1. Rural FMCG sales rise sharply in fiscal fourth quarter on higher grocer stockpiling
Sales of FMCG products in rural areas rose faster than urban sales in the fourth quarter of 2022-23. Sales for the whole year grew faster in rural areas as well than urban, according to data from Bizom. Rural consumer goods sales rose 16.8 per cent in the three months to January, showing 8.9 per cent growth for the full financial year. Urban sales grew 7.9 per cent in the fourth quarter, ending the full year with 5.5 per cent. Overall, FMCG sales grew 14.1 per cent in the fourth quarter and 7.8 per cent in the entire financial year.
Why it’s important: This growth cannot be seen as an indication of an overall recovery because discretionary spending on personal care, and confectionery are yet to pick up. The fourth-quarter rise can be attributed to stocking up at grocery stores. Inflation continues to hurt consumption.
2. Sovereign bonds fall past psychologically important 7 per cent, lowest since September
Yields on five-year Indian sovereign bonds have dipped below the psychologically significant 7 per cent, touching their lowest level since September, as the odds shortened on a protracted policy pause on interest rates. The central bank last week unexpectedly left the cost of funds unchanged for the first time in nearly a year. Profit-taking towards end of the trading session erased gains for these bonds, but outlook on short-term sovereign debt of up to 3- and 5-year maturities remained favorable. Bond prices and yields move in opposite directions.
Why it’s important: There are increasing expectations the unexpected pause in monetary tightening will eventually be a pivot for broader rate trajectory. It remains to be seen if these expectations are realized. Stubborn retail inflation could play spoilsport.
3. Private forecaster predicts below-average monsoon, posing risks to economic growth
India may see below-normal rains this year, with the onset of the southwest monsoon between July and September likely delayed by about 10-15 days, according to private forecaster Skymet Weather Services. Skymet in its first forecast for monsoon 2023 said rainfall will be 94 per cent of the long-period average due to the impact of the El Niño weather pattern, which is linked to droughts or poor rainfall in India.
Why it’s important: The forecast raises concerns over farm output, posing mounting risks to rural incomes, consumption, and economic growth. It could deepen the farming crisis, which still employs the largest segment of the country’s population.
4. Corporate India likely to report highly profitable fiscal fourth quarter
Brokerages expect Indian companies to report a rise in earnings for the March quarter of 2022-23 after a relatively muted showing in the preceding two quarters. The growth is expected to be led by financial services, FMCG firms, and automakers. The combined net profit of the Nifty companies, excluding Adani Enterprises, is expected to have grown 15.6 per cent to Rs 1.77 lakh crore from Rs 1.53 lakh a year ago. It was up 9.3 and 1.4 per cent year-on-year in third and second quarters, respectively.
Why it’s important: Despite the expected uptick in net profits, revenue growth might be losing steam due to sluggish demand and decline in commodity prices, which impact price realizations of upstream firms.
5. State Bank to raise up to $2 billion through overseas bond sales in 2023-24
The State Bank of India, the country’s biggest lender, plans to garner up to $2 billion in 2023-24 through overseas bond sales, dwarfing last year’s foreign fundraises by three of its closest private-sector rivals, including HDFC Bank. Its board will meet on April 18 to consider the fundraising through sales of senior unsecured notes. State Bank is expected to issue these bonds to overseas investors in multiple tranches.
Why it’s important: Despite the uncertainty in the global bond market due to the rising interest rate scenario, SBI is likely to take advantage of investor interest for bonds of state-run companies considered quasi-sovereign from an investment perspective.
6. Manipal Hospitals close to acquiring KIMS Health for Rs 3,500-4,000 crore
Manipal Hospitals, backed by Singapore’s sovereign investor Temasek, is close to acquiring Kerala-based hospital chain KIMS Health for Rs 3,500-4,000 crore. Manipal intends to buy the stake held by True North, which invested $200 million in KIMS Group in March 2017. Discussions are in advanced stages, and an announcement is expected soon. Founded in 2002, the Kerala Institute of Medical Sciences is a network of hospitals offering quaternary care in India and the Middle East.
Why it’s important: Once the deal goes through, it will be the Manipal Group’s third acquisition after AMRI Hospitals and Columbia Asia. The acquisitions could catapult Manipal to India’s largest hospital chain.
7. Reliance, WH Smith and other show interest in buying Future Retail
Reliance Retail, WH Smith, a consortium led by Boston-based restructuring firm Gordon Brothers, and April Moon Retail, in which the Adani Group owns a stake, are among 49 contenders that have submitted expressions of interest for Future Retail, which has a debt of around Rs 21,000 crore. It was admitted for insolvency proceedings in July last year after it was unable to repay loans. Resolution professional Vijay Iyer of Deloitte had sought expressions of interest a second time after the first round lacked enough participants and didn’t result in firm offers.
Why it’s important: Creditors of Future Retail would like to recover as much of their dues as possible. A buyer, on the other hand, would like to acquire it on the cheap since the status of many of its supermarkets and stores are under a cloud because the company failed to pay rent.
8. E-scooters drive electric vehicle sales to record 1 million in 2022-23
Electric vehicle sales in India roared past one million units in 2022-23, propelled by state incentives and robust production. Electric scooters, which tripled in sales, accounted for the bulk of the industry’s volumes, with sales climbing 30 per cent in March from the preceding month. EV sales in India rose 153 per cent in 2022-23 from the previous year to 1.15 million units, surpassing the cumulative 1.09 million sales until the previous year. All segments of EVs, including cars, three-wheelers, and two-wheelers, more than doubled sales, VAHAN vehicle registration data showed.
Why it’s important: The rapid expansion the sales of electric vehicles mark a significant stride towards sustainable transportation and green transition. Government incentives have proven to be effective in this instance.
9. Stockbroker Zerodha expects 20 per cent jump in revenue and profits
India’s largest broker Zerodha expects revenue and profit to have grown by a fifth in the financial year ended March. But there is a major correction ahead for the stockbroker firm in the current fiscal, founder and chief executive officer Nithin Kamath said. If current trends continue, overall revenues for Zerodha can decline by as much as 40 per cent in 2023-24.
Why it’s important: The volatility in stock markets, sparked by geopolitical tension that is impacting supply chains, recessionary fears, and interest rate hikes could be a dampener for brokers in 2023-24.
10. Government turns on heat on offshore online gaming companies
The Directorate General of GST Intelligence has cracked down on Cyprus, Mauritius and Cayman Islands-based entities offering online gambling and betting. These companies are not registered in India and were helping many wealthy individuals, including celebrities and social media influencers, launder money abroad. Tax officials have identified 38 such portals offering services in India that have not paid any GST. Initial estimates put the tax evasion at Rs 12,000 crore from April 2019 to November 2022. The tax department has issued notices to these companies and the investigation is ongoing.
Why it’s important: Concerns are rising over charges of money laundering and tax evasion by offshore gaming firms, which policymakers suspect are distorting the market. More stringent action by the authorities is expected.
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