India’s trade deficit for the month of February 2023 dipped marginally to $17.43 billion, but sharply lower than the $30 billion trade deficit that had been scaled in June 2022. Total merchandise exports dipped by 8.8% yoy to $33.88 billion while the imports were also down 8.21% yoy at $51.31 billion for the month. The big saving grace was services exports now scaling as high as 85% of merchandise exports and that has led to the overall deficit becoming neutral. Cumulative gross trade has already crossed $1 trillion for FY23.
After the fall of SVB Financial and Signature Bank, the impact was felt across the Atlantic in Credit Suisse. The bank has been in trouble for some time now and the SVB crisis has been the latest trigger. The fall in Credit Suisse came after its largest investor refused to provide the bank with more financial assistance till the bank put its house in order. It also led to financial stocks tanking across Europe. Investors in Europe rushed back to safe-haven German bonds. It is also uncertain how the ECB would react on the rates front.
In February 2023, mutual fund managers pruned their exposure to Adani Group stocks amid a massive sell-off triggered by the Hindenburg report. Adani Ports and SEZ was in the top sell list of most of the key mutual funds followed by other group stocks like Ambuja Cements and Adani Enterprises. It is estimated that holdings in Adani group stocks fell by nearly 28% in the portfolios of mutual funds during the month of February 2023. The biggest seller was Quant Mutual Fund, which almost fully exited Adani group stocks.
Banks are in a fix as credit demand is growing at a rapid pace but deposits are not growing. This reduced liquidity condition has changed the landscape of bank balance sheets and resulted in greater reliance on short-term funding avenues. Bank borrowings in FY23 have averaged Rs4.2 trillion against Rs2.6 trillion in the previous year. In fact, post September 2022, this figure has been consistently above Rs5 trillion. Most of the short-term borrowings come from the interbank market, which runs the risk of maturity mismatch.
According to a report by CRISIL, India’s air passenger traffic is estimated to grow in double-digits in FY24. This is likely to happen on the back of a sharp pick-up in international and business travel on the one side, and capacity expansion by airport operators and higher availability of aircraft on the other side. As per the report, air traffic volume at Indian airports would grow 70% to touch 32.50 crore for FY23. That would yet be lower than pre-pandemic levels but FY24 is likely to see air traffic at 38 crores; implying 17% growth.
The IPO of Global Surfaces Ltd on the mainboard was subscribed 12.21 times at the close of Day-3 of the IPO on 15th March 2023. While QIB subscription was 8.95 times, the retail portion was subscribed 5.12 times. The HNI / NII portion got undersubscribed with just 33.10% bids. The anchor allotment ahead of the IPO opening had already raised Rs46.50 crore from institutional investors, so only the balance was available for the QIB portion. The IPO is expected to list on the stock exchanges on 23rd March 2023.
Jubilant Foodworks, master franchisee for Domino’s Pizza, will scale up the US-based fried chicken brand, Popeyes, in India. It plans to open a total of 250 Popeyes outlets. The youth population of India is expected to drive this brand. Popeyes is part of Restaurant Brands International with $35 billion in annual sales and over 29,000 restaurant outlets spread across 100 countries. Popeyes, with its Cajun fried chicken and chicken sandwiches, is estimated to become the 2nd largest brand in Jubilant portfolio after Domino’s.
It appears to be virtual bloodletting as the stock markets extended its losses on Wednesday. Banking and financial stocks continued to be under pressure. In the last 5 sessions, the Nifty has given up 782 points while the Sensex has fallen 2,792 points. Nifty closed below the psychological level of 17,000 while the Sensex closed below 58,000. There was selling across heavyweights like IndusInd Bank, SBI, Reliance, HUL and HDFC Bank. Asian Paints and Tata Steel were two gaining stocks on the Nifty on a rather weak day.