Foreign Investors Reverse Course, Pump Over ₹25,000 Crore In December Alone
FPIs have now invested ₹26,505 crore into the Indian equity markets in just six trading sessions of this month on the bet that next year's elections will bring back the BJP in a comfortable majority and thus ensure continuity.
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:29) Foreign investors reverse course, pump over Rs 25,000 crore in December alone.
- (07:05) With just 16 million Indians travelling overseas, growth opportunity is huge, says research body CAPA.
- (13:45) Govt should not dilute Make In India policy, says industry body’s EV committe head.
- (16:44) Record visas for Indians to United States, immigrants leave Canada on high costs and Australia triples feees for foreign investors buying existing homes.
- (18:58) World’s richest families are $1.5 trillion richer in 2023.
- (19:44) The era of expensive and overpriced Rolexes are over.
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Markets & Oil
As we try and set the stage for the week ahead, a quick look back at last week.
On Friday, the Reserve Bank of India left interest rates unchanged at 6.5 per cent and quite ambitiously raised the GDP forecast for FY24 to 7 per cent, a figure that is a little higher than what most economists are predicting or projecting.
The NSE Nifty 50 zoomed past the 21,000-mark, to hit a high of 21,006 before closing with a gain of 68 points at 20,969.
The BSE Sensex hit a new all-time high at 69,894 and closed 304 points higher at 69,825.
So the BSE Sensex is poised to touch 70,000 and the NSE Nifty has already crossed 21,000.
And the foreign portfolio investors who were waiting for it out since September and have begun investing in bits and pieces in October and November now seem to have returned in greater force as 2023 comes to an end.
Foreign portfolio investors (FPIs) have now invested Rs 26,505 crore into the Indian equity markets in just six trading sessions of this month on the bet that next year’s elections will bring back the BJP in a comfortable majority and thus ensure continuity.
Elsewhere in the world, the US Federal Reserve has signalled potential rate cuts starting from the first quarter of next year, which means the days of high-interest rates may be ending.
Which means that capital will once again go further to seek higher returns and be willing to be exposed to greater risk.
And now our energy segment is supported by India Energy Week...
A coalition of more than 80 countries including the United States, the European Union and small island nations were pushing for a deal that includes language to “phase out” oil, gas and coal but were coming up against tough opposition led by the oil producer group OPEC and its allies, Reuters reported.
OPEC issued a letter to its members and backers on Dec. 6 asking them to oppose any language targeting fossil fuels in a COP28 deal, and negotiators told Reuters that those delegations appeared to be heeding the call.
What then is going on you might ask ?
Well, OPEC’s largest producer and ring leader Saudi Arabia, along with Russia and others, say COP28 should focus on reducing emissions, not on targeting the fuel sources that cause them.
Not surprising of course.
China’s top climate envoy, Xie Zhenhua, said on Saturday that a COP28 deal can only be considered a success if it includes an agreement on fossil fuels. Reuters also quoted him saying COP28 was the hardest climate summit of his career.
The next draft is likely today. And by the way the conference ends tomorrow.
COP 28 has produced several commitments from countries to hit targets like tripling renewable energy and nuclear power deployments, pulling back on coal and curb emissions of the powerful greenhouse gas methane.
So far, 130 countries have agreed to triple renewables and double the rate of energy efficiency improvements, while 50 oil and gas companies have agreed to cut out methane emissions and eliminate routine flaring by 2030 under the Oil and Gas Decarbonisation Charter.
The International Energy Agency (IEA) said on Sunday that these pledges - if honoured - would lower global-energy related greenhouse gas emissions by 4 billion metric tonnes of carbon dioxide equivalent in 2030.
While the figure is substantial, it represents only about a third of the emissions gap that needs to be closed in the next six years to limit warming to 1.5C above pre-industrial levels, as agreed to in the 2015 Paris Agreement, the IEA said and REuters reported..
Meanwhile, oil prices rose somewhat though both crude benchmarks fell for a seventh straight week, posting their longest streak of weekly declines in half a decade, on lingering oversupply concerns.
Brent crude futures are just under $76 a barrel. For the week, both benchmarks which includes West Texas Intermediate lost 3.8 per cent, after hitting their lowest since late June on Thursday, a sign that many traders believe the market is oversupplied, according to Reuters.
