The key reason for the country's stagnating exports is its failure to build a strong manufacturing base, says T N Ninan.
The robust export performance, coupled with a compression of imports led by gold, has led to a substantial narrowing in the current account deficit to comfortable levels.
India's largest two-wheeler maker by volume - Hero MotoCorp (Hero) - posted a better-than-expected operating performance in the January-March (fourth quarter, or Q4) quarter of 2022-23 (FY23). Riding on higher average selling prices which were up 5 per cent year-on-year (YoY) and volume growth of 7 per cent, the company registered a 12 per cent growth in revenue to Rs 8,306 crore. The company sold 127,000 units in the quarter, largely driven by domestic sales which were up 11.6 per cent, while exports saw a sharp fall of 57 per cent over the year-ago quarter.
The stock of the country's largest passenger vehicle maker, Maruti Suzuki India (MSIL), has been hitting successive all-time highs over the past three trading sessions. The rally in the scrip has helped it notch over a 21 per cent gain since the start of February, outperforming the National Stock Exchange Nifty Auto Index. The gains for the leader of small passenger cars have been more recent, as the company still trails the Nifty Auto over one- and two-year periods.
Since its results for the first quarter of the 2023-24 financial year (Q1FY24) earlier this month, the stock of auto component major Bharat Forge is up nearly 15 per cent and hit its all-time high in the process. The recent gains have extended the returns over the last three months to over 34 per cent. After a strong Q1 performance which beat expectations, brokerages had revised their earnings estimates upwards to factor in the improved outlook.
Despite multiple headwinds at the start of 2023, the Indian markets delivered a strong performance, posting 19-20 per cent growth for the year. Even as new records were set, investor sentiment remains strong going into 2024, given the lower inflation, expectations of steady to lower interest rates, higher economic growth, and strong inflows. However, the overriding concern for most brokerages is valuations.
Along with rising exports, the imports too went up by 54.1 at $40.9 billion during the month, pushing up the trade deficit to $15 billion during May. Imports grew highest in the last four years.
'While every year presents new challenges, it also provides opportunities for better growth and performance.'
'The deal pipeline across products is robust for 2024.'
Natco Pharma, Wockhardt and Marksans have rallied between 50 and 70 per cent in the year till date.
10 non-bank and non-finance stocks from the BSE500 Index universe that offer an optimal blend of low valuation, reasonably robust revenue and earnings growth in recent quarters, a strong balance sheet, and most importantly, positive cash flow from their operations.
Petrol and diesel prices are unlikely to be increased despite firming raw material costs because of upcoming general elections next year, Moody's Investors Service said. Three state-owned fuel retailers -- Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) -- which control roughly 90 per cent of the market, have kept petrol and diesel prices on freeze for a record 18 months in a row. This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in first half of 2022-23 fiscal year before easing oil prices propelled them to profitability.
Reliance Industries Ltd on Friday reported a 27 per cent jump in its September quarter net profit as earnings from the oil and gas business rebounded, and a pick-up in fashion and grocery helped boost retail revenues. The oil-to-retail-to-telecom conglomerate's consolidated net profit of Rs 17,394 crore, or Rs 25.71 per share, in July-September - the second quarter of the current 2023-24 fiscal - was 27.3 per cent higher than Rs 13,656 crore, or Rs 19.92 a share, earning a year back, the company said in a statement. The net profit was also higher quarter-on-quarter compared to Rs 16,011 crore earnings in the preceding three months ended June 30.
Stocks of the country's bigger tile and ceramic makers were major gainers over the past week. The leaders in this space -- Kajaria Ceramics and Cera Sanitaryware -- were up 7 per cent each. In the past three months, Kajaria Ceramics and Somany Ceramics were up 29-32 per cent, while Cera Sanitaryware gained 22 per cent.
Stocks of Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOCL) have more headroom left despite the sharp run in the last few weeks, suggests a recent report from Morgan Stanley. Stocks of these oil refining and marketing companies (OMCs), it believes, are seeing multiples re-rate as investors reassess long-term growth prospects. "IOCL trades at one year forward P/BV of 1.2x, 19 per cent below +1 standard deviation (SD); BPCL trades at one year forward P/BV of 1.5x, near historical averages; HPCL trades at one year forward P/BV of 1.5x, near +1SD," Morgan Stanley said.
'We emphasise the importance of not basing investment decisions solely on electoral outcomes.' 'Instead, focusing on investing in high-quality businesses capable of prospering regardless of the political landscape is paramount.'
Bharat Forge, the Pune-based automotive component maker, has been one of the top-performing companies in its segment. The company's stock price is up 39.3 per cent since the beginning of the 2023 calendar year, surpassing other leading automotive component makers such as Bosch and Samvardhana Motherson International. The stock also outperformed the benchmark BSE Sensex, which is up 17.3 per cent year to date so far.
'Auto, pharma, and industrials have delivered well in the recent quarter, while businesses like quick-service restaurants, consumer staples, and durables have underperformed in volume growth.'
'India's manufacturing will take 10-15 years to catch up with China.'
'India is in a slowdown which most of us have not seen in our living memory.'
Over the past three trading sessions, the stock of Cummins India has gained about nine per cent on strong January-March quarter (Q4) results and good near-term prospects. Its Q4 performance was led by a healthy 29 per cent revenue growth over the year ago quarter. This was largely on the back of a 33 per cent jump in domestic revenues while exports witnessed a growth of 17 per cent.
