The ruble has recouped most of its losses and become the top-performing currency globally. It continues to gain and is up 60 per cent against the US dollar from its lows in the first week of March. The ruble appreciated to 83 to the dollar intraday on Tuesday against a record low of 139 on March 7.
Tata Consultancy Services (TCS) - the largest information technology (IT) services provider in India and the second-largest globally - recently set an ambitious goal of $50 billion in revenue by 2030. The growth required to reach this goal, however, is lower than the company's own standards. In the past decade, TCS revenues, or net sales in US dollar terms, have grown at a compound annual growth rate (CAGR) of 9.5 per cent, from $10.2 in 2011-12, to an expected $25.3 billion during 2021-22 (FY22), based on its revenue trend in the first nine months of FY22.
A sharp sell-off in the Indian equities markets after a spike in crude oil prices should not be surprising. Historically there is a negative correlation between stock valuations in India and the price of Brent crude oil, which is the benchmark for the Indian crude oil basket. Between 2011 and 2014, crude oil traded above $100 a barrel for an extended period, the Sensex-trailing price/earnings (P/E) was 18X, on average, during the period, nearly 22 per cent lower than the current index P/E of 23X.
The biggest jump in earnings and decline in P/E multiples has occurred with top companies in metals and mining, corporate banking, and the oil and gas sectors.
Emerging markets such as India have always run higher inflation rates than developed economies such as the US and countries of Western Europe. But for the first time in the past 30 years, the US reported a higher consumer price inflation (CPI) rate than India in five consecutive months. The US reported a CPI rate of 7.5 per cent in January 2022 against 6.01 per cent in India and analysts expect the trend to continue for at least a few months more
The biggest headwind to the consumption story in FY23 is a sharp decline in government subsidies on food, fertiliser and fuel, and overall decline in revenue expenditure net of interest payments. This, analysts say, will adversely impact purchasing power of households at the lower end of the income pyramid, translating into lower spending on consumer goods and services.
Owing to a big rise in the market capitalisation of group companies such as Adani Green Energy and Adani Transmission, the group promoters, the Gautam Adani family, have closed the wealth gap with Mukesh Ambani, the promoter and owner of Reliance Industries Ltd (RIL). Ambani continues to top India's billionaire league table. The Ambani family's net worth was estimated to be Rs 8.06 trillion (around $108 billion) on Tuesday against the Rs 6.87 trillion (around $92 billion) of the Adani family.
India is much better placed today to deal with future waves of the pandemic relative to the first wave, RBI deputy governor Michael Patra said.
The group began to outperform the broader market only with the onset of the pandemic in March 2020 while earlier it was largely keeping pace with the Sensex. The group's market cap is up 164.4 per cent since the end of March 2020 against a 105 per cent rally in the Sensex.
The Tata group companies are now more valuable than all the listed central public sector undertakings (CPSUs) or companies in the country. The key 20 listed Tata companies ended the 2021 calendar year with a combined market capitalisation of Rs 23.36 trillion, ahead of the 70 listed CPSUs, which had a combined m-cap of Rs 23.2 trillion. In comparison, these CPSUs had a combined market capitalisation of Rs 16.7 trillion at the end of December 2020 against the Tata group firms' combined m-cap of Rs 15.7 trillion.
The future of cryptocurrencies in India appears uncertain but that has not deterred young Indians from embracing the so-called 'fourth industrial revolution' world, where interconnectivity and smart automation, much of it relying on blockchain technology, drive human civilisation. Reserve Bank of India (RBI) Governor Shaktikanta Das has repeatedly warned of macroeconomic instability and even "serious consequences" if cryptocurrencies turn mainstream. The country's monetary authority wants a China-like total ban on crypto, not even allowing these currencies to be treated as investments. Though Parliament's website had listed the Cryptocurrency and Regulation of Official Digital Currency Bill as one seeking a total ban of cryptocurrencies in the country, it was not presented in the Winter Session. India now has the highest number of cryptocurrency investors in the world.
