Markets Focus On Q3 Numbers, Tech Companies Under Microscope
Some 65 companies including many leading IT companies are slated to release numbers this week. Consumer price inflation is the other number to watch, which will be released on January 12
Our Top Reports For Today
- (00:00) Stories Of The Day
- (00:50) Markets focus on third quarter numbers with tech companies under the microscope.
- (09:38) Ford Returns to India, again.
- (11:03) Consumers head back to physical stores to get a feel for cooler gadgets and also find finance for them.
- (22:02) More airlines are grounding the Boeing 737 Max 9 following the mid air blowout of a emergency door.
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 Get Set For Results
For many, January 8th usually marks the beginning of the work year as people return from breaks and holidays.
The markets too have been a break of sorts, waiting for fresh triggers which will come largely in the form of third quarter results from Indian companies, apart from inflation numbers at the macro level.
Some 65 companies including many leading IT companies are slated to release numbers this week. Consumer price inflation is the other number to watch, which will be released on January 12.
Last month’s retail inflation numbers saw a rise to 5.55%, thanks also to rising food prices.
Last week, the indices ended slightly lower with the Nifty ending at 21,710 while the Sensex ended at 72,026. Most market people would hope the Nifty would regain 22,000 and the Sensex obviously stay beyond 72,000.
The real estate indices were leading the rest of the pack last week and we dived into why this was happening last week with Gulam Zia of Knight Frank who pointed out that, among other things, NRIs are not the big buyers of property this time, unlike in the past.
Back in the markets, the SEBI reiterated its ban on naked short selling, which means selling stock without actually owning it.
It also said institutional investors cannot day trade and should disclose upfront when they are placing the order whether the transaction is a short sale.
While retail investors have been permitted till the end of the trading day to make the same declaration.
Brokers and stock exchanges have been asked to collate this information and make it available to the public through their websites.
This move follows the Supreme Court's judgement on petitions seeking a court-monitored investigation into alleged manipulation in Adani Group stocks, following the Hindenburg report.
The Apex Court, while refusing this plea, asked Sebi to investigate whether Indian investors suffered losses from the research agency's actions or if there were short-positions taken in the market that went against the law.
Sebi’s current move appears driven by a specific case rather than a broader phenomenon, at least as I am seeing it here. This is somewhat restrictive as a policy response since it should be clear to all participants who are sought to be protected and the data that leads to that view..
Short selling in general of course provides liquidity to a market and flows from the simple principle that for every seller there is a buyer and vice versa.
Oil Prices
And in our energy segment supported by IndiaEnergyWeek.
Last week, oil rose, thanks to increased tensions in the Middle East and protests in Libya which have disrupted supply from local fields there.
Meanwhile, US stockpile data is showing large increases in gasoline and diesel inventories, balancing the tensions in the middle east.
Over the weekend Brent crude was quoting at $78.76 a barrel.
Elsewhere, the Red Sea shipping giant Maersk, which controls around 1.6th of global container trade, is diverting all container vessels from Red Sea routes around Africa's Cape of Good Hope for the foreseeable future while Hapag Lloyd put out the increased costs of diverting ships, Reuters reported.
The trip round Africa can add about 7-10 days to journey times and is of course more expensive as it requires more fuel and crew-time.
Roughly 33% of all global container cargo goes through the Suez Canal and redirecting ships could add some %1 million in extra fuel alone for every trip around Africa, Reuters computed.
French shipping firm CMA CGM which also has large operations in and to India said on Friday it had not changed plans announced last month to gradually raise the number of vessels travelling through the Suez Canal.
The Core’s energy segment was presented by INdiaEnergyWeek, to start on February 6, details at www.indiaenergyweek.com
India forecasts an annual growth rate of 7.3% for the current year
Early projections for 2023/24 from the National Statistical Office (NSO) on Friday put India at a growth rate of 7.3%, a little higher than predicted and projected.
The first advance estimates of annual gross domestic product (INGDPY=ECI) follow last month's increased forecast to 7% from the Reserve Bank of India (RBI), up from an earlier estimate of 6.5%, Reuters reported.
S&P Global Ratings expects India to remain the fastest-growing major economy for the next three years, putting it on track to become the world's third-largest economy by 2030, overtaking Japan and Germany.
India's economy grew 7.2% in 2022/23 and 8.7% in 2021/22.
Crisil Chief Economist D K Joshi wrote in the TOI that this calculus implies the second half of this fiscal year will see a slower growth rate of 6.9%, compared with a tearing 7.7% rate in the first half that persuaded analysts to pencil up their own calls for this fiscal.
