Sustained Bullishness Drives Stock Markets To Fresh Records
The markets swung quite wildly yesterday, usually a symptom of a lack of clear direction, with the BSE Sensex moving 1,175 points during the day and the Nifty hitting another record high of 22,252
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:00) Sustained bullishness drives stockmarkets to fresh records. Will it rise further?
- (02:37) Japanese markets hit a 34-year high, what it means for India.
- (04:54) Reserve Bank joins major central banks in ruling out early interest rate cuts.
- (06:07) Why recovery is slow after Indian retail’s blowout year in 2022.
- (18:15) The world’s hottest stock gets hotter. Can AI get bigger?
- (19:05) Will Birla’s Opus Take On Asian Paints?
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 Hit Another High
The stock markets and the Nifty50 hit a record closing high of 22,217 while the BSE Sensex ended 535 points up at 73,158.24.
The markets swung quite wildly yesterday, usually a symptom of a lack of clear direction, with the BSE Sensex moving 1,175 points during the day and the Nifty hitting another record high of 22,252.
Reuters polls released later showed India's stock market will surge to new highs by the end of June and gain nearly 9% in 2024, despite already lofty valuations, according to analysts polled, who said a correction in the next three months was unlikely.
The BSE Sensex index, closely tracking the U.S. S&P 500 index, rose nearly 19% last year.
The Feb. 12-21 Reuters poll of 28 equity analysts forecast the Sensex index would add another 4% to reach a high of 76,000 at the end of June, far above the 70,000 level expected in a November poll.
Meanwhile, the Rupee which usually stays in a tight band for not so mysterious reasons hit a more than five month closing high.
The rupee settled at 82.84 to the U.S. dollar, its highest closing level since Sept. 4 after having logged its biggest single-session gain in nearly two months, Reuters said.
Japan Markets Hit 34-Year High
Japan’s benchmark stock market index broke the record closing high set more than 34 years ago.
That was a time Japan was at the peak of its economic might after which it slipped into several decades of low growth.
The Nikkei is up 17 percent since the start of 2024.
The Nikkei Stock Average of 225 shares gained 2.2% to close at 39098 above the previous record of 38915.87 set on Dec. 29, 1989.
The Nikkei’s intraday high Thursday of 39156.97 also set a record, said the Wall Street Journal.
The previous high came on the last trading day of a decade that saw one of history’s great stock and real-estate bubbles.
Investors from abroad have been enthusiastic buyers of Japanese stocks, pumping a net $14 billion into the market in January, according to data from Japan Exchange Group, a stark shift from the roughly $3 billion that they pulled out in December, the New York Times reported.
Earnings at large Japanese companies are set to rise by more than 40 percent in their latest quarterly results, according to Goldman Sachs and Toyota hit a record market value for a Japanese company, about $330 billion, surpassing the mark set in 1987 by the telecom conglomerate NTT.
“The sceptics continue to argue that Japan never changes, and foreigners always get disappointed, so get out now,” the Goldman analysts wrote, according to the NYT.
While capital flows into India will remain strong, it is interesting to note that to some extent the space that China vacated has been taken up by Japan or Japan has edged into the vacuum which of course India has filled in terms of foreign portfolio flows.
Even conceptually, this is not something anyone in the stock market context could have visualised which is what makes it interesting.
RBI Rules Out Interest Rates Cuts For Now
RBI Governor Shaktikanta Das has said that the central bank’s job to bring down inflation is not over and any premature move on the policy front could undermine the success achieved so far on the price situation.
This was the governor’s view according to the minutes of the February Monetary Policy Committee (MPC) meeting released by the central bank on Thursday.
Mr Das had said at this juncture, monetary policy must remain vigilant and "not assume that our job on the inflation front is over".
He also stressed that the MPC must remain committed to successfully navigate the "last mile" of disinflation that can be sticky while voting for status quo in the key interest rate earlier this month.
