'GenAI has democratised the AI conversation. I do not know of a single client who is not interested in that conversation.'
After declining for three consecutive quarters, the value of FPI investment in Indian equities rose 8 per cent quarter-on-quarter to $566 billion in the July-September period, according to a Morningstar report on Wednesday. A fast-changing global macroeconomic landscape, sentiments and opportunities that the Indian equity markets have to offer impacted the direction of flows by Foreign Portfolio Investors (FPIs). Through the quarter, the value of the FPI holdings in domestic equities surged by 8 per cent to $566 billion from $523 billion recorded in the previous quarter.
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According to the global financial services major, the primary concern for the RBI at the moment has to be anchoring elevated inflation expectations and stabilising the currency, which could face renewed pressures if the Fed begins QE tapering this week, as widely expected.
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.
Already 15-20 per cent of the workforce, earlier used to be procured from staffing firms and subcontractors, are replaced by freelancers tapped from platforms like Topcoder, GitHub, and Upwork.
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.
India's consumer price index (CPI)-based inflation could ease in the coming months thanks to the arrival of kharif crops, lower international commodity prices, and a pass through of lower input costs to consumers, the finance ministry said in its Monthly Economic Review (MER) for October, which was released on Thursday. The MER, however, warned that the global macroeconomic situation remained precarious and a recession in many advanced economies would impact India's exports. "Easing international commodity prices and new Kharif arrival are set to dampen inflationary pressures in the coming months.
India's economy continues to be robust, but downside risks such as rising crude oil prices, adverse weather conditions, and the global banking crisis outweigh the upside potential in gross domestic product (GDP) growth in the current financial year (FY24), the finance ministry said on Tuesday in its Monthly Economic Review for March. "We reiterate that downside risks to our official forecast of 6.5 per cent for real GDP growth in FY24 dominate upside risks," the review said. "Opec's surprise production cut has seen oil prices rise in April, off their lows of low-seventies per barrel in March.
Macroeconomic (macro) concerns, along with a cautious approach towards discretionary information technology (IT) spending, will see the revenue for Indian IT firms decelerate by 5 per cent through 2024-25 (FY25), from the highs of 12-18 per cent in 2022-23, said analysts from S&P Global Ratings. "The reason behind this slow growth is a macro slowdown. "Customers are cutting their discretionary IT spending, especially on projects that take longer to deliver quantifiable outcomes. "We also acknowledge that there are still strong economic headwinds for the next few years," said Spencer Ng, associate director, corporate ratings, S&P Global Ratings, over a call in a media briefing.
Uncertainty is emerging as the only certainty, said RBI Governor Shaktikanta Das as he emphasised on continued policy support at the December MPC meet during which members expressed concerns over spread of the Omicron variant of coronavirus, as per the minutes of the rate-setting panel released on Wednesday. After three days of deliberations, the six members of the Monetary Policy Committee (MPC) on December 8 unanimously voted for status quo on policy rates for the ninth consecutive time. At the meeting, the RBI Governor said risks stalking the global economy have amplified with rapid spread of the virus mutations, including the Omicron variant, leading to countries scrambling for restrictions.
Gold burnished its image as the go-to asset class during turbulent times. However, investors seemed to have missed the bus. Net inflows into gold exchange-traded funds (ETFs) plunged to a four-year low of Rs 653 crore in 2022-23 (FY23), even as gold emerged as the top-performing asset class.
'To the believers of crypto regulations, I have only one question to ask, how will you regulate it?'
Dalal Street investors became richer by more than Rs 16.36 lakh crore this year as the equity market scaled new highs despite persistent geopolitical uncertainties and inflation worries. Analysts attributed better macroeconomic fundamentals, the confidence of retail investors and foreign investors investing again in the domestic equities towards the latter half of 2022 as the key factors that led to the outperformance of the Indian market in comparison to many other stock markets worldwide. During the initial part of the year, markets were jolted by the Russia-Ukraine war.
Reserve Bank Governor Shaktikanta Das on Thursday described cryptocurrencies as "clear danger" and said that anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name. The government is in the process of finalising a consultation paper on cryptocurrencies after gathering inputs from various stakeholders and institutions. Reserve Bank of India (RBI) has been flagging concerns about cryptocurrencies, which are seen as a highly speculative asset.
