Wednesday, 1st June 2022

India GDP grew at a much lower rate of 4.1% in the fourth quarter while for full year FY22, the GDP growth at 8.7% was 10 bps lower than the second advance estimates. However, if you factor in the -6.6% contraction in GDP in FY21, then GDP in FY22 has grown just about 1.53% over FY20. The fourth quarter estimates of GDP growth varied from 2.5% on the lower side to 5.5% on the upper side due to a mix of Omicron, Ukraine war and Fed hawkishness. For Q4, manufacturing growth was marginally in negative.

Textile exports out of India in FY22 touched an all-time record of $44 billion, thanks largely to the highly successful export thrust combined with the PLI scheme for textile exports. Textiles exports grew 41% over FY21 and 26% over FY20. Nearly 27% of India’s’ textile exports found its way to the US, 18% to Europe, 12% to Bangladesh and 6% to the UAE. Nearly 40% of the total textile exports were accounted for by cotton textiles. Ready-made garments followed closely with 36% share and man-made textiles with 14%.

The core sector growth for April was fairly impressive at 8.4% compared to just 4.9% in the month of March 2022. Core sector is not only an important high frequency indicator of infrastructure sectors but also constitutes over 42% of IIP. Performance of coal, refinery products and electricity were a lot better while steel and oil extraction continued to be in negative zone. Coal output rose sharply by 28.8% in April 2022, but that is more due to a weak base. Steel continues to face problems from weak auto demand.

On Wednesday, the 01st of June, the promoters of Bata India are expected to offload 36 lakh shares of the company, representing 2.8% stake in Bata. While JP Morgan is the banker to the deal, the floor price has been fixed at Rs1,750 per share. That is nearly 7% below the closing market price. The total value of the deal is estimated at Rs630 crore and the selling promoters would be subjected to a lock-in period of 3 months. For FY22, Bata recommended a net profit of Rs103 crore and dividend of Rs54.50 per share.

Higher tax collections in FY22 helped the Indian government to close the year with fiscal deficit at 6.7%, 20 bps lower than the budget estimates of 6.9%. Normally, fiscal deficit for the month is announced on the last day of the next month, but March is an exception when the figure is normally announced on the last day of May along with full year fiscal deficit number. The absolute fiscal deficit for FY22 was Rs15.87 trillion. Revenue deficit for FY22 stood at 4.37%. In April 2022, there was revenue surplus of Rs591 crore. 

LIC realized gains of Rs42,000 crore in FY22 from its equity investment. That is nearly 16.6% higher gain realization compared to FY21. Currently, 25% of the LIC AUM goes into equities and the balance in debt. On Monday, LIC had reported 17.4% fall in net profits due to higher claims pay-outs and provisions made. It had also declared dividend of Rs1.50 per share. LIC confirmed the overall gain in the year was Rs500,000 crore but only Rs42,000 crore was booked in the markets LIC AUM is more than all Indian MFs combined.

The IMD is now getting more optimistic about the monsoon scenario in 2022 and it has upgraded its rain forecast for 2022 from 99% of the Long Period Average (LPA) to 103% of LPA. According to the IMD, the La Nina conditions are expected to boost rains during the current monsoon. IMD expects it to be as high as 106% of LPA in central and south India. Kharif crops like pulses and oilseeds are predominantly grown in central and western India. This will also help to cool food inflation, which has shot up in last few months.

According to a recent report, the upcoming Nifty September Review is likely to see some key changes in the Nifty Next-50 index. For example, both LIC and Adani Wilmar are expected to enter the Nifty Next 50 index. Additionally, Tata Power, IRCTC and Mphasis may also find their way into the index. Some of the probably exits from the Nifty Next-50 could be Lupin, Jubilant Foodworks, Zydus Lifesciences, PNB, SAIL, and Adani Enterprises. The announcement is expected the second half of August and effective September.

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