Between now and May, NSO will publish two more estimates for this fiscal, including a ‘second advance estimate’ at the end of this month and a ‘provisional estimate’ in May considered more reliable.
Overall, the economy is robust, he says, despite agricultural growth having fallen from 4% to 1.8%.
Factors to note are the fact private consumption at 4.4% is trailing overall GDP growth. On the other hand, the trend of premiumisation is spreading as more people buy more expensive products and services, like cars.
Also, this is an election year so we only have an interim annual budget on Feb. 1 which will not have any major announcements which will come in July after a new government takes over.
Vietnamese Car Giant Arrives In India
While everyone awaits Tesla’s formal announcement to enter India with car manufacturing, now rumoured to happen at the Gujarat Invest summit next week, Vietnamese electric vehicle (EV) maker VinFast has already announced its first manufacturing facilities in India.
VinFast and the southern state of Tamil Nadu agreed to work toward an investment of up to $2 billion, with an intended commitment of $500 million for the first five years of the project, according to a joint statement, Reuters reported..
Construction on the project's EV and battery manufacturing plants is expected to start this year and generate 3,000 to 3,500 jobs locally, the statement said.
Vinfast was set up in 2017 and began making EVs 3 years ago and is expanding aggressively overseas, including with a Nasdaq debut in August last year.
VinFast said the Tamil Nadu project was expected to evolve into a first-class EV production hub in the region, with an annual capacity of up to 150,000 vehicles, compared with 250,000 at its main plant in Vietnam.
Electric models accounted for just around 2% of India's car sales in India last year, but the national government is targeting 30% by 2030 and is working on a scheme to attract EV makers, Reuters reported.
Ford
Sticking to cars, Ford Motors of America is apparently coming back to India by bringing back its Endeavour model, contemplating both local assembly in Chennai and direct imports.
By any stretch this is a remarkable U-Turn for a company and that too in a reasonably short period of time, having shut shop in 2021.
Autocar Professional reported that Ford has filed a patent in India for the Endeavour, listing new job openings, and now not selling its Chennai plant.
Ford still has its Chennai factory despite earlier plans to sell. It had a plant in Sanand in Gujarat which it sold to Tata Motors a year before.
Autocar says even after Ford halted sales, the company kept some service operations going and regularly advertised service and warranty packs. Unlike General Motors, which chose to exit the market to focus on key regions, Ford did not want to actually exit, but was faced with no alternative after a deal with Mahindra fell through.
Ford of course was in India into the 1950s after which it shut shop like many multinationals at the time and went home to return in 1995 in a joint venture with Mahindra and now this.
Well, hopefully Ford will find the new stint and avatar more rewarding, albeit in a challenging market for smaller auto players.
Cool Products And Finance Are Bringing Consumers To Shops
More consumers are returning to physical stores as they purchase both more expensive and more sophisticated gadgets like folding phones.
Essentially, stuff you would like to feel before you buy.
And manufacturers are also pushing consumers in that direction.
The share of e-commerce in total smartphone sales was 45% in 2023 compared with 48-49% in 2021 and 2022, according to Counterpoint Research data.
For several products, including televisions and washing machines, the share of online is falling, also because online had grown very fast during Covid.
Manufacturers are ensuring there is no price difference between online and offline.
But a key driver appears to be financing.
If you want to finance your colour television or phone purchase, the manner in which the whole process works, it's more effective to do it in store and quite likely will not happen at all online.
I caught up with Tarun Pathak, research director at Counterpoint Technology Market Research based in Delhi and began by asking him why and how consumers were coming back to offline and physical purchases of goods.
---
More Boeing Co.’s 737 Max 9 aircraft are being grounded around the world for inspections after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.
Alaska Air has kept its fleet of 65 737 Max 9s on the ground following the incident on Jan. 5 while United Airlines Holdings Inc., the model’s top operator, followed suit with some jets. Then the Federal Aviation Administration ordered a temporary grounding of 171 planes, accelerating the response among other airlines. Aeromexico took all of its Max 9s out of service, and Panama’s Copa Airlines did the same with most of its jets, Bloomberg is reporting.
The news service said the 737 Max is by far the company’s most popular aircraft and its biggest source of revenue. The 737 variant can carry up to 220 passengers, 10 more than the Max 8
Flight 1282 was carrying 171 passengers and six crew from Portland to Ontario, California on Jan. 5 when the crew reported a pressurisation issue.
A rear left part of the fuselage had blown out, leaving the hole resembling the opening for a door. The aircraft returned to Portland about 20 minutes after takeoff, having reached an altitude of about 16,000 feet (4,800 metres).
Video footage which went viral showed the aircraft landing in darkness, with passengers seated close to the gaping hole. Nobody was seriously injured.
