In a rather surprising move, Tata Motors and M&M have slashed product prices in the light of inventory piling up. It is estimated that unsold inventory of cars is currently at around Rs60,000 crore in India, as most companies had scaled up production in anticipation of demand growth. This move comes a day after the UP state government waived registration fees on strong hybrid cars. This would reduce their prices by nearly Rs4 lakhs. However, such prices cuts are limited to high end sports utility vehicles (SUV) segment.
As part of PM Modi’s visit to Russia, it was agreed upon to expand Indo-Russia bilateral trade to $100 billion by 2030, along with a free trade agreement (FTA) in place. Currently, India is a predominant oil importer from Russia, which now accounts for over 40% of India’s oil import basket. They may also look at a larger Eurasian Trade Agreement. The two nations are planning much deeper economic collaboration in energy trade, manufacturing, and fertilizers. India is concerned about rising traded deficit with Russia.
The month of June 2024 was another record month for mutual fund flows. Equity fund inflows created another record at Rs40,608 crore, largely driven by Rs21,262 crore via SIPs and more than Rs15,000 crore via NFOs. However, debt funds saw net outflows of Rs1.07 trillion, which ensured that the overall flows for mutual funds were in the negative for the month of June. However, the AUM of the Indian mutual funds segment crossed Rs61 trillion during the month. Inflows were robust in hybrids and passives too.
In a sign that the defence sector may be getting tad overheated, the HDFC Defence Fund plans to halt new SIP registrations into the fund from July 22, 2024. However, SIPs registered till that data will continue to be accepted. Also, lumpsum investments in the fund will continue. SEBI has tried to caution the investors about buying stocks at unreasonable valuations, especially in the mid-cap and small cap space. Apart from dissuading mutual funds; the regulatory has also put curbs on traders through stringent special margins.
Prosus will lead a $100 million funding into Bluestone. An omnichannel jewellery start-up. Apart from Prosus, other investors like Steadview Capital and Peak XV will also be participating in this round. The funding round is likely to happen at around $960 million valuation, which is more than twice the valuation of the September 2023 fund raising. Out of the $100 million, $60 million will be a fresh infusion while the balance will entail sale of stake by promoters and early investors. Prosus has $7 billion invested in India.
The Indian textile industry may finally be on a recovery path as domestic demand has improved. For the latest 7-month period, the textile exports were marginally higher at $17.9 billion. For textile sales in the domestic market, the ecommerce channel has been contributing a lot to incremental sales. For now, the government plans to include garments also into the PLI scheme for the textile sector while the SITP or the Scheme for Integrated Textile Parks is proposed to be revived. Annual textile export target is $50 billion.
The regulator now seems to be absolutely bent on raising bar for F&O transactions. The idea is to largely discourage the retail investors from the F&O market. One measure planned is to further increase the lot sizes in F&O from the current Rs5 lakhs to Rs20 lakhs. The second is to limit the options contract to just one per exchange to avoid the confusion. Thirdly, the SEBI also plans to make the upfront margins more prohibitive for the retail investors to participate in. Above all, expiry week margins may also be increased. HCL Tech, which announces its quarterly results this week, is likely to see pressure on margins. Consensus of five brokerage houses suggests that revenues could fall 2% on a sequential basis due to a combination of lower pricing to customers and also due to lower demand. This would be the sales in constant currency (CC) terms. There is also an expectation that the EBIT margins may get impact by nearly 60 bps due to the higher visa costs in many key countries. The net profit, as a result, could see a fall of 10% sequentially.