But the clincher is what lies ahead.
Which is a warmer winter from all early signs.
Temperatures in many parts of the Northern Hemisphere are much higher than what they usually are at this time.
The reason is climate change and El Niño, a warming of the tropical Pacific Ocean.
The World Meteorological Organization has already declared 2023 the hottest on record.
So what you might ask ?
Well, the heat is expected to suppress energy prices.
Prices for natural gas and heating oil are already slipping on projections that the weather could be warmer or not freezing cold.
Heating costs will fall, gas prices will be lower.
All this means that energy prices could remain low and contribute to existing projections of lower demand in the western hemisphere.
Which means that oil prices back home, right here, could come down further. Which means for example, air fares could come down further as the early signs seem to be suggesting.
More on air fares and aviation shortly.
The Core’s Energy segment was supported by the India Energy Week to be held from February 6 in Goa. Log onto www.indiaenergyweek.com for more details.
The Aviation Opportunity
The numbers might surprise you. Only around 16 million Indians are flying internationally to and fro from India. While total passenger traffic for international flights is 70 million, that obviously includes overseas visitors and those of course who fly multiple times.
This means the size of the opportunity to build internationally is larger than we perhaps think or know, Kapil Kaul, CEO of aviation research and consulting body CAPA told me.
We obviously need more capacity but also the ease of travel. Quite simply put, as Travel Agents Association of India president Jyoti Mayal told me in a conversation a few weeks ago, we have to encourage outbound travel including in the region if we want people to visit India. Indians are the best ambassadors, she said.
Back on air travel from India, I reached out to Kapil Kaul and asked him - as we were ending 2023 and entering a new year - where India stood on per capita international travel and what were the opportunities ahead ?
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Don't Dilute Make In India
The government should not dilute the 'Make in India' initiative and follow a consistent policy, FICCI EV Committee Chairperson Sulajja Firodia Motwani said.
Her comments come amidst reports of a possible slew of concessions for electric car manufacturer Tesla who wants to export fully built cars to India before starting domestic manufacture a year or two later.
Motwani is the founder and chief executive officer of Kinetic Green, which sells battery-operated three-wheelers and scooters, among others.
The Core has reported on this issue earlier also pointing out that while the Tesla badge is something to surely crave for, it cannot be at the cost of concessions which would put all other manufacturers domestic and foreign at a disadvantage.
The Core has also pointed out that several countries are still wooing Tesla who of course has limited bandwidth. I stress on the word bandwidth, followed by capacity, to expand manufacturing bases.
While a manufacturing base in India is welcome and desirable, the trade-offs, if any, have to be carefully considered. Also because a Tesla car is unlikely to be a small or budget car, or anything below Rs 20 lakh on the road. All this is of course basic reports.
Sullaja Motwani told news agency PTI that she strongly believes that the 'Make in India' policies that the government has put in place, there should not be any reversal because now people have started investing in local manufacturing.
If not followed diligently, the manufacturers would again shift to importing components from other countries including China, she added.
When asked if U.S. carmaker Tesla should get policy support to enter the Indian market, Motwani said, "As far as the entry of some of the premium car makers like Tesla goes, I don't know the details about the proposal but I believe it's linked to a large investment...But I still feel personally, there should not be confusion and the policy should be consistent."
People should know that there is a policy in place and it needs to be followed, she noted.
"It shouldn't be that one day you say that 'Make in India' is important...And then you say that now duties are reduced. Policy should be long-term and consistent," Motwani said.
50,000 Buses
Speaking about electric cars, India wants to get 50,000 electric buses on its streets by 2027 with help from a joint finance mechanism with the US.
The $390 million fund will act as a guarantee for manufacturers seeking loans to expand production, Indian and US officials said at a side event at COP28. India currently only has 12,000 e-buses in operation, Bloomberg reported.
The payment security mechanism, established with $150 million from the US government and philanthropic groups, and $240 million from the Indian government, “is the bedrock of risk management for building out the financial system for electric mobility at scale in India,” said Mahua Acharya, a government official who spearheaded the deployment of the first e-buses in the country.
Record Visas
Speaking about buses, more Indians are getting on the bus to the United States.
