Markets Balance Domestic Economic Indicators And Weak Global Cues
The markets are still running on sound momentum but there is some underlying nervousness that is creeping in which is expected till the results of general election are announced on June 4
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:09) Indian Markets Balance Strong Domestic Economic Indicators And Weak Global Cues
- (02:29) Oil Prices In Steep Fall, Close To $85
- (04:12) India’s April Numbers For GST Hits Record High, Over 2L Crore Now
- (07:50) Godrej Splits Up Amicably, Early Preparation May Have Helped
- (10:56) Understanding Redistribution Of Taxes In India
- (19:15) How More Indians Are Watching Movies In Cinema Halls Than Ever Before
- (29:00) International Air Cargo Grows In Double Digits For 4th Consecutive Month
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.
---
Markets Wait Global Cues
The stock markets on Tuesday slipped back after a solid run on Monday. Wednesday that is yesterday was a market holiday being May 1 and Maharashtra Day.
The markets are still running on sound momentum and a little more on that in a bit but there is some underlying nervousness that is creeping in which is expected till the results of general election are announced on June 4. Remember, the markets have fully priced in a substantive victory for the current Government.
On Tuesday, the BSE Sensex was down 188 points to close at 74,483 while the Nifty 50 was down 39 points to close at 22,605.
Wall Street was weak on Tuesday too, bringing to an end, a negative month as a whole. All major indices dropped between 1.5% and 2%.
The Dow lost 5% for its worst monthly performance since September 2022, said CNBC and other indices also lost similarly with the three major averages snapped five-month winning streaks.
On Wednesday, the markets were mixed to weak depending on which index you looked at as they awaited a Fed signal on interest rates which would be a continuation of the status quo which is no change in interest rates or the much awaited reduction.
Oil Prices Slide Sharply
We discussed this on The Core Report the other day. Oil prices tend to slide the moment external pressures like war risk premiums ease off, edging closer to $80 than the $90 level it has been kissing.
For the Indian stock markets, it's the other way round at this point, the default trend is still positive and stocks are rising and get held back for a variety of reasons ranging from domestic earnings to international interest rates. And then there is political continuity which the stock markets have gone all in on.
Back in oil, it slipped further with indicators of a rise in US crude inventories.
Benchmark Brent crude fell below $85 a barrel for the first time since the middle of March, while West Texas Intermediate was below $81.
Bloomberg said US crude stockpiles increased by 4.9 million barrels last week, according to the American Petroleum Institute. It would be the fifth expansion in six weeks if confirmed by official data later Wednesday.
Oil traders are, like everyone else, watching closely to see if there will be a cease-fire in the Middle East.
India was not the only market shut on Wednesday and May 1 Labor Day holidays are observed in several countries. This also means overall trading volumes are lower, something we also see during holiday shortened weeks and long weekends.
Elsewhere, gold and silver prices are down. Gold is now in the Rs 71,000 per 10 gm range for 24 K gold which is at least Rs 3,000 or so below its recent peaks.
GST Collections Are Up, At New Records
India's Goods and Services Tax (GST) or indirect tax collections hit a record high in April 2024 at Rs 2.1 lakh crore or Rs 210,000 crore.
This is a 12.4% year on year growth thanks to a jump in domestic transactions around 13.4% and imports or collection of duty on them which was up 8.3%.
GST collections for April have traditionally been higher, the previous high was hit in April 2023 as it reflects trade and economic activity for March, also the last month of the financial year.
After accounting for refunds, net GST revenue for April 2024 stands at Rs 1.92 lakh crore, up 15.5% compared to the same period last year, the Government said.
Last April, the GST collection figure was Rs 1.87 lakh crore or Rs 187,000 crore.
Monthly collections have been steadily rising ever since GST was introduced in July 2017. CHECK
It used to average under Rs 1 lakh crore per month in 2017-18 - its first year - collections rose rapidly after the pandemic-hit 20202-21 to average Rs 1.51 lakh crore in 2022-23.
Gross collections in the first month of FY25 was also 17.81 percent higher versus the mop-up in March of Rs 1.78 lakh crore.
States like UP, Punjab and Delhi have reported stronger growth, a MoneyControl report said.
A Surprise Exit At Kotak
The timing is not looking very good.
Weeks after the Reserve Bank of India asked Kotak Bank to halt issuing new credit cards and onboarding new customers through its online portal and mobile app, a top bank official has stepped down.
KVS Manian, joint managing director of Kotak Mahindra Bank Ltd, has resigned with immediate effect, according to an exchange filing from the bank on April 30.
Manian, an almost three decade Kotak Bank veteran whose tenure predates the formation of the bank and from the NBFC days, was also a front-runner for the CEOs position in the transition that happened from founder Uday Kotak to new CEO Ashok Vaswani who took over on January 1 this year.
In his resignation letter to the private lender, Manian said he was resigning to pursue other opportunities in Financial Services and thus was stepping down from the board also.
Veterans like Manian who occupy top positions in many of the private banks are undoubtedly being sounded out for leadership roles in smaller private banks and newer NBFCs.
