World Bank lowers India’s 2022-23 GDP growth forecast to 6.5 percent
The World Bank has pared its growth estimate for India by one percentage point to 6.5 percent for 2022-23, citing the Ukraine war and global monetary policy tightening. It is the lowest growth estimate by any multilateral agency. The International Monetary Fund, which estimates that India’s economy will grow at 7.4 percent in the same period, is expected to revise its projection next week. Last week, the Reserve Bank of India cut its growth estimate for 2022-23 to 7 percent from 7.2 percent earlier.
Why it’s important: Elevated inflation due to higher prices of key commodities and rising borrowing costs is expected to impact domestic private consumption demand, while slowing global growth will have an effect on India’s exports.
Market regulator cancels Brickworks Ratings licence, orders windup by April
The Securities and Exchange Board of India has cancelled the license of Brickwork Ratings promoted by Canara Bank, stopped it from adding new clients and ordered it to wind up operations in six months. The order listed various violations by Brickwork, including failure to document meetings with the management, lack of independent analysis of financial projections given by firms, delay in recognizing defaults, and conflict of interest.
Why it’s important: This is the toughest regulatory action against any credit rating firm in India. An earlier audit of the ratings agency in January 2020 had led to an administrative warning and enquiry. Sebi has issed a show-cause notice to Brickworks in November 2020.
Nifty firms to see double-digit growth in fiscal second quarter
The aggregate revenue of the 50 companies on the Nifty gauge is likely to grow in double digits in the three months to September for the seventh quarter in a row. Revenue is expected to grow 18.8 percent from the year earlier, while net profit may increase 5 percent, according to ET Intelligence Group. Operating margin, however, is likely to shrink by 2.9 percentage points year-on-year to 18.4 percent because of high inflation in input costs.
Why it’s important: Although analysts have slashed their aggressive projections of profit growth of Nifty firms due to inflation in raw material costs, most of them expect the healthy corporate earnings momentum to continue.
Losses of oil marketers to widen on slimmer margins, frozen pump prices
Losses at Indian Oil, Bharat Petroleum and Hindustan Petroleum are expected to widen to Rs 21,300 crore in the September quarter from Rs 18,500 crore in the preceding three months as refining margins have shrunk and retail prices remained frozen, according ICICI Securities. The losses on retail sales for diesel and petrol, however, narrowed to Rs 9.8 per liter in the second quarter from Rs 14.4 a liter in the June quarter of 2022-23.
Why it’s important: Although crude oil prices have been extremely volatile in the recent past, pump prices have remained frozen for about six months. The slight moderation in crude prices have been offset by lowered refining margins in the second quarter.
Chinese investment in India’s stock markets inches closer to top 10 countries
China is moving towards being one of the top 10 nations in terms of foreign portfolio investor inflows into India, according to numbers obtained through an RTI application by Business Standard. It was Rs 80,684 crore in June, according to the latest data provided by the Securities and Exchange Board of India. This is less than Rs 20,000 crore away from the 10th largest FPI country, the Netherlands, at Rs 99,140 crore.
Why it’s important: China’s increasing market investments in India likely reflects its relative attractiveness in a slowing world but such investment will also attract higher government scrutiny.
Online festive sales in first week see increased demand for consumer goods
The first week of this year’s festival season sales has brought some cheer to the e-commerce industry and manufacturers. The online retail market touched $ 5.7 billion in gross merchandise value, registering about 27 percent growth from a year earlier, according to market researcher Redseer’s 2022 Ecommerce Festive Sales report. The festive season, which starts with Onam and continues till the New Year, accounts for as much as 40 percent of annual sales of companies that sell discretionary products.
Why it’s important: The surge in private consumption is a good indicator for India’s economic growth at a time of global recession fears and central banks raising interest rates to tame inflation.
Output in services sector in India expands at its slowest pace in six months
India’s services sector posted its weakest output growth in the six months ended September because of weak sales and inflationary pressures, according to the S&P Global India Services Purchasing Managers’ Index, which came in at 54.3 in September. It was the 14th month of growth in a row but was still down from August’s 57.2. A reading of 50 indicates expansion.
Why it’s important: The slowdown indicates a loss of momentum in private sector output growth. High price pressures and an increasingly competitive environment also crimped the rate of expansion.
Retail investors can now earn up to 7.55 percent on NBFC deposits
Individuals can earn as much as 7.35-7.55 percent on deposits from non-banking finance companies. Bajaj Finance, one of the biggest NBFCs with the highest AAA rating, is raising interest rates on its 30-month deposit by 30 basis points to 7.35 percent. One basis point is a hundredth of a percentage point. PNB Housing Finance with an AA rating raised rates by 30 basis points to 7.55 percent for 36-47-month deposits. Financial advisers expect other NBFCs to raise interest rates further over the next week.
Why it’s important: The Covid pandemic tested the resilience of NBFCs, but the sector seems to have emerged stronger with reasonable balance sheet growth, lower delinquency ratio and larger liquidity cushions.
Airtel provides 5G services to customers at existing rates in eight cities
Airtel customers in eight cities will get access to the new 5G services at existing rates until the rollout is more widespread, the telecom operator has said. The announcement follows Reliance Jio’s recent promise that customers will get 5G at affordable rates. The new 5G services have gone live in Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Siliguri, Nagpur, and Varanasi.
Why it’s important: The intense coemption in India’s low-margin, high volumes telecom market is likely to ensure that 5G services being rolled out across the country will remain affordable to a large section of consumers.
SpiceJet stock rises on government window for collateral-free liquidity
Shares of SpiceJet jumped as much as 8.8 percent as investors bought the stock on hopes that the government’s collateral-free liquidity window for the aviation sector would ease cash flow woes of airline firms. The stock closed at Rs 41.85 after rising as much as 9.1 percent to hit the day’s high of Rs 42.50.
Why it’s important: SpiceJet needs swift capital infusion as the beleaguered carrier has been facing troubles over safety concerns about its aircraft. The aviation regulator has grounded half of its flights.
