Tag: Inflation in India

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Delhi News

FDI equity inflow contracts 22% to $46 billion in FY23: Govt data

Business Standard


FDI inflows decline 16% to $71 billion for first time in a decade: RBI data

RBI MPC: Here is what experts have to say about the policy announcement

RBI hikes repo rate by 35 bps to 6.25%, cuts FY23 GDP forecast to 6.8%

FDI equity inflow contracts 15% to $36.7 billion in Apr-Dec: Govt data

RBI MPC: When and where to watch policy announcement by Shaktikanta Das

Investments by sovereign wealth funds surge 56% in 2022: SWFI analysis

Senior citizens scheme sees investment of over Rs 10,000 crore in April

ICICI Prudential Life Insurance launches new debt fund for long-term

Investor queue outside IEPF grows longer by the year, shows data

AIF commitments jumped 30% to Rs 8.33 trillion in FY23, shows data



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Fed policy action, RBI rate decision key driving factors for mkts: Analysts



The US Fed policy action, RBI rate decision and foreign fund flows are some of the major factors that will guide the equity markets in the near-term, analysts said on Wednesday.


Besides these, September quarter earnings announcements would also pave the way for the markets, whose overall structure remains bullish, they added.


From its 52-week low of 50,921.22 quoted on June 17 this year, the Sensex has jumped 16.91 per cent till now. The Nifty has climbed 16.96 per cent from its 52-week low of 15,183.40 on June 17 this year.


So far in 2022, the BSE Sensex has climbed 2.20 per cent and the Nifty has advanced 2.33 per cent.


“We believe that the underlying market is bullish. Given India’s stance as a high-performing economy, there are many reasons for India to be an excellent performer as we advance,” said Sunil Damania, Chief Investment Officer, MarketsMojo.


He said the rupee has stabilized after hitting an all-time low level.


The rupee is currently hovering at 79.50 against the US dollar. It had touched an all-time low of 80.15 against the US dollar in intra-day trade on Monday.


“We are of the opinion that irrespective of whether the market touches a record high in September, market sentiments will stay bullish by Diwali,” Damania said, adding that the BSE benchmark Sensex and the NSE Nifty have picked up since mid-June 2022.


At the moment, investors might be skeptical of the current market rally, Damania said, adding that “We maintain the Sensex could touch 65,000 by December 2022, and our short-term Nifty target is 19,000 by December 2022.”

Factors that could influence the direction of global markets include geopolitical issues, commodity prices, inflationary trends, interest rate trajectory followed by central banks and recessionary conditions, experts said.


According to Deepak Jasani, Head of Retail Research, HDFC Securities, Indian markets could get impacted by the turn in global sentiments and as more investors turn risk averse ahead of the historically down month of September.


“However, the intensity and amount of fall in India will be limited as its economy may not be linked fully with the happenings in the US economy,” he noted.


From now till the end of the calendar year, Nifty could see an upside of 18,100 and downside of 15,850, Jasani added.


Reshma Banda, Head-Equity & Executive VP, Bajaj Allianz Life Insurance said Indian macroeconomic fundamentals are better placed on a relative basis.


Inflation in India is elevated and is only marginally higher than the RBI threshold band, which compares favorably to other developed countries where inflation is hovering at multi-decade highs, Banda said.


According to official figures, India’s retail inflation softened to 6.71 per cent in July due to moderation in food prices but remained above the Reserve Bank’s comfort level of 6 per cent for the seventh consecutive month.


Some of the other factors that can impact market sentiments include normal monsoon, which augurs well for controlling food inflation levels in the country.


Further, foreign fund inflows have returned to India, thereby aiding a healthy rally in the equity markets, experts said.


After turning net buyers last month, foreign investors have become aggressive shoppers of Indian equities and pumped in Rs 49,250 crore so far in August on improvement in corporate earnings and macro fundamentals.


