Business News

Diamond exports set to fall by 25-30%

Business News - March 6, 2024 - 10:04pm
The country's cut and polished diamond (CPD) export is set to fall by 25-30 per cent this fiscal to a multi-year low of USD 15-16 billion due to the massive demand slump in the largest consuming markets of the US and China, and is unlikely to get better even next fiscal, says a report. Accordingly, the outlook for the CPD industry is negative as the exports will plunge to a multi-year low in the current fiscal, Care Ratings said in a note Wednesday, adding it does not expect a significant recovery in FY25 either. India is the world's largest centre for diamond cutting and polishing, accounting for around 95 per cent of the world's polished diamond production, while the US and China are the primary consuming markets, together accounting for around 65 percent of the country's exports. Following the pandemic, a surge in diamond jewellery demand, spurred by the economic stimulus in the US and limited opportunities for experiential spending, propelled CPD exports to record highs in FY22 at USD 24.43 billion and in FY23 at USD 22.04 billion. However, a decline in CPD demand began in December 2022 and despite expectations of a recovery during the holiday season of H2FY24 due to the economic conditions in the US and China, the increased alternative discretionary spending options, the growing market for the cheaper lab-grown diamonds (LGDs) etc have negatively affected exports. This resulted in a 28 per cent on-year drop in exports to USD13.04 billion in the first ten months of FY24, according to the report. This demand-supply imbalance has put pressure on the pricing of polished diamonds, leading to a price correction to the tune of 5-10 per cent for diamonds below 0.3 carats, 20-30 per cent for 0.3-3 carat diamonds, and 10-20 per cent for diamonds above 3 carats in 2023, leading to lower export earnings. Another reason was the high inventory at the start of FY24 and the subsequent fall in prices, which impacted the scale and profit margins, resulting in a higher-than-anticipated decline in total operating income, profitability and gross cash accruals. Thus, the outlook for the CPD industry is negative and the agency expects exports to hit a multi-year low in FY24 with a 25-30 per cent fall in realisation to USD15-16 billion. Further, the agency does not expect a significant recovery in FY25 as well.
Categories: Business News

China says economy got a strong start in 2024

Business News - March 6, 2024 - 7:21pm
China has plenty of room to maneuver to attain its annual target for robust economic growth of about 5% after a strong start for the year, top economic officials said Wednesday, though they acknowledged it's a challenge. China's exports rose about 10% in the first two months of the year from a year earlier, while medium- and long-term loans from banks jumped more than 30%, said China's top planning official, Zheng Shanjie, who heads the National Development and Reform Commission. Zheng said the priority will be on "supporting scientific and technological innovation, integrated development of urban and rural regions, food security and energy security, among other areas." "The potential construction demand in these areas is huge and the investment cycle is long. It's hard to fully meet needs using existing funding channels and there's an urgent need to increase support," he said at a news conference on the sidelines of the National People's Congress, China's ceremonial legislature. Premier Li Qiang announced the "around 5%" growth target for the year Tuesday at the opening of the congress, which runs for about a week and mostly just endorses policies set by top leaders of the ruling Communist Party. China's economy, the world's second largest, grew at a 5.2% pace in 2023, but that was from a relatively low pace since it expanded only 3% the year before, one of the lowest rates since the 1970s. Growth of around 5% would be cause for rejoicing in the US and other major economies, but it's moderate for a developing economy with a huge population like China's. Pan Gongsheng, the head of China's central bank, and the other senior economic planners speaking on the sidelines of the congress said Beijing has more policy tools it can turn to, such as reducing the reserve ratio requirement, or the amount of funds banks must keep in reserves. They emphasized Beijing's determination to put 1 trillion yuan (about $140 billion) in special, ultra long-term bonds to productive use to upgrade industries and advance technologies in key areas such as clean energy. The market for modernizing factory equipment amounts to about 5 trillion yuan (nearly $700 billion), Zheng said. That compares with the $649 billion the administration of US President Joe Biden says private companies have committed to investing in such areas as clean energy, electric vehicles and semiconductors and electronics. Despite robust growth in China's exports in the first two months of the year, Commerce Minister Wang Wentao said global demand may remain muted given the recent trend toward protectionist measures. Trade in goods and services rose a mere 0.2% in 2023, according to the World Trade Organization, and will increase this year but not to levels seen before the pandemic. China's own exports fell last year, adding to drags on the economy from weak consumer demand and a downturn in the property market, a major contributor to demand for construction, appliances and many other industries. China plans to do more to promote exports of higher-value products and to support smaller and mid-sized companies in tapping world markets, he said. "We are confident about consolidating the fundamentals of foreign trade and foreign investment," Wang said. To help spur more consumer spending, an increasingly important driver for growth as China becomes wealthier, the government plans to use tax policies and other incentives to encourage families to scrap their older vehicles, replace aging appliances and redecorate their apartments, the officials said. In other comments, the chairman of China's Securities Regulatory Commission, Wu Qing, acknowledged intervening in the financial markets at times when authorities deemed it necessary. China's stock markets languished from late last year, though they have recovered somewhat in recent weeks following a crackdown on price manipulation and insider trading among other confidence-boosting measures. Hong Kong's Hang Seng index is still 20% below where it stood a year ago, while the Shanghai Composite index has lost 8.5% at a time when many other world markets are breaching record highs. "Normally there should be no intervention in the markets, but at times when they sharply deviate from fundamentals, show irrational and severe volatility, an extreme lack of liquidity, market panics or a severe lack of confidence, we should act decisively to correct market failures," Wu said.
Categories: Business News

Tech View: Nifty ends above 21-EMA ahead of weekly expiry. What traders should do on Thursday

Business News - March 6, 2024 - 6:03pm
Nifty on Wednesday ended 118 points higher to form a long bull candle with a long lower shadow on the daily charts. The headline index ended at a record closing high, which was above the 21EMA on the daily scale.One may expect further upside in the coming sessions and the next upside levels to be watched around 22,800 and immediate support is at 22,300-22,250 levels, said Nagaraj Shetti of HDFC Securities.OI data showed that on the call side, the highest OI was observed at 22,500 strike prices while on the put side, the highest OI was at 22,300 strike price.What should traders do? Here’s what analysts said:Ruchit Jain, 5paisa.comThe derivatives data indicates short positions outstanding in the index futures segment while the RSI readings are positive and the index has continued the ‘Higher Top Higher Bottom’ structure. This could lead to a short covering of such positions, which could lead the indices higher. The immediate support for Nifty is now placed around 22,200 while the retracements indicate possible targets around 22,700. Thus, traders are advised to continue to trade with a positive bias till the index trades above its support.Osho Krishan, Angel OneThe support zone of 22,200 withheld its significance and is likely to provide a cushion in the near term, followed by 22,150 and 22,000 on a broader term. On the flip side, as Nifty is in uncharted territory, it would be challenging to forecast resistance. But with the strong bullish candle formation, 22,600-22,650 is likely to be seen as the next potent resistance for the index in the comparable period.Rupak De, LKP SecuritiesThe index exhibited volatility throughout the session but ultimately closed on a strong note. The short-term trend appears positive, as the index concluded the day above the 21-EMA on the daily chart. Additionally, the momentum indicator RSI shows a bullish crossover, indicating a positive momentum for the short term. The bulls are likely to maintain control as long as the index stays above 22,350. Looking ahead, there is potential for the Nifty to reach levels between 22,600 and 22,700 on the higher end.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Categories: Business News

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