The Monetary Policy Committee minutes announced on 22nd February, hinted at increasing degree of concern among members over inflationary pressures. Even as Ashima Goyal and Jayant Varma dissented, the other four members remained worried about sticky core inflation. In the February meeting, the RBI had hiked rates by another 25 bps to 6.50%, taking the total quantum of rate hikes since May 2022 to a total of 250 basis points. Even the RBI governor worried about the recent bounce in inflation in January.
The Sensex tanked by 928 points on Wednesday as bearish global sentiments spooked domestic equity markets. Even the Nifty fell over 250 points on Wednesday. Nifty closed at 17,553. Several reasons triggered the sharp fall. The first was the global weakness amidst hawkish central bank sentiments. The other reason was the persistent selling in Adani group stocks, which is hitting sentiments. Thirdly, there was a lot of unwinding in the markets ahead of Thursday expiry. Lastly, a weak rupee also played a part.
All the 10 listed stocks of the Adani group fell sharply on Wednesday. The Adani group has already seen nearly $130 billion of market cap wiped out in the carnage from the peak levels in December 2022. While
Adani Enterprises fell by 10.4% on Wednesday, Adani Ports fell 6.2%. Another 6 group companies of the Adani group were locked in 5% lower circuit. Hindenburg really appears to be taking a toll on the group stock prices. SEBI has also now begun an investigation on why rating agencies have not reviewed ratings.
FDI in equity in the first 9 months of FY23 were lower by 15% at $36.75 billion, as per DPIIT data. The FDI was more respectable at $55 billion if reinvested earnings was also included. Recessionary trends in the global economy has been a key reason for the sharp fall FDI during the current fiscal. Singapore remained the top FDI source country at $13.07 billion, followed by the US, Mauritius, United Arab Emirates, the Netherlands, the UK, Japan etc. IT hardware and software cornered the bulk of FDI flows at $8.07 billion
Morgan Stanley released a bullish report on Indian energy sector calling it a gradual metamorphosis. India has been raising oil output at a time when global output is falling. ONGC and Oil India have been named the top picks in this space. Morgan Stanley is also impressed that the government hydrocarbon pricing was now trending closer to market prices. The brokerage expects an inflection point in earnings quality for ONGC and for Oil India. Morgan Stanley also expects the average selling price to double in next decade.
IMF managing director Kristalina Georgieva, expects India alone to contribute 15% to the incremental annual GDP in FY24. The IMF MD has highlighted factors like digitization, focus on capex and its prudent fiscal policy as key reasons for this optimism. IMF expects Indian economy to grow at 6.8% in FY23 and at 6.1% in FY24. It expects Indian economy to be the sold bright spot in an otherwise dull global economy. IMF also pointed out that the latest budget gave indications of capex push as well as fiscal deficit control.
It is not just the IT and digital companies that are laying off people. Even the venerable McKinsey plans to eliminate 2,000 jobs, something unheard of in the past. It will help McKinsey preserve the compensation pool for its partners. The headcount at McKinsey was 28,000 five years back and has since grown to 45,000 which called for some rationalization. Like most of the other companies, even McKinsey appears to have overestimated the intensity of the post-pandemic economic recovery, which fell way short of the promise.
Orient Cement of CK Birla group and Adani Power Maharashtra cancelled their plan to establish cement grinding unit (CGU) at Tiroda, Maharashtra. Adani Power had told Orient Cement that they could not obtain the necessary clearances from the MIDC. Recently, Adani Power had also allowed its plan to buy DB Power Ltd to lapse. The reasons are not clear but it does look like the Adani group is looking to go slow on its capital commitments for now and focus more on reducing debt and grooming its public perception.