The sanctions on Russia have begun with the US, Canada, EU and the UK announcing the first round of sanctions against Russian banks and HNIs. The US has imposed sanctions on 2 large Russian institutions and on Russian sovereign debt. Sanctions have also been imposed against some of the Russian elites as well as some administrative officials in Russia. The first tranche of sanctions acknowledges that Russia has already entered Ukrainian territory. More sanctions are likely if Russian incursions intensify from hereon.
Crude prices surged close to $100/bbl in the Brent market after Putin sent troops into Ukraine and most developed nations imposed sanctions on Russia. In India, prices of petrol and diesel are under freeze due to elections. Post elections, government has to decide whether to cut levies or hike market prices. There are also fears of supply disruptions since Russia supplies 35% of oil and gas needs of Europe. This is the highest crude price level since September 2014. Russia’s share in India’s oil import basket is less than 1%.
Amidst rising geopolitical fears, Gold has emerged as the best-performing asset class of 2022. It had been a laggard in 2021. From a low of $1,796/oz in late Jan-22, gold has rallied nearly 7% to $1,918/oz in a span of just one month. The geopolitical tensions in Ukraine are only making matters worse. Year 2020 was the last big year for gold as it rallied by 25.1% amidst COVID uncertainty. However, in 2021, gold fell 3.6% amidst rising interest in risk assets. It is not clear; how much gold can rally when bond yields are so high.
Indian policy makers are confident of India’s textile exports cross $100 million over the next 5 years. The annual textile exports currently stand at $40 billion. The Textiles Secretary called upon the textile sector to focus on vertical integration and scale so as to fully benefit from the PLI scheme. Textiles are one of the most job-generating sectors in India, which is what makes it important for the government. Post-COVID, most global buyers have shifted to the China+1 formula to reduce sourcing dependence on China alone.
Hero Motocorp joined hands with BPCL to set up charging infrastructure for 2-wheeler electric vehicles (EVs) across India. In 2021, BPCL had already initiated the process of converting 7,000 conventional retail outlets into energy stations with multiple fuelling options (including EV charging). To begin with, Hero Moto and BPCL will first establish substantial charging infrastructure at existing stations. In Phase 1, they will set up charging stations in 9 cities, starting Delhi and Bengaluru with multiple DC/AC charging points.
Swiggy, one of India’s leading food delivery app, is charting out the glide path for its $800 million IPO in early 2023. Swiggy, backed by Softbank, had recently overtaken Zomato in terms of valuations. Swiggy plans to eventually position as a logistics company than just as a food delivery outfit. Recently, it raised funds at a valuation of $10.7 billion. Amidst the pandemic, the home office and home school concepts led to sharp spike in demand for home delivery of food. Swiggy is also into 10-minute grocery deliveries.
FSN E-Commerce Ventures (Nykaa), touched a new low of Rs.1,218 and has now corrected over 53% from its recent peak of Rs.2,574. The stock price is still above the issue price, but it is not too clear how much longer it could hold. For Q3, Nykaa’s net profits fell 58% at Rs.29 crore. Employee costs were sharply up 56%. However, Nykaa maintained top line robustness, growing its revenues by 36% at Rs.1,098 crore. Markets are worried about stiff competition for Nykaa from Tatas, Reliance, Purple, MyGlamm & Myntra.
Bitcoin may have lost more than 40% from its November peak, but this time the pressure is coming from Bitcoin miners. The Bitcoin rally in 2021 had drawn many new entrants into mining. However, this crowd has also resulted in a rising hash-rate making the activity less profitable for miners. It was expected that the tensions in Ukraine would push up demand for Bitcoins, but the problems are coming from the supply side. Bitcoin was created with final limit of 21 million coins, and 19 million coins have already been mined.
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