The big event in the current week will be the US Fed meet followed by the Fed statement on March 20, 2024. Rate cuts have already been ruled out in this meet, especially with consumer inflation higher in the month of February 2024. Also, last week, the US bond yields had spiked sharply to 4.308%. Indian markets will also await the decision of other global central banks, especially the BOJ and the Bank of England, as both these economies recently dipped into recession, with two consecutive quarters of negative growth.
In a move that is aimed at boosting ease of doing business in India, SEBI made major changes to the IPO regulations. SEBI has done away with the requirement of 1% security deposit in the case of any public or rights issue of shares. Also, promoters and shareholders having more than 5% stake in the company can now contribute can contribute to MPC without being identified. In case of convertibles, they would be considered for MPC conditions if held for 1 year. In special cases, the IPO can be extended by even 1 day.
India’s merchandise exports were up 11.9% in February 2024 at $41.40 billion, the highest in the last 1 year, despite the headwinds from the Red Sea crisis. The growth in goods shipments was the highest since June 2022. This was also the third month in a row when the merchandise trade deficit was below the $20 billion mark. More gratifying was the services trade surplus for the month, which almost wiped out the merchandise trade deficit, leaving a net deficit of just about $1.95 billion, easing the pressure on the CAD.
India has grown its share among the smartphone exporters to the US by 4-fold and this growth has come at the cost of China and Vietnam. For the April-December period, India exported smartphones to the tune of $3.53 billion to the US, with market share growing from 2% to 7.76%. This also makes India the third largest exporter of smartphones to the US. This was largely on the back of the scale up of iPhone output.
During the same period, China’s share in the US smartphone market fell from 77.7% to 70.9% on yoy basis.
Government has approved a 17% wage revision for the staff of LIC of India and this 17% hike in wage bill is likely to impact the wallets of nearly 1,10,000 employees of the insurer. LIC has been trying to boost the morale of its employees as also attract the best talent in the market. Incidentally, LIC undertakes wage revision for its employees once in five years. This will include raising the NPS contribution by LIC from 10% to 14%, apart from a one-time ex gratia for LIC pensioners. The stock of LIC fell sharply in the latest week.
Adani group plans to invest about $14 billion across its portfolio of companies. This would include key outlays across ports, energy, airports, commodities, cement, and media. This investment is for FY24 and Adani group plans to invest $100 billion in the next 10 years. Projected capex for FY25 is likely to be 40% higher than FY24. Over the next 10 years, nearly 70% of the capex will go into its green portfolio; primarily renewable power, green hydrogen, and green evacuation. Airports and port verticals will also see outlays.
FPI flows bounced back sharply in the week to infuse Rs40,710 crore in the first fortnight of March 2024. This is in sharp contrast to the outflows of Rs25,743 in January and flat flows in February. FPIs have been changing their strategy in response to the changes in the bond yields in the US. Therefore, now that US bond yields have spiked to 4.308%, they could turn sellers in the coming week. Ironically, the markets fell sharply in the week, losing more than 2% as trading positions unwound, but more for tax farming reasons. For the week ended March 15, 2024, a total of 5 of the top 10 most valuable companies saw combined erosion of Rs223,660 crore. The fall was led by Reliance and LIC. Among big losers; Reliance Industries lost Rs81,763 crore, LIC Rs63,630 crore, SBI Rs50,112 crore, Hindustan Unilever Rs21,792 crore and ICICI Bank Rs6,363 crore. There were gainers too, with TCS adding Rs38,858 crore to its market value, Bharti Airtel Rs11,977 crore, ITC Ltd Rs7,739 crore, and Infosys Rs7,450 crore. HDFC Bank also gained during the week.