India’s CPI inflation for Feb-22 came in higher than expected at 6.07% even as the WPI inflation also was much higher than anticipated at 13.11% for Feb-22. It was largely an outcome of the surge in crude prices and its downstream effect. In fact, wholesale inflation has been in double digits for the 11th month in succession. Clothing, footwear and fuel drove up CPI inflation even as food inflation was marginally lower. The pressure came from fuel inflation and manufacturing inflation, reflecting sharp input cost pressures.
Tata Group announced the name of N Chandrasekaran as the chairman of Air India. This was after Turkey’s Ilker Ayci declined the position of chief executive of Air India. Chandra is already the chairman of Tata Sons and Air India will include a lot more of executive responsibilities. Chandra has been a 30 year veteran of the Tata group, including the CEO of TCS till 2017. Interestingly, Chandrasekaran is the first non-Parsi professional executive to head Tata Sons. The market cap of Tata group has grown smartly under Chandra.
It looks like the problems are just not ceasing for Paytm. Just a couple of days back, the RBI had banned Paytm Payments Bank from taking on fresh accounts till the RBI completed a total audit of its IT and systems. While the road rage incident may be dismissed as a one-off, a more serious charge has emerged about leaks of key information to Chinese companies. While Paytm has denied these allegations, the damage was visible in the price as the stock lost 13% to Rs.680. Paytm is down 68.5% from its listing price.
Baroda BNP Paribas MF, created by the merger of Baroda Mutual and BNP MF, commenced operations as a merged entity from 14th March. The deal took 2 years to fully come through. The combine will offer a total of 28 schemes spread across equity, hybrid, debt and overseas FOF categories. Suresh Soni is the CEO of the combined entity. The mutual fund segment has been all about size and AUM and this joint venture combines the massive local reach and knowledge of Bank of Baroda with global expertise of BNP.
India will buy crude oil and other commodities from Russia at discount once rupee-rouble transactions are enabled. This is due to sanctions imposed on Russia by the West over its aggression in Ukraine. India currently relies on Russia for about 2-3% of crude, but may increase it if they get a good price. Currently, Russia is offering oil and other commodities at heavy discounts. Global traders have been avoiding Russian oil to dodge sanctions. With SWIFT restrictions, India will first need a rupee-rouble mechanism in place.
It is evident that FPI selling in 2021-22 has been worse than the selling in 2008. While FPIs sold $28 billion during the 2008 global financial crisis, they have already sold $36 billion since this global sell-off started in Apr-21. FPIs have been cautious about India for some time over valuation concerns, high input inflation and the possibility of aggressive rate hikes by the US Federal Reserve. Things went awry after Russia attacked Ukraine last month and added to geopolitical risk. Nifty impact has been much smaller in 2022.
Crude oil shed more than $4 per barrel amidst diplomatic efforts to end the war in Ukraine. Brent had fallen below $110/bbl after touching a high of $139/bbl briefly in the previous week. Both Russia and Ukraine are upbeat about a peaceful resolution to the conflict. Experts are expecting oil prices to moderate further during this week. Russia is the world’s top exporter of crude and oil products shipping 7 million bpd or 8% of global supply. The rise in COVID cases in China are also raising demand concerns.
Reliance New Energy acquired all assets of Lithium Werks BV for $61 million. This also includes the patents portfolio of Lithium Werks, manufacturing plant in China and key business contracts. Reliance is looking to capitalize on the resurgence in demand for the Lithium Iron Phosphate batteries. This is also synergistic with Reliance’s recent acquisition of Faradion Ltd, a global leader in sodium-ion cell chemistry. This makes Reliance a leading new-age batter manufacturers. It will serve the growing EV and energy storage markets.