The Week That Broke Several Records In The Stock Markets
Indian equities have now continued their forward run for the seventh consecutive week which in turn makes it the longest weekly advance in 6 years
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:10) The week that broke several records in the stock markets and reversed trends. Could it continue?
- (05:13) India’s exports steady, imports fall sharply
- (11:43) Four larger media players, Sony, Zee, Reliance and Viacom18 could become two, what does it mean?
- (20:45) Almost 95% of fresh power investments is renewable, the International Solar Alliance steps up
- (24:17) Lufthansa will resume flights to Tel Aviv in three week’s time
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 & Records
It was a week of new records on the stock markets over last week. Let me begin with what happened on Friday as a Fed-driven rally continued on the bourses.
The Sensex ended at 71,484 (up 970 points), and the Nifty50 ended at 21,457 (up 274 points), respectively.
Indian equities have now continued their forward run for the seventh consecutive week which in turn makes it the longest weekly advance in 6 years.
So the Sensex rose 1,658 points or 2.37 per cent last week.
The combined market valuation of nine of the top-10 most valued firms jumped Rs 2.26 trillion last week, with Tata Consultancy Services (TCS) and Infosys emerging as the biggest gainers amid an overall bullish trend in equities.
Note that software companies are benefiting from the positive interest rate trend projected in the US. Translated, lower interest rates means spending could increase which could benefit IT firms. That is the external reason. The internal one is that if money is flowing into stocks, then these are the companies one would traditionally bet on.
Speaking of money flowing in, foreign institutional investors as we have discussed in recent days are now back after a holiday at a time when they usually take holidays.
FIIs already pumped in more than $2.5 billion into domestic equities in just five days, higher than the week before.
A quick reminder. The US Federal Reserve or central bank left the federal funds target range unchanged at 5.25-5.50% last week and gave a guidance for a cumulative 75 basis points of rate cuts in 2024.
In December so far, their net inflows have touched nearly $4 billion, equivalent to that seen in July this year.
Meanwhile, after a break the rupee strengthened quite sharply, given its sluggish to weak behaviour in recent weeks, by 33 paise to close at Rs 83.
It would be interesting to see if the rupee changes track here onwards, given that most prognosis for it is to stay weak.
Gold is going strong with ten grams of 24 K gold selling around Rs 63,000, depending on where in India you are buying with prices differing slightly.
Crude Oil Snaps A Two-Week Losing Streak
And here is our energy segment from IndiaEnergyWeek
Crude oil prices have rallied the most in a month following the same dovish comments from the US Federal Reserve.
Brent crude futures concluded the week at $76.78 per barrel and were quoting around $76.55 over the weekend.
Though overall, both Brent and West Texas Intermediate are on track for their third consecutive monthly loss.
US gasoline inventories have risen as have US crude exports while on the demand side projections including from the International Energy Agency or IEA are saying less oil will be consumed in 2024, by almost 400,000 barrels a day to be specific.
While there will be growth, the pace will weaken with IEA saying it will almost halve next year, to about 1.1 million barrels a day.
The Energy Segment was supported by the IndiaEnergyWeek that starts on February 6 2024 in Goa. For more details log onto www.indiaenergyweek.com and for now, hang on, as we have more energy insights later in the show.
Exports Down
The pace of India’s exports continues to be weak though India’s merchandise trade deficit narrowed sharply to $20.58 billion in November from the previous month's record levels as imports of gold, petroleum and electronic goods moderated, government data showed on Friday.
India's merchandise exports in November stood at $33.9 billion, In the previous month, merchandise exports were $33.57 billion.
Imports for November were $54.48 billion in contrast to the previous month imports at $65.03 billion.
November saw a wild, festival-demand led gold buying spree and imports of that nearly halved from $7.2 billion in October to $3.45 billion in November, an analysis of government data by Reuters showed. Last year 0r 2022 saw Diwali being celebrated in October in case you were wondering whether the figures were being accurately compared.
Interestingly, imports of petroleum products were 22% lower in November and electronic goods imports registered a near 17% decline in the latest print at $6.49 billion, analysis showed.
GST returns
The number of Goods & Service Tax return filers rose about 65 per cent to 11.3 million in 5 years till April 2023 as compliance by taxpayers improved, the finance ministry said on Sunday.
Also, the number of active taxpayers registered under GST increased from 10.6 million as of April 2018, to 14 million.
The 11 million figure of GST users should give you a sense on the width of those enterprises or individuals paying GST.
The Goods and Services Tax (GST) was rolled out on July 1, 2017 and in turn overrode several local taxes like excise, service tax and octroi, for those who live in Mumbai.
Surat Bourse, Is Anyone Batting For Mumbai?
Prime Minister Narendra Modi inaugurated the Surat Diamond Bourse in Gujarat on Sunday.
Built on 36 acres of land at a cost of ₹3400 crore, the Surat Diamond Bourse is pitched to become a global centre of rough and polished diamond trading.
The bourse will comprise a 'Customs Clearance House' for Import - Export, a jewellery mall for retail jewellery business and a facility for International Banking and Safe Vaults.
The Diamond Bourse is the world's largest interconnected building, as it houses over 4,500 interconnected offices. The office building is even larger than the Pentagon and is the country's largest customs clearance house.
The building can house 4,200 traders from 175 countries who will come to Surat to buy polished diamonds.
