UBS India, the domestic franchise of Swiss banking major UBS Group which last month surrendered its banking licence, has started laying off around 50 people, who are affected by the decision.
UBS AG's head of operations (India), Manisha Girotra has resigned from the bank to pursue her own business venture. The lender has named Aashish Kamat as the new head of its India business.
India's GDP growth will slow down to 5.5 per cent in FY24 from the 6.9 per cent expected in the current fiscal 2022-23, a Swiss brokerage said on Wednesday. The slowdown was attributed to slowing global growth and tightening of monetary policies in the report by economists at UBS India. It said India will be among the "lesser affected economies" in the world, but made it clear that the world's fifth largest economy is not immune from global headwinds.
The stellar rise in corporate earnings in financial year 2021-22 (FY21) and FY22 did not result in a corresponding boom in capital expenditure (capex), with listed companies' investment in fixed assets rising just 2.3 per cent year-on-year (YoY) in FY22, growing at the slowest pace in the last six years. In comparison, the firms' combined net profit jumped 63.5 per cent YoY in FY22, while net sales increased 31.1 per cent - the fastest pace in over a decade. The 955 non-financial companies in Business Standard's sample reported combined net profit of Rs 7.18 trillion in FY22, compared with Rs 4.39 trillion in FY21 and Rs 2.59 trillion in FY20.
The economy faces more downside risks now as economic disruptions arising from the second wave are likely to stabilise only from July, warned the Swiss brokerage USB Securities. Last month, the brokerage had cut its GDP forecast by 150 bps to 10 per cent for FY22, which though is much higher than the consensus projections by others with some pegging it at as low as 8 per cent. Though adverse impacts on sequential growth is less severe than in the June 2020 quarter when it plunged by 23.9 per cent, as lockdowns are more targeted and localised and households and businesses have adjusted to the new normal now, still, it is increasingly possible that normalcy returns only by July as against our baseline assumption of June.
Lockdowns imposed by the states in April and May to contain the second wave of the deadly COVID-19 pandemic has likely led to the economy contracting 12 per cent in the June quarter as against 23.9 per cent contraction in the same quarter in 2020, says a brokerage report. The economy had its worst contraction on record in FY21 at 7.3 per cent as the 2.5 months of unplanned lockdown announced by the centre with just a four-hour notice had crippled the economy in the first quarter with a massive 23.9 per cent contraction, which improved to -17.5 per cent in the second quarter.
What is more worrying, according to the report, is the fact that in over 20 per cent of the topic caseload districts where the second has ebbed, the third wave has set in firmly, which was only 5 per cent a month ago.
Citing faster-than-expected recovery, rising consumer confidence and the resultant spending spike, Swiss brokerage UBS Securities has revised upwards its growth forecast for the current fiscal to 9.5 per cent from 8.9 per cent in September. The brokerage also sees the economy clipping at 7.7 per cent in FY23 but moderating to 6 per cent in FY24, as it expects the benefit of the low-interest rate regime to end by the end of FY23, and it sees the central bank hiking policy rates by 50 bps in the second half of the next fiscal. The Reserve Bank also forecasts 9.5 per cent GDP growth this fiscal while the average projection ranges from 8.5 to 10 per cent.
Despite the slowdown, India's population of rich is growing. The country saw 120 more individuals join the exclusive club.
The trend in corporate earnings suggests that index earnings could fall to the levels last seen in early 2014.
International uncertainties such as the debt crisis in Greece would have an impact on equity markets globally, including India, a top financial sector expert said.
Heineken, among the world's top brewing firms, had been in protracted negotiations with UB, India's largest brewing firm and owned by billionaire Vijay Mallya. However, according to UB sources, Heineken is understood to have now agreed to bring Asia Pacific Breweries' India operations into the UB fold, thus ending the year-long impasse.
Ending an almost two-year-long dispute over partnership with the Vijay-Mallya owned United Breweries Ltd, Heineken NV, the world's third-largest brewery firm, on Monday agreed to permit UBL to brew and market the Heineken brand in India.
Indian entrepreneurs who made global acquisitions are bullish since they've achieved margin expansions which were even higher than what they'd originally anticipated, and global managements have accepted Indian shareholders very well.
UBS has already recruited 180 people in the city.
With nearly 5% share in the world generic market, are Indian pharma companies ready to go global? How competitive are their current business models?
Asset financing firms are still witnessing subdued demand and meaningful recovery is likely only in FY16, the report said.
Experts said concerns over the Union Budget, too, had weighed on the market performance.
The wide-based NSE sensitive index is currently hovering around 7,900.
New gold schemes may perform better than previous plans: UBS.
'It is unlikely that foreign portfolio investors (FPIs) might increase their India allocation, given the overweight status for most FPIs.' 'Given the commentary from the Republican Party, an anti-imports approach means money will not flow out of the US.'
India is Asia's third-best performing equity market.
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