Moody’s estimates, that the windfall tax on domestic crude oil output and fuel exports would generate around Rs94,080 crore for the government. However, it would trim profits of upstream oil companies as well as of refiners. Under the new tariff model, Indian oil companies must pay Rs6 per litre on exports of petrol and ATF and Rs13 per litre on export of diesel. Oil producers have to pay Rs23,250 per tonne of tax on crude oil produced domestically. This is likely to distribute gains and also boost revenues for the centre.
The real test of auto demand growth lies, not in wholesale dispatches, but in registrations. For June 2022, automobile registration across categories surged 27.16% to 1.50 million units as per FADA. However, sales of two-wheelers were down 8.68% in June 2022, straining the most economically
vulnerable segments. Even the CV segment grew by 4% in June 2022. One reason for the weak volumes in two-wheelers is the increasing shift to EVs. Average inventories stood at 15 days for PVs and about 23 days for two-wheelers.
The rupee went into a free fall on Tuesday as it tanked by 41 paise to close at a new low of Rs79.36/$. The strong dollar played spoilsport even as FPI outflows were unrelenting. The rupee was also hit by the trade data (provisional) indicating June 2022 trade deficit at a record high of $25.63 billion. That is likely to put pressure on the CAD and that also impacted the rupee. The weak forward premia in the dollar forward market is also leading to global traders losing interest in rupee positions. All eyes are on the Fed minutes.
The steel export duties have started showing impact with Tata Steel India recording 2% yoy drop in overall deliveries. Higher export duties had made steel exports expensive. Production was still higher in the first quarter, but deliveries suffered. Tata Steel attributed the drop in deliveries to moderation in exports after the imposition of 15 export duty. On a sequential basis, the deliveries fell by a much sharper -20.7% and that is where the pressure is actually palpable. However, automotive demand for
steel was up 22% in Q1.
NTPC focus on self-sufficiency in coal appears to be working. To mitigate frequent power crisis caused by coal shortages, NTPC stepped up its captive coal production in order to reduce dependency on Coal India. For the June 2022 quarter, NTPC reported 61% growth in coal production to 42.40 lakh tonnes. The entire NTPC coal output came from its 3 operational coal mines located at Pakri-Barwadih (Jharkhand), Dulanga (Odisha) and Talaipalli (Chhattisgarh). June 2022 coal output at 15.55 lakh tonnes was 101% higher yoy.
For the month of June 2022, India’s services PMI expanded at the fastest clip in 11 years amid a sharp build-up in demand. The Services PMI rose to 59.2 in 2022 compared to 58.9 in May 2022. The last time such a high level was reached was in April 2011. PMI above 50 is considered expansionary and the monthly comparison shows whether the momentum is favourable or not. In terms of the components of Services PMI, the boost came from improvement in demand, capacity expansion and upturn in new
work intakes.
Tata Steel Long Products completed the acquisition of the PSU, Neelachal Ispat Nigam, for Rs12,100 crore. As part of the takeover by TSLPL, the transfer of 93.71% shares of all joint venture partners to TSLPL was completed. Neelachal Ispat makes pig iron and billets. Tata Steel Long Products won the deal, outbidding the consortium of JSPL, Nalwa Steel and JSW Steel. The sale also include transfer of mining rights and the leasehold rights of lands held by Neelachal Ispat. Tatas will enhance the capacity of
Neelachal to 1.1 MTPA.
India’s gold imports in June 2022 nearly trebled yoy as jewellers used relatively lower prices to replenish inventories. In June 2022, India imported 49 tonnes of gold compared to 17 tonnes in June 2021. The
good news is that in value terms, the June 2022 gold imports at $2.61 billion was less than half the gold imports in May 2022, which had crossed $6 billion. After the robust Akshaya Tritiya celebrations, jewellers saw stockpiles depleted leading to inventory demand. India recently hiked the import tax on gold by 500 bps.