Sunil Nyati, Managing Director, Swastika Investmart Ltd, said, Indian equity benchmark indices are witnessing profit-booking after a stellar rally of about 17 per cent from June lows.


Historically, September remains a weak or sideways month for Nifty and Sensex but in October month or near Diwali, Nifty and Sensex can approach their fresh all-time highs, Nyati added.


On the global front, the market will have an eye on economic data and geopolitical situations while on the domestic front, earnings, festive season demand, and FIIs’ behavior will be the key factors.


The Fed’s September policy action is the one significant factor the market will consider until Diwali.


The US Federal Bank chair Jerome Powell has indicated that the central bank will stick to a strategy of rate hikes to cool inflation.


Some experts believe the market is ready for aggressive rate hikes and most of this is already discounted whereas any relief on the inflation front may improve investor sentiments.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)



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Explained: What investors should look out for before putting money in an IPO


The sharp revival in equity markets has catalysed the primary markets, and as many as 27 companies have filed offer documents with the Securities and Exchange Board of India (SEBI) over the last couple of months.

With foreign portfolio investors (FPIs) making a strong comeback — the benchmark Sensex has reclaimed the 60,000 mark — merchant bankers have lined up public issues to take advantage of bullish domestic retail and FPI investor sentiments. While there has been no new listing since May 24, the cycle is set to restart with the listing of Syrma SGS Technology later this month. The issue closed for subscription on Thursday. Many more are lined up — Utkarsh Small Finance Bank, Fincare Small Finance Bank, and GO Digit General Insurance have filed their offer documents with SEBI.

How are the IPOs that came during the previous market boom faring?

2021 witnessed a record number of IPOs and fund-raising. While 63 companies came with public issues to raise funds amounting to a record Rs 118,723 crore from the equity markets in the calendar year, only 18 issues have hit the market in 2022. Collectively, they have raised Rs 40,310 crore — and half of this amount has come from just one issue: LIC.

A large number of public issues that hit the market amid soaring valuation in 2021 are now trading below their issue price. Data from NSE show that 27 of the 63 issues that hit the market in 2021 are trading below their issue price, including high-profile ones such as One 97 Communication (Paytm) and Zomato.

On the other hand, of the 16 issues that hit the market in calendar 2022 when the markets were less buoyant and the indices were on a decline, only four are trading below the issue price.

“We always witness a bunching-up of issues when the secondary market is buoyant. Most issues that come in times of sharp rally in the markets tend to be overpriced, and are susceptible to sharp declines when the market weakens. On the other hand, IPOs that come during normal times fare much better as they tend to be priced reasonably,” a fund manager who did not wish to be named, said.

So should you invest in this IPO rush?

The 18 per cent rally in the benchmark indices at the BSE and NSE since June 17, coming on the back of sharp FPI flows and a revival in investor sentiment, have encouraged merchant bankers to line up issues. For retail investors looking to play in the primary market, however, experts advise caution. They say that retail investors should seek out good-quality stocks from the bouquet of existing listed companies, and pick up the ones that are undervalued and not leveraged.

Several high-profile new age tech companies that came with their issues in 2021 are trading below their offer price — market participants say investors should be cautious, as there is a lot of irrationality around start-ups when there is liquidity in the market.

“When the market weakens, investor confidence in these companies gets shaken even on minor negative news flows. In the case of most of these companies where profitability is not visible for the next five years, it is very tough for an investor to stay invested when the market weakens, and so one has to be very careful about which company and at what valuation they are investing,” the head of research with financial services firm said.

What should you look for before investing in an IPO?

An IPO is an asset class that is a derivative of the secondary market, and its performance is linked to the sentiment in the broader market. Demand tends to be strong when investor sentiment is buoyant, and in such a scenario they get higher investor interest and fare well. However, that is not true for all cases; it also depends upon the pricing of the issue. Hence, investors need to do a thorough study of the company — the quality of promoters, business fundamentals, and the financial and peer review analysis — before investing in an IPO.