"As markets are front-running central banks in anticipation of policy pivots, any premature move may undermine the success achieved so far," the governor said, as per the minutes.
Das statements broadly echo what central bank governors in the west, including in the United States and Europe are saying, who have ruled out interest rate cuts in March which was widely expected at least by the markets thanks to money had begun flowing into stocks which has now reversed somewhat with some of it going back into bonds.
India’s Retail Industry Still Recovering From 2022 Blowout
It was the year after Covid or the year many of us were still recovering from Covid, from shock and pain into relief and celebration. And of course, like the rest of the world, we shopped like almost never before.
Keeping up with those numbers and purchasing intensity will not be simple as numbers from subsequent years which is last year shows.
There are some smaller trends, like shifts from unbranded clothing and fashion to value fashion brands which became apparent.
In January specifically, many segments did not do well, for example the Consumer Durables and IT abbreviated as CDIT.
The Retailers Association of India says it would be tough for 2023 to match 2022. The larger challenge in some ways is the stress at the bottom of the pyramid which is of course evident from the numbers across the spectrum now.
I caught up with Kumar Rajagopaln, CEO of the Retailers Association of India based in Mumbai. The RAI has over 2,200 members and 700,000 stores under its belt including all the large chains like Reliance and Croma including jewellery.
I began by asking him first about overall trends in 2023 and what stood out before also skimming over last month which is January numbers.
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Nvidia Stuns The Market
AI Chip company NVIDIA's sales more than tripled in the company’s fiscal fourth quarter from a year earlier and are projected to do so again in the current period. Earnings surged more than eightfold. The results exceeded analyst expectations, the WSJ has reported.
Nvidia’s results act as a bellwether for the strength of the AI boom, as big tech companies such as Microsoft, Google and Apple
place large bets on the technology and need Nvidia’s hardware to drive them.
Wedbush analyst Daniel Ives said the results show that “the AI revolution is just starting and not peaked.”
Nvidia crossed the $1 trillion valuation mark in June, and it topped $1.8 trillion.
Birla Paints The Town
In our corporate news section, well we have always or mostly have some corporate news or the other but henceforth we will have a section saying so.
The Indian paints market is controlled by a few organised players and many unorganised players.
But the organised segment is juicy. Because Asian Paints has close to 60%, Berger is at 18%, Kansai Nerolac at 15% and Dulux made by Akzo Nobel is at 7%.
Not surprisingly, everyone wants to jump in though Asian Paints to its credit has held competitors at bay for several decades now and retained its iron grip on share.
The Aditya Birla Group has finally launched its decorative paints brand Birla Opus yesterday - finally because the intent to do so was known for some time - and is aiming for Rs.10,000 Cr gross revenue within 3 years of full-scale operations.
Birla Opus sits under the group’s flagship company Grasim and has already pulled in Rs 10,000 crore of investments.
Aditya Birla Group chairman Kumar Mangalam Birla said Birla Opus would add 40% to the industry’s paint capacity and claimed no paint company globally had launched at this scale.
Birla Opus will offer the widest range in the industry, with 145+ products across water-based paints, enamel paints, wood finishes, waterproofing and wallpapers.
The products offered will be across consumer segments.
Birla Opus has six, fully automated, integrated, and global scale manufacturing plants with a total commercial capacity of 1,332 MLPA (million litres per annum), the company said, which should equal at least the three next players after Asian Paints.
The question is of course will Asian Paints wilt under this new threat?
Tough to say so soon because while Birla has the brand and the brand connect for cement and building materials products, Asian Paints is a stronger touch n feel brand.
The market itself is growing around 12% annually, going by reports.
Also, Asian Paints and the other brands like Nerolac are also adding and have added a fair bit of capacity.
For the same reason. Construction has been booming and a record number of new homes are being built and of course old ones would be repainted apart from other commercial applications.
While paints is a very marketing and distribution intensive product, the power of brand and customer comfort will matter. It will be an interesting and long battle, one which might see some price wars as well.
