India’s Sep-21 quarter GDP grew 8.4%, almost at par with what the Reuters poll of economists had called. This is a good 50 basis points higher than what the RBI had projected for Q2. This also raises hopes that India GDP growth should get in the range of 9.5% to 10% for FY22. The GVA (which is the GDP excluding the impact of indirect taxes and subsidies) grew 8.5%. The growth was in contrast to the contraction of Q2-FY21, bringing overall GDP in absolute terms at par with 2019 levels. Growth was triggered by services.
The Oct-21 core sector output of 8 infrastructure sectors grew 7.5% on sharp increase in output of cement, coal, refinery products and electricity. Sep-21 growth got upgraded to 4.5% in its first revised estimate. Crude was the only 1 out of the 8 sectors that saw negative growth yoy. The 8 core sectors account for 40.27% of the IIP and hence are critical. Steel growth tapered due to production cutbacks by the auto industry, one of the core consumers of steel. Auto slowdown could hit November 2021 core sector hard.
For FY22, the government expects fiscal deficit at 6.8% of GDP i.e. 10 basis points below its budget estimates. As of end Oct-21 the total fiscal deficit stood at Rs.5.47 trillion or 36.3% of budget estimates. This is largely due to better revenue collections. Last year, the fiscal deficit had touched 120% of full year target by end of Oct-21, but then it was an extreme pandemic year. This fiscal, the centre was aided by higher than expected RBI transfers to government. GST collections have crossed Rs.8 trillion in 7 months.
In his testimony to the Senate Banking Committee, Fed Chair Jerome Powell testified that he would prefer to complete the Fed taper a couple of months earlier than anticipated. The taper is scheduled to complete in Jun-22. This is in the light of persistent inflation, which may force front-ending of rate hikes. The next Fed policy meet is on 14-15 December. Another hawkish comment made by Powell was that he suggested it was time to stop using the word “transitory to describe inflation. Bond yields trended higher in the US.
Axis Bank got some relief as the SAT quashed a directive issued by NSE stating that funds lying in the bank account of Karvy Stock Broking belonged to NSE defaulter committee. Axis Bank had challenged the NSE order at the Securities Appellate Tribunal (SAT) in Dec-20. Karvy had been expelled from membership of both the stock exchanges for illegally pledging shares belonging to clients. Axis Bank had challenged the NSE order on the grounds that NSE had no powers to freeze any account where the bank had a lien.
The spate of IPOs continues as wealth management solutions provider, Anand Rathi Wealth, announced the launch of its IPO. The IPO will open on 02-Dec and close on 06-Dec with the price being fixed in the band of Rs.530-550. The IPO is entirely an offer for sale by the promoters and other early investors offering 1.20 crore shares in total as part of the OFS. The issue is worth Rs.660 crore and values Anand Rathi Wealth at around Rs.2,989 crore market cap. Investors can bid for minimum 27 shares with retail limit of 13 lots.
Thanks to the strategic association between Reliance Industries and Facebook, Indians can use WhatsApp to order groceries from JioMart. This can be done through a simple “tap and chat”. Reliance is betting on this feature to take on the might of Wal-Mart and Amazon in Indian retail market. JioMart will offer free delivery and will offer perishables and durables. This move was long awaited and comes more than a year and half after Facebook invested $6 billion in Jio Platforms. WhatsApp has 530 million users in the country.
Ecommerce start-up, Snapdeal, does not really want to miss the IPO fever as it plans to file for a Rs.2,000 crore IPO in December this year. This will be a combination of primary fund raising and an offer for sale. Over the last few years, Snapdeal lost out in the ecommerce race to the likes of Flipkart and Amazon, so this will be something like a comeback for them. Snapdeal could seek a valuation of $2 billion in the IPO. Snapdeal boasts of investors like Softbank, Temasek, BlackRock and eBay with Softbank holding 35.67%.