Indian equities extend winning streak as fears of US recession recede
Indian stock markets rose for the 10th consecutive session to a one-month high as concerns eased that the US economy could enter into a recession. Support from foreign portfolio investors saw the benchmark Sensex surpass 60,000 points. The Nifty breached 18,000 points as the market saw a broad-based rally led by gains in banks, engineering, capital goods and cement companies. The Sensex gained 1.31 percent to end trading at 60,746.59, and the 50-share Nifty rose 1.27 percent.
Why it’s important: Indian stocks have rebounded as overseas investors expect the US Fed to go slow on raising interest rates. However, weakness in the broader market remains a worry as stock prices of smaller firms continued to underperform larger rivals.
Reserve Bank set to roll out digital rupee today in the wholesale segment
The Reserve Bank of India will launch the digital rupee as a pilot project for the wholesale segment on November 1 to review and improve the virtual currency’s functionality. The pilot project will test the settlement of secondary market transactions in government securities in the wholesale segment. The central bank will launch a similar test for the retail segment in closed user groups of customers and merchants within a month.
Why it’s important: The central bank digital currency has been launched to counter potential threats posed by cryptocurrencies to overall financial stability. The concept of a digital currency was first announced in the national budget earlier this year.
Core sectors in India recover in September after slowing for two months
Growth in the eight infrastructure sectors of the economy recovered to a three-month high in September after slowing down in the previous two months. All core sectors except crude oil and natural gas reported expansion. Growth in coal, crude, natural gas, refinery products, fertilizers, cement, steel and electricity rebounded to 7.9 percent in September after slowing to a seven-month low of 4.1 percent in August, commerce ministry data showed.
Why it’s important: The revival in growth in core infrastructure sectors indicates a revival in industrial activity, which could help India maintain its growth momentum that has earlier shown signs of slackening. Growth in industrial production is expected to pick up in the coming months.
Customs and excise collections may fall short by Rs 1 lakh crore in 2022-23
The central government may see a combined shortfall of up to Rs 1 lakh crore in excise and customs levies in the current financial year compared to the budget estimates, mainly because of duty cuts on edible oil and petroleum products. The government had set a target of Rs 3.35 trillion for excise and Rs 2.13 trillion for customs in 2022-23 while announcing the budget in February.
Why it’s important: The trend in customs and excise duty collection might not affect overall indirect tax collection because of robust GST revenues are expected to more than offset the shortfall.
Experts concerned over data mismatch in trade with China that leaves $12 billion hole
Hugely varying trade data from India and China have left experts searching for reasons to explain the mismatch. While China has claimed trade with India touched $103 billion in the first nine months of 2022, India’s data show that bilateral trade stood at just $91 billion. The difference in the trade figures in the two nations stood at nearly $12 billion. China has claimed India’s trade deficit expanded to $75.67 billion, while Indian data shows a narrower gap of $67.17 billion.
Why it’s important: The significant gap in trade data is likely because of the underinvoicing of shipments by Indian importers to avoid paying import taxes and maximize profits.
Chinese telecom equipment makers see staff exodus as business takes serious hit
The employee base of the Indian arms of ZTE Corp and Huawei Technologies has reduced by as much as 90 percent over the past two years with the two Chinese telecom equipment makers failing to secure new business, including any for 5G gear supplies following greater government scrutiny and tightened procurement rules.
Why it’s important: Business of many Chinese firms have been affected amid protracted border tensions. In the telecom sector, India has cited cybersecurity concerns while issuing an order last year that required all telecom equipment supplies to go through a much tighter screening process.
Government forms three panels to evaluate semiconductor facilities
The central government has set up three sub-committees to evaluate proposals received under its India Semiconductor Mission and aims to soon approve the first applications. Five consortiums, including Vedanta-Foxconn, Next Orbit Ventures-Tower Semiconductor and Rajesh Exports, which applied for incentives under mission’s $10 billion package, are awaiting official sanction to set up semiconductor fabrication units in the country.
Why it’s important: Establishing a semiconductor manufacturing ecosystem in India is a crucial step towards achieving self-reliance in the electronics sector. Careful evaluation is needed as these are multibillion dollar proposals.
Net profit of Tata Steel plummets 90 percent in fiscal second quarter
Tata Steel has posted a 90 percent decline in its second-quarter net profit. The steelmaker, which also has operations in western Europe, reported a consolidated bottom line of Rs 1,297 crore, compared with Rs 12,548 crore in the year-ago period. Consolidated revenue for the three months to September was Rs 59,878 crore, down marginally year-on-year. Operating profit declined 62 percent to Rs 6,271 crore.
Why it’s important: Softening steel prices and higher input costs have squeezed operating profit margins at Tata Steel. The extent of the plunge is in line with that of other steelmakers facing similar headwinds.
Airtel reports 89 percent rise in net profits on higher 4G subscribers
Telecom operator Bharti Airtel’s consolidated net profit for the fiscal second quarter increased by as much as 89 percent to Rs 2,145.2 crore on the back of robust increase in 4G users who consumed more data. The firms also paid lower spectrum usage charges and posted a one-time gain.
Why it’s important: Despite the rise, India’s second-largest telecom firm still missed analyst estimates due to slowing overall customer additions, higher foreign exchange fluctuations and lower profits from associates.
Net profit of L&T rises 22.5 percent, revenue increases 23 percent on strong order inflows
Engineering firm Larsen & Toubro reported a 22.5 percent growth in consolidated net profit to Rs 2,229 crore for the quarter ended September. Net profit was up nearly 31 per cent in the fiscal second quarter sequentially. Profit before interest depreciation and tax was Rs 5,638 crore, an expansion of 24.5 percent over the year-ago period.
Why it’s important: Although the results were below street expectations, L&T gained from strong order inflows in the local market despite sustained volatility in currency and commodity prices.
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