The Indian financial system's asset quality improved despite the pandemic, but it could be due to special dispensations by the regulator, and banks would likely see increased stress on their books once the schemes expire. According to the annual trend and progress report of the Reserve Bank of India (RBI) released on Tuesday, the data available for this financial year so far indicate that banks' bad debts have moderated while provision coverage ratios (PCRs), capital buffers as well as profitability indicators have improved relative to pre-pandemic levels.
Reserve Bank of India (RBI) deputy governor M Rajeshwar Rao on Wednesday defended the central bank's decision of not allowing industrial houses to float banks, and said more deliberations are needed before RBI changes its stance on this issue agreed back in 2001. An internal working group (IWG) of the RBI had recommended allowing industrial groups into banking, but late last month the RBI said it kept on hold the two recommendations of allowing industrial houses and large non-banks to float banks. However, RBI had accepted 21 of the 33 recommendations of the group that submitted its report a year ago.
The draft amalgamation scheme of Punjab and Maharashtra Co-operative (PMC) Bank with Unity Small Finance Bank (SFB) allowed quick relief to depositors with savings of up to Rs 5 lakh, but a long wait for those who had their nest egg with the scam-tainted bank. If the scheme gets approved, 96 per cent (or 880,000 of 924,000) depositors will get their full money straightaway after PMC is merged with Unity SFB. According to the draft scheme, retail investors may get up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) instantly, and then some more in phases till they can recall their full deposits after 10 years.
The Reserve Bank of India's retail direct scheme is off to a good start but the central bank itself sees it as an additional avenue and not an alternative to the existing one. Still, a reasonable expectation is to have at least 100,000 investors within a month of it being operational, and that could be well under way, if the latest trend is to sustain. The registration in the retail direct platform has crossed 35,000.
'I hope the trend is sustainable and that economic activity accelerates going forward.'
The Reserve Bank of India (RBI) unions have decided to intensify their stir demanding revision of wages, pending since November 2017, and have called for mass casual leave of employees at the central bank on November 30. However, several sources in the RBI told Business Standard that the unions may not have to go on agitation, as the new contours of the wage pact have been almost finalised and could be announced any time. An email sent to the RBI was not answered. The United Forum of Reserve Bank Officers and Employees had deferred its agitation earlier after it was told that RBI Governor Shaktikanta Das was to hold talks with the human resource management department (HRMD).
India's top listed companies reported their best-ever quarterly net profit of Rs 2.39 trillion in the September quarter of FY22, up 46.4 per cent year-on-year. The earnings were driven by a big surge in the profitability of banks, non-banking financial companies & insurance (BFSI), oil & gas, and metal & mining firms. The combined net profit of these three cyclical sectors were up 87 per cent YoY to a record high of Rs 1.53 trillion, up from Rs 82,000 crore a year ago and Rs 1.08 trillion in Q1FY22.
Rapid strides in digital payments notwithstanding, the Indian economy will likely remain cash-dependent for many years to come, at least that's what the automated teller machine makers and cash logistics companies are betting on. After growing at over 20 per cent for most of 2020, currency in circulation growth fell to 8.5 per cent as of October 29 this year, shows data from the Reserve Bank of India (RBI). The reason for the steep rise in currency last year was the uncertainties related to the Coronavirus (Covid-19) pandemic, where people preferred to hoard cash to meet exigencies.
Prime Minister Narendra Modi will on Friday launch two schemes of the Reserve Bank of India (RBI) that may go a long way in changing how the household sector invests, and complains if anything goes wrong with their savings. These schemes - retail direct and an integrated ombudsman - will be launched by the Prime Minister virtually, in the presence of Finance Minister Nirmala Sitharaman. With the introduction of retail direct, a common man can directly take a position in government securities (G-Sec), considered to be the safest asset class a sovereign can offer.
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