Surat dominates in processing of the precious gems, with about 90% of the world’s rough diamonds cut and polished there before they are sold to buyers in places like the US and China.
The new bourse aims to centralise the industry under one roof.
“Surat is a major cutting centre and a diamond exchange is long overdue,” Eli Izhakoff, honorary president of the World Federation of Diamond Bourses, told Bloomberg, adding that dealers from all over the world can do business from a secured and centralised place with confidence.”
The new complex is located inside the Diamond Research and Mercantile City, a business district modelled after the Gujarat International Finance Tec-City, or Gift City.
It has nine 15-story towers and about 4,700 offices.
Some 130 offices of these are reportedly in use.
Between the International Finance Centre or GIFT City near Ahmedabad and the diamond bourse in Surat some 267 kilometres away, Gujarat is obviously giving Mumbai some tough competition.
Which is of course great and desirable as competition between states ought to benefit the nation as a whole.
It is of course somewhat unfortunate that the city of Mumbai is not fighting back in any form or shape as I can see.
My sense is that if you were to rewind a few decades, there would have been leaders in the public and private sector who would have been actively brainstorming on how to make Mumbai more attractive or come up with alternative options.
Presently, the issue of Mumbai’s competitive position is mostly a non-issue.
There seems to be no discussion at all, with most political focus seemingly on completing a few infrastructure projects that were launched a few years ago and most of them, like the city’s new metro system lying half complete and the other half in a near abandoned state in south Mumbai.
Admittedly, progress is being made underground and someday it will be visible above ground as well. But in the meantime.
Mumbai of course rides on its traditional strengths of being a finance hub for over a century and more.
Taking that badge away is not simple. But resting on one’s laurels is not a good idea either.
I do wish someone would take ownership of this city’s future. Coastal roads, bridges and metros are a most welcome addition but they will serve little purpose if the city is unable to host new businesses or constantly reinvent itself.
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Tesla Car Imports
Now to an issue that we have been discussing in recent months on The Core Report, the unfairness of a possible proposal to allow Tesla to import cars into India at low duties and without the mandatory local value addition stipulation, something all other foreign car companies who have been investing in India in the last couple of decades have had to meet.
Which is that if you want to sell in India, then manufacture in India.
So the latest is that the Government has formally said it is not currently considering reducing taxes on imported electric vehicles.
“Presently, there is no proposal either to provide an exemption from local value addition cost or to provide a subsidy on the import duty on electric vehicles in India,” Som Parkash, junior minister of the Ministry of Commerce and Industry, told parliament last week, as reported by Bloomberg.
Parkash said existing policies under the government’s “Make-in-India” push are aimed at encouraging domestic and foreign investment in the EV industry.
The earlier thinking was that the Govt would have allowed international companies to import electric cars on concessional tax rates if they commit to eventually manufacturing in India, Bloomberg News reported last month.
The New Entertainment Landscape
India’s media and entertainment industry has been buzzing with action, also thanks to the waves of consolidation that are sweeping it.
Two key developments are awaited.
First, a much-delayed merger between Sony and Zee Entertainment could happen though a two-year time frame for it is expiring and is, going by reports, sought to be renewed.
A renewal of the time frame, if it happens, would mean the merger is still on track.
The second is a potential buyout of Disney’s India assets or the key chunks of it by Reliance and its entertainment arm which includes Jio Cinema, among others.
The point here is that instead of 4 largish players, we will have two giantish players.
Assuming there are no competition commission issues in all of this, there could be major changes in the landscape.
I reached out to Karan Taurani, senior vice president and entertainment analyst of Mumbai-based Elara Capital and began by asking him to define the present and potential landscape.
The Solar Alliance Gets Set
Sticking to electricity and the generation of it, the International Solar Alliance is setting and leading the global agenda in solar investments.
Set up between India and France, it is an intergovernmental treaty organisation with 118 member countries, and still growing.
Massive amounts of funds are flowing into the solar sector globally in the past year. Last year, it was in excess of $310 billion (three hundred and ten billion dollars) but 74% of it went to the OECD countries and China.
How can and will that change, as in more countries including India stepping up their investments in solar energy and where do we stand now. I spoke with Dr Ajay Mathur, DG of the ISA and asked him about the cost of solar and its competitiveness including the major projects planned.
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You can catch the full interview on TCR WE
Indefinite War, Biz As Usual
The Israel-Hamas war started on October 7 and more than two months on, while the war continues, almost like an indefinite war, as wars around the world are increasingly turning into, some stability appears to be coming in.
Bloomberg is reporting that Deutsche Lufthansa AG is resuming flights to Tel Aviv early next month after suspending the service earlier, becoming one of the first major carriers to return to the country.
The German carrier will start flying from Jan. 8 with four weekly trips from Frankfurt and three from Munich, it said in a statement. Austrian Airlines, a Lufthansa subsidiary, is planning eight weekly connections, while the Swiss airline unit will provide five flights, Lufthansa said.
“The Lufthansa Group continues to monitor the security situation in Israel closely and is in close contact with the local and international authorities,” the airline said. “Possible flight schedule adjustments must be expected due to changing conditions.”
In total, the Lufthansa Group will provide 20 weekly connections to and from Tel Aviv, equal to about 30% of the regular schedule. The company will deploy Airbus A320 models on the route, it said.
Lufthansa said that it also resumed previously suspended flights to Beirut on Dec. 15, Bloomberg reported.