Many would have and also are considering fintech startups, though the allure may not be as strong today as it was maybe even a year ago.
It is quite clear, on a somewhat different note that while experience could be replaced somewhat with technology in a technology-driven banking ecosystem, it is abundantly clear that integrity cannot.
And that is a facet the RBI has repeatedly exposed as lacking in many of its actions or crackdowns recently.
Godrej Splits Up Amicably, Early Preparation May Have Helped
Roughly two decades ago, in a interview on family run businesses, Adi Godrej, who was Chairman of the Godrej Group at the time enlightened me on the the existence of family councils in their group where family members also in involved in business met periodically and thrashed out issues of mutual and business importance.
The reason he said was that issues, including disputes, were bound to arise over time, and the family council, with its elders, was the best place to voice them and find resolution to the satisfaction of everyone.
Looking around, there are cases where the family councils have worked, like evidently in the Godrej Group where an asset and responsibility split has become formalised and elsewhere where it has not.
The existence of family councils - some business owners may use other terms - is in itself not a solution to all problems that may arise, including obviously ambition and desire on part of a family member to rise beyond the rest or break away.
But it does appear that family councils serve their purpose. Their existence and effective functioning is also important to the outside world particularly when there are many listed companies involved.
One of the biggest failures in this direction is obviously the events that led to the public and acrimonious split of the Ambani brothers in 2005, following their father’s untimely demise three years earlier, which obviously put other family business owners on alert since.
In what now is being termed as one of the most amicable business carve ups or splits, the Mumbai headquartered Godrej Family is splitting up.
Godrej Industries will stay with Adi Godrej and brother Nadir Godrej with five listed companies.
Cousins Jamshyd and Smita will get the unlisted entities including Godrej and Boyce, its affiliates as well as a land bank in Mumbai.
The Godrej brand needs little introduction of course, except to quickly add it goes back 125 years to 1897 and was founded by Ardeshir Godrej.
And of course locks. Ardeshir launched the Anchor branded lock in 1897, to the spring less lock in 1907 to the famous NavTal lock in 1954.
Some of Godrej’s locks cost a fortune, almost, and are quite naturally also IOT devices, capable of connecting to the phone, internet and so on.
Godrej as a group is into a host of products from locks of course to soaps, real estate, white goods, office furniture and critical machinery for India’s space and satellite launch efforts.
While the Godrej split is amicable and could be also to do with the general temperament of the senior family members in the business, it is equally likely that the efforts to address and then work out a split began a long time ago.
How Does Redistribution of Taxes Work?
Of course our taxes get redistributed. But in the light of much discussion around this theme, it is instructive to revisit some basics. Not because there is a specific promise to redistribute more of our taxes or collect more taxes through various devilish means but because it is useful to know where we stand at this point.
I reached out to Shankkar Aiyar, veteran economic journalist and author who has written extensively on the subject of tax collections and then of course where they go and who also in a recent column argued that redistribution is visible on India’s balance sheet, in schemes and provision of private goods.
I began by asking him how he was looking at the theme of redistribution.
---
Indians Are Returning To Movie Halls
More than 157 million Indians watched at least one film in the theatre in 2023.
Significantly, this trend-reversing figure is an 8 per cent growth from the pre-pandemic (January to March 2020) number of 146 million.
These 157 million people bought 943 million tickets which means they saw an average of 6 films in the year.
Different languages did differently.
Average viewership was highest in Telugu at 9 films followed by Tamil at 8 and Hindi at 3.
All this is part of ‘Sizing The Cinema: 2024’, a report from Mumbai-based analytics firm Ormax Media which is in its 3rd year of publication and based on research conducted in January 2024 among 8,500 people across urban and rural India.
I reached out to Sanket Kulkarni, head business development theatrical at Omaxe Media and began by asking him what stood out most in the latest numbers.
---
Air Passenger And Cargo Growth Strong
Total demand, measured in revenue passenger kilometres (RPKs), was up 13.8% compared to March 2023, according to latest figures from International Air Transport Association.
Total capacity, measured in available seat kilometres (ASK), was up 12.3% year-on-year. The March load factor was 82.0% (+1.0ppt compared to March 2023).
“Demand for travel is strong. And there is every indication that this should continue into the peak Northern Summer travel season.
Asia-Pacific airlines continue to lead the way, with a 38.5% year-on-year increase in demand. Capacity increased 37.4% year-on-year and the load factor rose to 85.6% (+0.7ppt compared to March 2023), the highest among all regions. Major routes from Asia-Pacific display outstanding growth, although the number of scheduled air services from China to North America is still only 16.5% of pre-pandemic levels.
International air cargo continues to grow, rising 10% in March, making it the fourth consecutive month of double digit year on year growth, IATA said.
This was higher than the strong first quarter of 2021 performance during Covid.
Capacity as measured in available cargo tonne kilometres (ACTKs) increased by 7.3%.
IATA’s top official said the figures were a reflection of global cross border trade and industrial production continuing to grow and that 2024 was shaping up to be a solid year for air cargo.