Corporate governance practices in the company should be given top priority. A good peer review is a must: Investors must study other listed companies in the sector and compare their growth, and their PE ratio (market price to earnings per share). If the company coming with an IPO is demanding a higher valuation, investors can consider avoiding it.





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Ukraine Crisis Could Disrupt Economic Recovery, Say Experts


India’s economic growth could be impacted by the Ukraine crisis, say experts

India is likely to rank among the emerging economies worst affected by the Russia-Ukraine crisis as a surge in global prices of commodities is set to upend spending plans and derail its pandemic recovery, analysts say.

If the conflict lasts, India, which imports close to 85 per cent of its oil needs, is likely to see its fiscal, trade and account deficits swelled by a surge in crude oil prices to their highest in more than a decade, which will also fuel inflation.

“The contagion from currently rising geopolitical tension is unlikely to remain limited to financial assets and warrants a change in our key macro forecasts for 2022-23,” said Abheek Barua, chief economist at HDFC Bank.

February’s budget was based on an average oil price of $75 to $80 a barrel for the fiscal year starting from April 1, but Brent briefly soared on Monday to nearly $140, its highest in over a decade.

A senior government official said if oil prices averaged $100 a barrel in the fiscal year to March 2023, that could shave 90 basis points off growth, taking it below 8 per cent, from a forecast range of 8 per cent to 8.5 per cent.

In such a scenario, inflation is seen rising by 100 basis points and the current account deficit could widen by 120 basis points to 2.3 per cent to 2.4 per cent of GDP.

DBS Bank says every increase of $10 a barrel in the price of oil lifts India’s consumer price index-based inflation by 20 to 25 basis points, widens the current account gap by 0.3 per cent of GDP, and poses a downside risk of 15 basis points to growth.

The oil price spike is also expected to pressure the government to lower fuel levies and reduce the burden on consumers. That in turn would dent revenues, narrowing the room for capital spending needed to boost growth.

Retail fuel prices could rise 10 per cent or more, starting from this week, as results flow in from elections in key states. To avoid voter backlash at the polls, state-run oil companies have not raised prices since November 4.

“Given the bunched-up increase in the offing, excise duty cuts might be undertaken, to ease pressure on purchasing power and incomes,” said Radhika Rao, an economist with DBS Bank.

But every rupee cut from fuel levies shrinks revenue for the government’s coffers by 130 billion rupees ($1.7 billion) a year. Economists say India could lose as much as 900 billion rupees in trying to lower pump prices.

And a recent battering of markets, which forced a rethink of plans for an $8-billion initial public offer (IPO) of state-run Life Insurance Corporation (LIC) by the end of March, is likely to further dent the government’s financial position.

RATINGS RISK

On the plus side, the government could turn a profit by selling some of its vast grain stockpiles following a rise in global wheat prices that could boost exports of the grain from India.

That could defray expenses on its vast annual purchases of grain at prices above global levels in the effort to support farm incomes.

But India’s fiscal deficit had widened to a record 9.3 per cent in the year that ended in March 2021, thanks to efforts to cushion the shock of the coronavirus pandemic and revive growth.

That meant the ratio of debt to GDP shot up to more than 90 per cent, for the worst among similarly-rated emerging markets.

Although India’s ratings have held steady, agencies have warned of long-term challenges and the need to cut the debt-to-GDP ratio to more sustainable levels.

Government officials said the fiscal deficit could slip by 20 to 30 basis points from a target of 6.9 per cent of GDP in the current fiscal year ending in March if LIC was not listed by then.

“The ratings agencies were not very happy with the fiscal consolidation path undertaken by us in the budget. Further deterioration could concern them,” said a second government official, who also spoke on condition of anonymity.

The government is reworking some key budget figures and the outcome of next year’s spending plans could look very different from the budget outlined last month, he added.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)



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