Sensex Hits 70,000 As Markets Pause For Breath
The U.S. consumer price inflation data and Federal Reserve's rate decision, both due later in the week, are likely to influence the near-term interest rate outlook and market trajectory
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:19) Sensex hits 70,000 as markets pause for breath.
- (02:15) Oil continues to trade weak as demand signals stutter.
- (07:55) Government’s move to ban use of sugarcane juice for ethanol could add a month’s additional sugar stock.
- (16:07) India’s alcohol market is growing and Coca Cola finds a way in.
- (18:03) India’s travel and tourism sector to grow a healthy 12% says Crisil
- (20:05) Australia starts to cut back on record high migration.
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 & Oil
India's benchmark stock indices scaled newer heights on Friday.
The BSE Sensex scaled a high of 70,058, and eventually ended 103 points higher at 69,929.
The NSE Nifty 50 hit a high of 21,026, and settled with a gain of 28 points at 20,997.
The U.S. consumer price inflation data and Federal Reserve's rate decision, both due later in the week, are likely to influence the near-term interest rate outlook and market trajectory.
Meanwhile, excitement continued in the oil markets. When I see excitement I mean the point at which most people don’t know whether it is supply or demand forces that are winning, an economist’s dream or nightmare.
Coming up, our energy segment, supported by the India Energy Week.
Oil slipped further after concerns that supplies are overtaking demand triggered the longest weekly losing streak in five years.
Brent futures, the global benchmark, traded below $76 a barrel after sliding for seven weeks in a row as the markets did not respond to the latest announcement of production cuts by the OPEC+ alliance.
With the frantic signalling from the OPEC countries on supply cuts not really having an impact, what is the near to medium term outlook for oil.
I reached out to Viktor Katona, lead crude analyst at Vienna-headquartered energy research firm Kpler and began by asking what demand factors were presently driving prices and where it could go in coming months.
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The Core Report energy segment was supported by IndiaEnergyWeek, which starts from February 6 next year in Goa. Log onto www.indianergyweek.com for more details.
A month’s worth of sugar
The Government’s move to curtail use of sugarcane juice to produce ethanol, a lucrative endeavour, could lead to roughly a month’s additional supply of sugar.
A note from rating agency Crisil put out yesterday said production of sugarcane and sugar is projected to decline ~9% and ~3%, respectively thanks to lower rainfall in the key sugarcane producing states of Maharashtra and Karnataka.
As of September, says the Crisil reports, closing inventories of sugar were adequate to meet just 2 months’ consumption as against the past 5-year average of 4 months’ consumption.
For a country with a sweet tooth, that does sound worrying.
India consumes close to 30 million tonnes of sugar every year and ethanol is used for blending with petrol and is a stated Government objective as well.
So the question is what does the Government’s move to curtail production of ethanol do to sugar and sugar prices.
To understand this, I reached out to Rahil Shaikh, of MEIR Commodities, sugar trading company and now manufacturing as well and began by asking him what the Government’s move would do to sugar supply and prices.
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Coke To Get Into Booze
Coca-Cola has jumped into the ready-to-drink alcohol space with a brand called Lemon-Dou and is pilot testing it in Goa and parts of Maharashtra, the Economic Times is reporting.
The drink is priced at Rs 230 for a 250 ml can in the test-launch phase.
The most famous brand in this segment is of course Bacardi Breezer which belongs to Bacardi, one of the largest, privately held and family owned spirits companies in the world. Breezer actually is quite popular in India.
Brezer-like drinks are called alcopop, as a ready-to-drink alcoholic beverage pre-mixed with fruit juice or aerated drinks.
Lemon-Dou, part of Coca-Cola's global portfolio, is a mix of shochu, a distilled Japanese liquor similar to brandy and vodka, and lime. It was first launched in Japan in 2018.
In October, Coca Cola announced that its Sprite, a lemon drink, would join with Pernod Ricard’s Absolut vodka to create a pre-mixed cocktail for an initial launch planned for select European countries in early 2024
“We keep consumers at the centre of everything we do as we continue to develop our portfolio as a total beverage company,” said James Quincey, Chairman and CEO of The Coca-Cola Company.
“We are expanding in the alcohol ready-to-drink space, including products that use select brands from our core portfolio. We are excited about our new relationship with Pernod Ricard and look forward to the introduction of Absolut & Sprite.”
Absolut was established in 1879 in Sweden. Sprite was established in 1959 in Germany and has grown to be one of the biggest brands in The Coca-Cola Company’s global portfolio.
Travel Is Growing
Yesterday, we pointed out, via research done by aviation advisory firm CAPA India that barely 16 million Indians travelled internationally every year. This of course demonstrated the size and scope of the opportunity for growth.
Rating agency Crisil in a new report out yesterday has said the Indian tour and travel sector1 is poised for a healthy growth of 12-14% in fiscal 2025 thanks to continuing high air fares and volumes almost at pre-Covid levels across segments.
A lot of this would be driven by short-haul journeys in south east Asia, middle east and Europe.
Interestingly, Crisil says for now the revision in the rate of tax collected at source (TCS) on overseas travel packages may not have a material impact on demand.
An analysis of four major travel operators3 accounting for ~60% of the domestic sector revenue, suggests that the books are in good shape, says Crisil.
Poonam Upadhyay, Director, CRISIL Ratings said the TCS rate hike4 may have a limited impact on demand as expenditure per individual per trip is usually much less than the Rs 7 lakh threshold for over 80% of tour packages.”
That said, tour operators could face some challenges with respect to monitoring the limit per traveller in the transitional period due to lack of adequate tracking mechanism of travel spends, Crisil pointed out.
The prime minister has urged Indians to not travel to get married overseas and instead do so in destinations like Uttarakhand.
Australia To Cut Migration
Speaking of travel, Australia plans to bring record-high levels of migration under control by cracking down on student visas and unskilled migration, as the country struggles with a growing housing crisis which has pushed rents to their highest levels in more than a decade, Bloomberg is reporting.
New estimates of net overseas migration to be released later this week will show Australia welcomed more than half a million people in the financial year ended June 30, according to the Department of Treasury. That is the highest annual arrivals in the country’s history and at least 100,000 more than was expected in April.
However, projections, which will be released as part of the government’s Mid-Year Economic and Fiscal Outlook on Wednesday, will show net overseas migration is expected to drop to 375,000 in the financial year ending June 2024 and then 250,000 the following year.