The U.S. Consulate General Mumbai celebrated a record-breaking year and reduced visa wait times, including with a special Saturday of visitor visa interviews for 2,023 applicants, the consulate said.
So far in 2023, the U.S. Mission to India has processed over 1.2 million nonimmigrant visas, of which U.S. Consulate General Mumbai processed more than 400,000 – an all-time record.
Additionally, this summer the U.S. Mission to India issued a record number of student visas, almost 90,000.
During the 2022-23 academic year, Indian students studying in the U.S. increased by 35 percent hitting an all-time high of over 268,000.
While many are going to the United States, others are leaving Canada.
In the first six months of 2023 some 42,000 individuals departed Canada, adding to 93,818 people who left in 2022 and 85,927 exits in 2021, official data show.
The rate of immigrants leaving Canada hit a two-decade high in 2019, according to a recent report from the Institute for Canadian Citizenship (ICC), an immigration advocacy group.
While that is a fraction of the 263,000 who came to the country over the same period, a steady rise in emigration is making some observers wary, Bloomberg reported.
Meanwhile, Australia is making it more expensive for foreigners to stay by raising fees for foreigners who buy existing houses and will penalise them if they leave the properties vacant, while encouraging people from overseas to purchase new properties to boost housing supply.
Foreign investment charges for the purchase of established homes will triple, a Government official said Sunday in Sydney.
Penalties for buyers from overseas who leave their properties vacant will double while application fees for investment in build-to-rent projects will be reduced, he said.
Foreigners are only able to buy a home in Australia if they live in the country to work or study, and are required to sell if they don’t become permanent residents.
World’s Richest Families Get Wealthier in 2023
The richest dynasty in the world is the House of Nahyan which has joined Bloomberg’s annual ranking of family fortunes, at the very top.
With a $305 billion fortune, the Al Nahyans of Abu Dhabi topped the Waltons of Walmart Inc. by a cool $45 billion. Another new entrant: the Al Thanis, the royal family of Qatar, at No. 5.
As a group, the world’s richest families have gotten $1.5 trillion wealthier since the last ranking, and the new tallies from the Middle East weren’t the only noteworthy shifts.
Among the biggest gainers was the sixth-generation dynasty behind luxury brand Hermès, who added $56 billion to become the world’s third-richest.
Rolexes Cheaper
Speaking about wealth and luxury, The biggest ever boom in Swiss luxury watches is coming to an end, Bloomberg is reporting.
That massive demand for timepieces from Audemars Piguet, Rolex and others, boosted Swiss watch exports to record levels — almost 25 billion francs ($28.5 billion) in 2022.
But now watch manufacturers are seeing demand cool in recent months, while prices on secondary markets have tumbled.
And the industry has begun to accept that things are rapidly downshifting.
“What we saw in 2021 and 2022 was out of the norm,” said Francois-Henry Bennahmias, chief executive officer of Audemars Piguet, known for its Royal Oak sportswatch and whose timepieces sell in stores for an average of about 50,000 Swiss francs. “We couldn’t even fathom that we would experience this in our lives. I believe that we will never see this ever again.’’
For used watches, values have been dropping for more than a year. The Bloomberg Subdial Watch Index, which tracks the 50 most-traded models by value, has declined about 42% since its peak in April 2022.
Zoom Out Of Nasdaq 100
What a fitting or not so fitting finale I am sure for Zoom, whose name is now a verb or a noun for non in person communication or video calling. which hit an all time high during the pandemic and some of course hoped that that would be the new normal, wherein people moved from bedroom to living room and back everyday.
To come to the point, Zoom Video Communications will be removed as part of the annual makeover of the tech-heavy Nasdaq 100 Index.
Other companies leaving include EBay and JD.com among others while those joining include Doordash - the delivery guys, Splunk Inc and ., MongoDB Inc
The changes will be effective prior to market open on Monday, Dec. 18, Bloomberg reported.
The Nasdaq 100 comprises the largest non-financial companies listed on the Nasdaq stock exchange.
There is no minimum market capitalization requirement to be eligible for inclusion, but stocks must have an average daily trading volume of at least 200,000 shares, among other criteria, to be listed.
Of course the reasons Zoom could be saying goodbye to the index could be many but since Ebay is also part of the farewell list, you can make your own educated guesses.
