Markets Swing Again With 5 Trading Sessions To Go For Election Results
There is pressure building up to take some profits off the table and many institutional investors are saying it or doing it
On Episode 303 of The Core Report, financial journalist Govindraj Ethiraj talks to Aditi Nayar, chief economist of rating agency ICRA as well as Ashok Sreenivas, group coordinator at the Prayas (Energy Group).
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SHOW NOTES
(00:00) Stories Of The Day
(00:50) Markets swing again with 5 trading sessions to go for election results
(01:54) How Japan & India are both China + 1 investment destinations
(03:18) India's economy slowed down in the last quarter, what does it mean for the next?
(11:23) India’s power demand is surging and usage patterns are shifting, is there enough supply?
(19:17) Crime pays but cybercrime pays more
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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Highs & Lows, 5 Trading Sessions To Go
It was highs and then lows, almost like the markets were wrestling between the precise number of seats that the party in power would get when votes would be counted on June 4 in India’s 2024 general elections.
But this was all within the day.
Clearly there is pressure building up to take some profits off the table and many institutional investors are saying it or doing it, like foreign institutional investors are doing and have been so for more than a month.
Despite all that, the benchmark indices hit fresh all-time highs on Dalal Street, with banking and IT stocks leading the way.
The Sensex crossed 76,000 for the first time and the Nifty crossed 23,100 for the first time but closed down.
The Sensex was down around 20 points to 75,390 while the Nifty was down around 25 points to 22,932.
Most of the selling happened in the last hour as it often does when swings like this happen.
In the broader market, the BSE midcap index was up very slightly and the smallcap index ended flat.
Meanwhile, for those looking for their daily dose of reassurance that institutional investors are firmly focussed on the longer term, a top JP Morgan official told CNBC that India and Japan are two bright spots in Asia’s “supremely interesting” markets.
He was speaking with CNBC, guess where, in China at the banks’ Global China summit.
His reference was to the equity and deal making landscape.
“You have Japan, which is on fire. India, which is very in high demand,” Filippo Gori, co-head of global banking at JPMorgan, told CNBC.
Japan’s Nikkei 225 stock index as well as India’s Nifty 50 have climbed nearly 26% over the past year, according to LSEG data.
That’s interesting also because in general, I cannot think of occasions in the past where one could draw comparisons between India and Japan.
The CNBC report also says countries India and Japan have also been benefiting from the “China Plus One” strategy, as investors look elsewhere in the region to park their money amid escalating U.S.-China tensions.
Once again, I would not have thought Japan being in the same boat as India in a China plus one context though to those who are in both markets, these things may be clearer.
India’s Economy Slows Down In Last Quarter, What Lies Ahead?
India's economy likely grew at its slowest pace in a year in the January-March quarter due to weak demand, says a Reuters poll of economists.
The country's gross domestic product (GDP) grew by 8.4% in October-December compared to a year earlier, thanks to a sharp drop in subsidies which provided an artificial boost to net indirect taxes, Reuters said.
The high GDP number had caught the most Government friendly economists also by surprise.
But economic activity, as measured by gross value added (GVA), showed a more modest 6.5% expansion.
So the poll of 54 economists says growth likely slowed to an annual 6.7% in January-March, more in line with the long-term GDP growth rate. GVA growth was expected to slow to 6.2%.
Meanwhile, looking ahead, Goldman Sachs has revised upwards its forecast for India's gross domestic product (GDP) growth for calendar year 2024 (CY24) by 10 basis points (bps) to 6.7 per cent.
Just to repeat, this is the calendar year and not the financial year being the time span everyone else uses.
Analysts at Goldman Sachs are also expecting inflation to bottom out in the second quarter, that’s now and then rise after that. This belief, they said, was mainly driven by their view of an uptick in core goods inflation due to the lagged impact of manufacturing cost increases.
I reached out to Aditi Nayar, Chief Economist of rating agency ICRA and began by asking her how she was reading the transition from the October to December quarter to January to March quarter.
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And as Aditi mentioned, monsoon forecasts are above normal.
India is likely to receive above-average monsoon rains this year, the India Meteorological Department said on Monday, retaining its April forecast.
This year's monsoon rains are expected to be 106% of the long-term average, the director-general of the India Meteorological Department (IMD) told a virtual news conference, reported by Reuters.
So yes, if nothing drastic happens, the second half is looking promising for the economy including for consumption and thus consumer companies.
Oil Prices Steady
The week began with oil prices holding steady as they did over the weekend, a little over $82 a barrel right now.
Traders are focussed on supply cuts and how the US driving season - yes that is a factor - kicks in.
Brent futures dropped 2.2% last week and touched the lowest since early February, while West Texas Intermediate was near $78, Bloomberg reported.
Incidentally, Monday is a holiday in the UK and the US, where the Memorial Day weekend also kicks off that summer driving season.
All markets are closed, including financial markets.
Bloomberg says early signs have pointed to a solid showing, with the number of people expected to fly over the weekend may be the highest in nearly 20 years, according to the American Automobile Association.
Power Surges In India
Energy demand is rising everywhere, whether oil for cars in the US or power for more cooling in India.
This comes in the context of rising weather advisories which have warned of severe heatwave conditions across most of northern India.
Rising summer temperatures have pushed power demand, with numbers rising closer to the power ministry’s projected peak of 260 gigawatts (Gw) this summer, Business Standard reported.
Increased use of cooling equipment during heatwaves is said to be a key reason, although only around a quarter of households own air conditioners or air coolers in India. This is expected to multiply in the coming years and decades
Eastern India and North India have seen among the largest increases in peak power demand, says the BS report.
Thermal or coal generated power met most of the rising demand, accounting for more than three quarters of the electricity generated as of March 2024, similar to previous years.
There are some interesting shifts though, one being that it is only now that peak power consumption is shifting to the day, it was evening earlier.
I reached out to Ashok Sreenivasan, Group Coordinator at the Pune-based Prayas Energy Group which has been working on analysis-based policy and regulatory engagement for over 30 years and began by asking him how he was seeing the present demand supply patterns.
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Crime Pays But Cyber Crime Pays More It Appears
Two weeks ago, several colleagues of mine got a message from me, saying that I needed money urgently and to transfer the money through various intermediate payment systems like Amazon Pay.
The number on WhatsApp was a US one but the photograph was mine so the anomaly was not immediately clear..
And one colleague unfortunately succumbed to the scam and paid a sum of money. She has now gone to the police.
Just between January and April this year, Indians lost over Rs 1,750 crore due to cybercriminal activities, the Government has said.
If you were to annualise that, as we financial journalists like to do, it's Rs 7,000 crore for the year or quite likely more.
All of this happened thanks to online investment fraud, gaming apps, algorithm manipulations, illegal lending apps, sextortion, and OTP scams.
In 2023, the Indian Cyber Crime Coordination Centre reported over 100,000 investment fraud incidents.
Incidentally, in the last four months, there were 740,000 complaints lodged on the National Cybercrime Reporting Portal, which is managed by the Ministry of Home Affairs.
Unlike let's say good old robberies, most of us know someone or the other who has been scammed and we are getting hit by all kinds of calls and messages seeking money or trying to pull us into a scam.
The Indian Cyber Crime Coordination Centre (I4C) stated that in May 2024, an average of 7,000 cybercrime complaints were recorded daily, a significant surge of 113.7 per cent compared to the period between 2021 and 2023, and a 60.9 percent increase from 2022 to 2023, according to a report in the Economic Times.
Additionally, 85 percent of these complaints pertained to financial online fraud.
So, parting advice. Please be careful of any such messages you get.