The RBI's Monetary Policy Committee brainstormed the impact of any future shocks on the inflation trajectory and stressed monitoring the cumulative effect of monetary policy actions over the past one year, which is still unfolding, revealed minutes of the rate-setting panel released on Thursday. The minutes of the meeting of the Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, also indicated it would be premature to declare an end to the monetary tightening cycle, which started in May 2022 to check high inflation following the outbreak of the Russia-Ukraine war. The central bank, which effected six back-to-back hikes in the key short-term lending rate (repo) since May 2022 to check high inflation, decided to take a pause early this month.
Upbeat high-frequency indicators and consumer confidence show that Indian economy continues to forge ahead, emerging out of shackles of pandemic, said an article on the state of economy published in RBI Bulletin on Wednesday. The recovery is spearheaded by an uptick in private investment through November-December alongside a turnaround in bank credit offtake and high capex from the government sector (Centre and states). In conjunction, the employment situation has brightened, said the article written by RBI officials.
With the Big Four information technology services players having disappointed the Street, the focus is on mid-cap IT players who seem to have met expectations, according to analyst reports and management commentary on the demand environment.
'Limited spillovers' to Asia's third-largest economy, even as world 'perilously close' to recession.
Retail inflation dropped marginally to 7.01 per cent in June mainly due to slight easing in prices of vegetables and pulses, though it still remained above the Reserve Bank's comfort level for the sixth month in a row. The consumer price index (CPI) based inflation stood at 7.04 per cent in the preceding month of May and 6.26 per cent in June 2021. Inflation in the food basket in June 2022 was 7.75 per cent, compared to 7.97 per cent in the previous month, as per the National Statistical Office (NSO) data released on Tuesday.
'Rather than cutting and pasting from advanced economies, we should use basic economic principles to think about what is right for India at the stage of development at which we are,' says Chief Economic Advisor Krishnamurthy Subramanian.
Whether this remains under control in the coming months will depend on the future intensity and spread of the Russia-Ukraine war, and the effectiveness of the Indian government's response, points out A K Bhattacharya.
Reserve Bank Governor Shaktikanta Das on Monday said despite the latest headwinds arising from the Jackson Hole summit leading to extreme volatility, our banking system and financial markets are strong enough to withstand such pressures. Taking the markets by surprise, US Fed chair Jerome Powell had told the annual Jackson Hole summit of central bankers and economists last week that he would have to keep raising federal fund rates to tame inflation, which remains the biggest challenge to the world's largest economy. He also warned of the pains that such monetary policy actions would create on growth and jobs.
In a tightening cycle, a premature pause in monetary policy action would be a costly policy error, Reserve Bank Governor Shaktikanta Das opined while voting along with five other members of the MPC for raising the key lending rate by 35 basis points earlier this month, according to the minutes of the meeting released on Wednesday. Prior to the December hike in repo rate, the RBI had raised the key short-term lending rate by 190 bps in four tranche.
M&M was the top gainer in the Sensex pack, rallying over 5 per cent, followed by Bajaj Finance, HDFC Bank, ICICI Bank, Bharti Airtel and Hero MotoCorp. NSE Nifty rose 65.30 points, or 0.71 per cent, to finish at 9,270.90.
Mark Zuckerberg, founder and CEO of Meta, summed it up well as he explained the reason for the company sacking 13 per cent of its employees. He said no one predicted that the boom for digital services during the Covid pandemic would die out. "Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended.
'It's a big technology company and may offer good remuneration, but stability in my career is equally important to me.'
Chief Economic Advisor (CEA) V Anantha Nageswaran on Tuesday said India is not defending the rupee and the Reserve Bank of India is taking necessary steps to ensure that the movement of the rupee is gradual and in line with market trends. Nageswaran further said that the rupee is being managed in a manner that reflects the fundamentals of the economy. "India is not defending the rupee... I don't think Indian fundamentals are such that we need to defend the rupee. "The rupee can take care of itself," he said at an event in New Delhi.
Global gold demand has seen a year-on-year decline of 8 per cent during the April-June period to 948.4 tonnes and going ahead further monetary tightening and continued dollar strength may pose headwinds, says a report. According to the WGC Gold Demand Trends Q2 2022 report, the total gold demand during the second quarter of 2021 stood at 1,031.8 tonnes. The year-on-year demand was affected by increase in gold electronic traded funds (ETFs) outflow, decline in Central banks buying and lower demand from the technology segment, the report said.
