Walt Disney and Reliance Industries signed a binding agreement to merge their media operations in India. The deal assumes significance in the light of the Sony-Zee deal falling through. Reliance will own not less than 61% in the merged entity, with Disney holding the balance. Disney also has a minority stake in Tata Play Ltd. Disney has been struggling with challenges like retaining subscribers and getting premium media assets. Disney has been evaluating various options for its India business, including an outright sell out.
For the week to February 23, 2024, market valuation of 8 of the 10 most valued Indian companies saw value accretion of Rs110,107 crore. Reliance led the pack adding Rs43,977 crore to its market cap. Other gainers were ICICI Bank Rs27,012 crore, LIC Rs17,236 crore, ITC Ltd Rs8,548 crore, Hindustan Unilever Rs4,535 crore, SBI Rs4,150 crore and Bharti Airtel Rs3,856 crore. Among losers in the week were TCS losing Rs27,950 crore and Infosys Rs10,528 crore. Market cap of SBI surpassed that of Infosys during the week.
India saw its monthly steel exports in January 2024 hit an 18-month high at 1.1 million tonne, on the back of higher demand from EU and supportive global prices. That is nearly 50% higher than the outbound steel exports in January 2023. The export surge has been triggered by robust restocking demand from the EU region, which accounted for nearly two-thirds of the exports. Indian HRC was 10% lower than the global prices, leading to a surge in export demand. Steel also headed to Africa and central Asia in January 2024.
Even as India awaits its Q3 GDP data on the last working day of February, a survey of economists done by Moneycontrol, has pegged Q3-FY24 GDP lower at 6.5%. GDP had grown at 7.6% in Q2-FY24. Along with the GDP growth data for Q3-FY24, the MOSPI will also release the second advance growth estimates for GDP growth in FY24. This slowdown has been attributed to lower industrial volume growth in the third quarter. Also, slowdown in government expenditure and uneven monsoon, may have impacted Q3 GDP.
Goldman Sachs has downgrade some of the banking stocks on the reasoning that the “Goldilocks period” for banking may be coming to an end. The Goldilocks period refers to the sweet spot of rising growth coupled with rising spreads. With deposit growth lagging credit growth by more than 700 bps, the banks now have no choice but to pay more for deposits. That would compress NII growth and the NIM spreads. In addition, mounting operating costs are another problem for the banks. The NPAs could also see a spike.
Foreign portfolio investors (FPIs) underlined their confidence in Indian debt paper, infusing close to Rs18,500 crore in February 2024, till date. This buying is on the back of the inclusion of Indian government bonds in the JP Morgan Index. That is likely to trigger passive FPI buying of close to $30 to $35 billion in Indian bonds, over a period of time. This is highest inflows into Indian debt since July 2017. There is a lot of front loading of debt paper happening ahead of the inclusion, with the actual passive flows yet to come.
Thanks to the demonetization of the Rs2,000 currency note, the growth in currency in circulation fell to just 3.7% in the week to February 09, 2024. It fell from a high of 8.7%. The currency in circulation refers to the notes and coins in circulation. As of January 31, 2024, close to 97.5% of the Rs2,000 currency notes have returned to the banking system. It may be recollected that the total value of the Rs2,000 banknotes in circulation stood at Rs3.56 trillion when the demonetization was announced. It will still be valid tender.
Prime Minister Modi launched the largest ever grain storage plan in the cooperative sector. This entails an investment of nearly Rs1.25 trillion with 11 godowns being set up in primary agricultural credit societies (PACS). Over the next 5 years, nearly 700 lakh tonne of storage capacity will be created by constructing thousands of godowns and warehouses. This would be the key to ensuring food security for Indians, so that grain price fluctuations can be neutralized. Today, the farmers bear huge losses due to poor storage.