoo Finance)
EPS : $12.37 ($7.41 expected, according to analysts surveyed by Yahoo Finance)
Facebook third-quarter profit and revenue continued to grow along with its worldwide user base, the company said, but it predicted a “significant amount of uncertainty” looking ahead to 2021.
The social media giant’s average monthly user base was 2.74 billion as of September 30, up 12% from a year earlier. Facebook lost users in the U.S. and Canada, its most lucrative ad market. Monthly users in the region dropped to 255 million, while daily users dropped to 196 million.
Revenue : $21.47 billion ($19.82 billion expected, according to analysts surveyed by Yahoo Finance)
EPS : $2.71 ($1.91 expected, according to analysts surveyed by Yahoo Finance)
Apple slightly exceeded Wall Street estimates for its fiscal fourth quarter, powered by international sales, which accounted for 59% of the company’s revenue during the quarter.
Revenue: $64.7 billion ($63.7 billion expected, according to analysts surveyed by Yahoo Finance)
EPS : $0.73 ($0.70 expected, according to analysts surveyed by Yahoo Finance)
IPhone revenue: $26.4 billion
Services revenue: $14.5 billion”
Wearable revenue: $7.8 billion