After lagging behind other segments in the automotive (auto) space over the past few years, two-wheelers are expected to reverse their volume underperformance. After witnessing a 36.3 per cent volume decline over the 2018-19 (FY19) through 2021-22 (FY22) periods, the sector staged a recovery in 2022-23 (FY23), with volumes rising 17 per cent. While volumes are still a quarter lower than the FY19 peak of 21 million units, a double-digit growth trajectory is expected to prolong.
'We are cautious only on sub-sectors that have seen massive melt-up during the past six months.'
Non-performers were not punished, performers were not rewarded, points out Utkarsh Mishra.
Profit taking in Bajaj Finance, Nestle, Kotak Bank, SBI, Bharti Airtel L&T and Asian Paints also weighed on the benchmark index. Maruti bucked the trend by gaining 1.73 per cent after strong retails sales in September. Power Grid, M&M. JSW Steel and Tata Steel also advanced.
Hindustan Unilever Ltd, India's largest personal care product maker, on Tuesday reported a better-than-expected increase in its September quarter net profit and revenues, signalling a revival of demand following the world's biggest lockdown.
India appears poised to sustain its growth in a more durable way than before with the economy carrying the momentum from FY23 into the current fiscal year, the Annual Economic Review for 2022-23 released by the finance ministry on Thursday said. However, the report cautioned that escalation of geopolitical stress, enhanced volatility in global financial systems, sharp price correction in global stock markets, a high magnitude of El-Nino impact, and modest trade activity and FDI inflows, are factors that could constrain the pace of growth. "Should these developments deepen and dampen growth in the subsequent quarters, the external sector may challenge India's growth outlook for FY24," the finance ministry said.
Corporate margins and profits in India remain vulnerable to changes in crude oil prices in the international market. Historical quarterly data from listed companies (excluding banks, finance and insurance, oil and gas, and power sectors) indicate an adverse correlation between corporate margins and crude oil prices.
India's manufacturing sector activity rose to a 13-month high in December, supported by healthy inflows of new business and strong demand conditions, according to a monthly survey. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) stood at 57.8 in December, up from 55.7 in November, as business conditions improved to the greatest extent in over two years. The December PMI data pointed to an improvement in overall operating conditions for the 18th straight month.
Manufacturing sector activities in India moderated for the second straight month in July as rates of expansion in output and new orders eased slightly, a monthly survey said on Tuesday. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) eased to 57.7 in July from 57.8 in June. Despite the fall, the Indian manufacturing sector maintained strong growth momentum at the start of the third quarter amid ongoing buoyant demand, the survey said.
IT and pharma companies again save the day; mask pain in domestic consumption.
Stocks of defence-related companies have been firing on all cylinders on the bourses in calendar year 2023 (CY23). Shares of Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Bharat Dynamics (BDL), Data Patterns, MTAR Tech, Cochin Shipyard and GRSE have rallied in the range of 21-96 per cent so far this year. By comparison, the BSE Sensex is up 8 per cent. The gains have been sustained on the back of robust export opportunities, a healthy project pipeline and the government's continued push for local manufacturing and indigenisation of defence equipment.
Exports of gold jewellery fell 23.13 per cent to $1153 million.
Improved monsoon, solid fiscal performance, and capex push by the public and private sectors augurs well for India's macroeconomic stability and growth, the finance ministry's monthly economic review for June 2023 said. But the report said that while India's domestic fundamentals remain strong, negative cross-border spillovers and adverse global developments could act as a deterrent in achieving the high growth path this financial year. "An improved matching of aggregate supply and aggregate demand in the Indian economy underpins the progress made in the control of domestic inflation and the consequent strengthening of macroeconomic stability," the review said.
India's second largest IT services company Infosys on Thursday reported a 3.1 per cent year-on-year rise in net profit to Rs 6,215 crore for the September 2023 quarter. The earnings (before minority interest) of the Bengaluru-based company stood at Rs 6,026 crore in the year-ago period. The company - which competes in the IT services market with TCS, Wipro, HCL Technologies and others - saw its revenue rising 6.7 per cent to Rs 38,994 crore for the just-ended September quarter.
'I found it unbelievable that L&T said 45,000 jobs were waiting to be filled because of unavailability of suitable skillsets.' 'So, when the Opposition sweepingly says there are no jobs, I'm sorry... I'm not saying it's raining jobs, but there are jobs. The (skill) gap has to be bridged.'
Maruti Suzuki India and Hyundai reported single-digit sales growth in July with the sports utility segment continuing to drive overall demand in the market. Mahindra & Mahindra witnessed a 29 per cent increase in passenger vehicle dispatches while Tata Motors saw a marginal increase in the wholesales last month. Maruti Suzuki on Tuesday said its total domestic passenger vehicle sales stood at 152,126 units last month as compared to 142,850 units in the year-ago month, a growth of 6 per cent.
Consumer goods firms and auto companies are witnessing an upturn in rural demand, which had been lagging for most of FY24. Expectations of a bumper rabi crop harvest have helped turn the tide. The Reserve Bank of India's (RBI's) Monetary Policy Committee kept the repo rate unchanged last week, noting that as rural demand catches up, consumption is expected to support economic growth in 2024-25.
'Cognizant's results indicate that digital related spends can more than offset headwinds in traditional services'
