Its A Bull Market And A Frenzied Bull Market
A bull market frenzy is visible in the mid, small and micro-cap indices, which have risen 25%, 29% and 42% respectively from March 2023 lows
Our Top Reports For Today
- <00:50> Its a bull market and a frenzied bull market at the same time. Why its time for some caution
- <07:58> Is India in a position to manufacture high end laptops right now ?
- <16:34> The cost of a vegetarian thali in India rose by 34 per cent in July, in just one month.
- <20:46> Global advertising giant WPP forecasts slower growth as tech majors pull back on spends.
TRANSCRIPT
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.
A bull market and a frenzied bull market
After some hiccups and downs and then ups, domestic markets ended Monday's trade in the green. The BSE Sensex settled at 65,953 levels, up 232 points while Nifty50 gained 80 points to close at 19,597 levels.
Of course, with the markets hitting an invisible wall in recent weeks, everyone is wondering what the next destination is or at least the direction of it.
Is it all over or does the market have some legs left? And what about all the bullish earnings forecasts and India becoming overweight to China’s underweight, at least to Morgan Stanley?
Well, the trick is not to look at different sections of the market differently.
For one, as research house ICICI Securities points out, the NIFTY50 index is consolidating just below the 20,000 mark after rallying 14% from Mar '23 lows (a modest 7% YTD return) while robust earnings expansion catches up.
This Isec indicates rational behaviour and is not technically a bull market either.
All of you active investors and traders, do note.
However, a bull market frenzy is visible in the mid, small and micro-cap indices, which have risen 25%, 29% and 42% respectively from Mar '23 lows. Technically, a more than 20% upside indicates a bull market.
So ICICI Sec says that going by past evidence and assuming Indian markets are entering into a bull phase, there is scope for markets to remain buoyant given the robust macro environment. However, the expected returns will most likely be muted from current levels, especially for the broader markets, the brokerage says.
To get a deeper insight into this, I reached out to ICICI Securities Equity Strategist Vinod Karki and asked him to explain his brokerage’s stance on the markets.
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Can We Make A High End Laptop in India
Apple is making phones in India now but can a Macbook Air or Pro be also made in India ? To me, as a user, that is a good point to start when trying to establish where India stands in its efforts to localise laptop production, an outcome of an upcoming licensing restriction on import of laptops.
Before I get to that, the Electronic Industries Association of India or ELCINA was established in 1967 as the first industry association supporting electronics hardware, when India’s Electronics industry was still in its infancy.
ELCINA says it actively interacts with the government and advises it on policy and business environment issues.
Elcina is also quite happy with the Government’s move to impose licences on imports of laptops and notebooks, even as it acknowledged the short-term challenges that this move would lead to.
And of course, Elcina is quite happy, admitting that she is happy as well.
Elcina put out a statement earlier saying it welcomed the Government’s decision to implement a licensing requirement for finished laptops, tablets and personal computers.
It also said the new regulation, effective immediately, signifies a crucial step towards enhancing national security and reducing reliance on foreign imports and of course boosting domestic production.
Of course, the Government, somewhat predictably after it faced a pushback from many quarters, has now pushed the implementation. To Nov 1, 2023.
I reached out to Sanjay Agarwal, President of Elcina and began by asking him whether he agreed that the move to impose import licences was a step back in many ways before going on to whether India was ready right now to make high end laptops ?
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Food Inflation And Other Numbers
Meanwhile, we may have stopped talking about it for a few days but food inflation is still there, creeping upon us. Last week, the Rice Exporters Association ED Vinod Kaul told me that prices of non basmati rice were actually going up in India despite the ban on exports.
Which obviously contributes to inflation in cereals, a staple diet in India, which the Government’s objective was to bring down.
Meanwhile, a report by rating agency Crisil said on Monday that the price of a vegetarian thali in India rose by 34 per cent in July as compared to June, CRISIL's monthly indicator of food place cost released on Monday showed.
Some 25 percent of this can be attributed to the inflation in tomatoes. From Rs 33 per kilogram in June, its price rose 233 per cent to Rs 110 per kilogram in July.
This is the third time in a row that the prices of vegetarian thali have risen sequentially. In 2023-24, this is the first time the price of thali has risen year-on-year (YoY).
The price of non-vegetarian thali too rose but by a smaller 13 per cent month-on-month.
CRISIL said it calculates the average cost of preparing a thali at home based on input prices prevailing in north, south, east, and west India.