As large-scale layoffs begin at Facebook's parent company Meta, employees on work visas such as H-1Bs are now faced with uncertainty over their immigration status, with CEO Mark Zuckerberg acknowledging "this is especially difficult if you're here on a visa" and offering support to those impacted. Meta announced that it is laying off 11,000 employees or 13 per cent of its workforce, with Zuckerberg describing it as "some of the most difficult changes we've made in Meta's history." US-based technology companies hire a large amount of H-1B workers, the majority of whom come from countries such as India.
The Reserve Bank remains laser-focused to bring back retail inflation to 4 per cent over a period of time in a non-disruptive manner, Governor Shaktikanta Das stressed while voting for status quo in interest rates, as per minutes of the October policy meeting released on Friday. The central bank has been mandated by the government to ensure the Consumer Price Index (CPI) based inflation is at 4 per cent, with a band of 2 per cent on either side. The retail inflation, which was above 6 per cent during May and June, has started moving down and stood at 4.35 per cent in September.
'Earning expectations remain strong.'
Moody's Investors Service on Thursday said the credit downturn arising out of COVID-19 will be short-lived but most economies will not return to pre-pandemic activity levels until 2022. In the year since the World Health Organisation (WHO) declared COVID-19 a pandemic on March 11, 2020, the virus has disrupted the global economy and triggered a credit downturn accompanied by a spike in bond defaults. "The credit challenges arising from COVID-19 have been substantial, but the credit downturn likely will be relatively short-lived. "Risks remain more significant for the sectors most vulnerable to restrictions on their normal activities," Moody's said in a global report in coronavirus. Stating that most economies will not return to pre-pandemic activity levels until 2022, Moody's said it expects a slow and bumpy global recovery and uncertainty around the macroeconomic outlook remains much higher than usual.
'Higher than expected inflation in the US or the European Union, faster than expected tightening by the major central banks, break out of a war in Europe, and withdrawal of portfolio equities from the emerging markets are factors which can result in equity market corrections.'
India's manufacturing sector activities moderated in August, as business orders and production rose at softer rates due to the pandemic and rising input costs, a monthly survey said on Wednesday. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 52.3 in August, down from 55.3 in July, indicating a softer rate of growth that was subdued and below its long-run average. The August PMI data pointed to an improvement in overall operating conditions for the second straight month.
The IMF has encouraged both the UK and the EU to work collaboratively towards a smooth transition.
After three consecutive years of infusing huge funds, foreign portfolio investors retreated from the Indian equity markets in a big way in 2022 with the highest-ever yearly net outflow of nearly Rs 1.21 lakh crore. The huge outflow, which surpasses by a big margin the previous record of Rs 53,000 crore net withdrawal in 2008, came amid aggressive rate hikes by central banks globally but 2023 is expected to be better on positivity about overall macroeconomic trends in India, experts said. Apart from global monetary tightening, volatile crude, rising commodity prices along with Russia and Ukraine conflict led to an exodus of foreign money in 2022.
India's services sector remained in contraction territory for the third straight month in July, as business activity, new orders and employment declined further largely due to the COVID-19 pandemic and local restrictions, a monthly survey said on Wednesday. The seasonally adjusted India Services Business Activity Index rose from 41.2 in June to 45.4 in July, but was stuck in the red due to subdued demand conditions amid the COVID-19 crisis. In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
The criticism that the Reserve Bank of India was behind the curve in hiking interest rate to tame rising inflation is unfair, former RBI Governor D Subbarao said on Wednesday and asserted that it is difficult for any central bank to anticipate the future more accurately. Earlier this month, Monetary Policy Committee (MPC), the central bank's rate-setting panel, surprised the markets with a 40 basis points hike in repo rate in an off-cycle policy meeting. It was also the first rate hike after August 2018, amid spiralling inflation.
At the same time, the UN said in a report, the performance of private investment remains a key macroeconomic concern.
As he projected a grim outlook for the economy, RBI Governor said that amidst this encircling gloom, agriculture and allied activities have provided a beacon of hope on the back of an increase of 3.7 per cent in foodgrains production to a new record.
