One big positive outcome of the COVID pandemic appears to be that GST revenues have grown to above pre-COVID levels. GST collections for the month of Jan-21 came in at Rs.120,000 crore. This is not only the highest ever but represents the fourth successive month of GST collections above the Rs.1 trillion mark. For Dec-20, the Indian government had reported GST revenues of Rs.1.15 trillion. In the last few months, the GST collections have improved sharply on the back of output getting back to normal levels and also because GST department has tightened the loopholes and plugged tax evasion substantially.
Core sector for the month of December 2020 came in at -1.3%. However, there were a series of growth upgrades. The contraction in Nov-20 was upgraded from -2.6% to -1.4% while for Sep-20 it was pushed up from -0.1% to 0.6%. Effectively, we have 6 months of negative core sector between April and August with positive growth in September followed by negative core sector growth between Oct-20 and Dec-20. The cumulative core sector number for 9-months stands at -10.1% and looks set to eventually converge with the GDP contraction of -7.7% by March. Fertilizers were a disappointment with negative growth while only coal and electricity were in positive. Oil-linked core sector basket accounting for 45% of the overall composition, saw signs of bottoming out. Cement contraction deepened in Dec-20.
The government has so far garnered Rs.19,500 crore from the divestment of PSEs and PSU buybacks as against the divestment target of Rs.210,000 crore for the full fiscal year. Even if you remove the LIC IPO, which could not materialize this fiscal, the government would still find itself having achieved only 20% of the residual divestment target with just two more months to go for the fiscal year. Four CPSEs including HAL, Bharat Dynamics, IRCTC and SAIL managed to raise close to Rs.13,000 crore through OFS issues. The government also raised Rs.2,800 crore from buyback of shares by four PSU companies this fiscal.
Despite the heavy FII selling in the last week of January, they still remained net buyers to the tune of Rs.14,649 crore in the month. FPI infused Rs.19,473 into equities but withdrew Rs.4,824 crore from debt instruments. FPIs sold close to Rs.13,000 crore in the last week of January with Rs.5,900 crore of equities sold on Friday itself. Had it not been for the last week, January could have been an impressive month, if not having the same momentum as November and December. Sensex at 50,000 proved to be a mental and psychological resistance forcing many foreign investors to lighten their long positions in India.
It was a brutal week in which the Nifty lost close to 8% so obviously, 9 out of the 10 most valuable companies on the Nifty lost value to the tune of Rs.396,630 crore. ICICI Bank was the only gainer during the week with marginal gains of Rs.2400 crore. Among the losers in market value, Reliance alone lost Rs.131,000 crore of market cap, TCS gave up Rs.71,483 crore while Infosys lost Rs.42,936 crore. Other losers among the index heavyweights included HDFC Rs.38,083 crore, HUL Rs.34,151 crore, HDFC Bank Rs.28,894 crore, Kotak Bank Rs.23,320 crore, Bajaj Finance Rs.13,950 crore and Bharti Rs.12,902 crore.
With Biden taking over as the US President, there was always the fear that he would get tough on the shale business, especially when it came to prospecting for oil on Federal lands. In the last two weeks, Biden has already moved swiftly to stop the leasing of Federal lands for shale leases. He has even ordered the government to expand its fleet of eco-friendly vehicles. Not surprisingly, the US oil industry is up in arms as they are at pains to explain that shale is less polluting than imported crude oil. The oil industry has also tried to explain that putting restrictions on shale drilling will shift oil to other nations and the US could lose out in the process. Biden also proposes to once again re-join the Paris Climate accord. Since oil operators normally tend to pile up leases for years, the impact on supply will be limited.