The monthly change reflects the impact on the common person's expenditure. The data also reveals the ingredients, including cereals, pulses, broilers, vegetables, spices, edible oil, and cooking gas, driving changes in the cost of a thali.
Interestingly, Crisil said prices of chilli and cumin have also shot up.
Their prices rose 69 per cent and 16 percent sequentially, respectively, in July.
"The prices of onion and potato increased 16 per cent and 9 per cent month-on-month, respectively, contributing further to the increase in cost," the agency said in its indicator.
A veg thali comprises roti, vegetables (onion, tomato, and potato), rice, dal, curd, and salad. For a non-vegetarian thali, chicken has been considered instead of dal.
The cost of a non-vegetarian thali rose at a slower pace as the price of broilers, comprising more than 50 per cent of the cost, likely declined 3-5 per cent in July.
Incidentally, we have been somehow lulled, if i could use that word, into believing that a good or sufficient monsoon would solve most of our problems, more specifically in the context of food prices and inflation.
It turns out that data never said so.
Food inflation has been in the 6%+ range for three of the past four normal monsoon years, a new report from rating agency Crisil has pointed out.
Also, factors other than the monsoon have been increasingly shaping food inflation. These include extreme weather events, domestic policy and geopolitical developments. Food inflation can be high even when the monsoon is normal.
Cereals inflation as we just alluded to has been sticky in double digits over the past six months.
Looking at the current production trends, pulses are in a vulnerable position. The concern on food inflation is evident in the preemptive steps the government is taking, says Crisil, such as banning some types of rice exports, imposing stocking limits on wheat, and market intervention to improve supplies.
How much these moves will help is of course not clear, just to go back to the rice example I mentioned earlier where prices have gone up.
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Most of us have taken Covid shots and in India, either Covershield and Covaxin. But internationally, Pfizer Covid vaccines were the go-to vaccines in many countries, notably in the United States.
This obviously pushed up sales for Pfizer.
The WSJ now says the return to Earth has been abrupt. Earlier this year, Pfizer said it expects its Covid-19 vaccine to generate $13.5 billion in sales in 2023. This is down roughly 2/3rds from last year. The company said its Paxlovid antiviral would bring in about $8 billion in sales this year, down 58% from last year.
Pfizer’s new forays include Abrysvo, a new vaccine for older adults for respiratory syncytial virus and Litfulo, a treatment for the hair-loss condition alopecia areata.
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Speaking of falling drug sales and hair loss conditions,
Technology spending is falling too and is not just affecting IT companies who we track.
Advertising holding company WPP, which also has a significant presence in India, has reduced its growth forecast for the year after it saw lower revenue in the U.S. from technology clients and delays in spending on technology projects in the second quarter, the WSJ said.
WPP said it saw delays across all client types for technology projects such as app development, e-commerce projects and data integration projects, the WSJ is reporting
WPP Chief Executive Mark Read said that with tech making up about 18% of the company’s business, lower spending in that arena made an outsize impact on its results.
“In the long run, that’s a source of growth,” he said. “In
WPP owns agencies like Ogilvy, Wunderman Thompson and VML Y&R, as well as media-buying giant GroupM.
Other advertising giants like Omnicom, IPG and S4 also recently called out slower spending by technology marketers, while some ad holding companies also cited less spending by telecommunications marketers.
Back home, the Lok Sabha on Monday cleared the Digital Personal Data Protection Bill which we discussed yesterday in some detail by a voice vote amid slogan shouting by opposition members over the Manipur issue.
Some amendments moved by opposition members were defeated by a voice vote.
The bill seeks to protect the privacy of Indian citizens while proposing a penalty of up to Rs 250 crore on entities for misusing or failing to protect the digital data of individuals.
The bill which comes after six years of the Supreme Court declaring "Right to Privacy" as a fundamental right has provisions to curb the misuse of individuals' data by online platforms.
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And before I go, a study conducted by a traffic expert M N Sreehari, has said that Bengaluru loses close to Rs 20,000 crore because of problems arising out of traffic congestion and related factors.
A report in NDTV says study shows that despite having 60 fully functional flyovers, Bengaluru has faced a loss of Rs 19,725 crore because of delays, congestion, stoppages at signals, interference of slow-moving vehicles with fast-moving, fuel loss, occupants' time loss, loss of the vehicle time. The amount was calculated by converting the loss of vehicle time into money based on salary and other factors.
I shudder to think what the number for Mumbai will be. But I hope someone will compute it too.
That’s it from me for today. Have a great day ahead and look forward to hearing from you on [email protected] or visit www.thecore.in
