The consensus over the US debt ceiling continues to be elusive. June 01 is the deadline till when the emergency measures will last. Beyond that, if the debt ceiling is not raised or scrapped altogether, the US government would start defaulting in payments. This is likely to be disruptive for markets, although it is very unlikely to happen. Already there are worries about US stability and that has impacted the position of dollar as reserve currency. For now, markets are reposing faith that a solution will be hammered out.
JSW Steel confirmed that it was on track to expand capacity to 37 million tonne per annum (MTPA) by FY25 and further to 50 MTPA by FY30. These announcements were made when the company put out its quarterly and annual results for FY23 last week. This move will make JSW Steel one of the largest steel companies globally with a strong bias towards value-added products. Its current steel capacity stands at 27 MTPA. The company is also on a debt reduction spree and net debt for FY23 stands at Rs59,345 crore.
India is becoming a hub for global delivery centres and global capability centres. In latest move, Deloitte US has expanded delivery capabilities in India with offices in Pune, Chennai, and Kolkata to service companies globally. In the coming year, it is planned to add over 10,000 professionals at these locations. There is growing US demand for skilled professionals across Deloitte’s advisory businesses with skills in artificial intelligence, data analytics, cybersecurity, cloud, human capital, assurance, valuations, and M&A.
Foreign portfolio investors (FPIs) infused Rs30,945 crore into Indian equities in May 2023 till date. The flows were triggered by strong macros, likely reduction in interest rates and positive earnings guidance in the fourth quarter. Thanks to the surge in May, FPIs are net buyers in Indian equities in 2023 to the tune of $2 billion. In a sense, the pause in rate hikes by the RBI in April provided a big trigger for FPI flows into India. Lower rates reduce the solvency risk of companies but also boosts valuations via lower discounting.
The good news is that Indian businesses are now paying a lot less for imported energy and other inputs like chemicals. That is being used to buy more machinery from overseas. Since February 2023, the pace of imports has slowed due to weakening commodity prices amid slowdown concerns. The lower input cost story is also evident in the corporate performance for the fourth quarter. For the month of April 2023, India reported a flat overall deficit as services surplus almost wiped out the merchandise trade deficit.
India is already the second largest gold consumer in the world and there is now a new booster dose. Jewellers confirmed a surge in gold demand after the government decided to demonetize the Rs2,000 note by September 2023. Jewellers started receiving inquiries for purchase of gold or silver on spot after the decision to withdraw Rs2,000 currency. This has led to jewellers charging a premium for gold as the price of gold has now gone up to Rs66,000 per 10 grams. However, gold buying has to be KYC compliant.
In a fresh announcement, government made it mandatory to deposit 25% of penalty imposed by the Competition Commission of India (CCI), before filing an appeal with the NCLAT. In addition, the notice also says that submission of false statements would attract higher penalty of Rs5 crore, versus Rs1 crore earlier. The CCI basically deals with hub-and-spoke cartels and other anti-competitive arrangements, where sellers collude to distort markets. This is likely to attract a lot of protests from sectors like cement.
The government of India, which holds 7.85% stake in ITC through the SUUTI scheme, has no plans to sell this stake in FY24. The stock price of ITC has almost doubled in the last one year and is currently trading at a 52-week high. The government stake in ITC is worth Rs41,000 crore and it probably wants to realize more value from this investment. It can actually go a long way in helping the government meet its FY24 disinvestment target of Rs51,000 crore. With ITC and BPCL sale ruled out, HZL could be the only sell now.