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Updated: 2 hours 37 min ago

Apple to roll out a cheap iPhone in March

2 hours 37 min ago
By Debby Wu and Mark GurmanApple Inc. suppliers plan to begin assembling a new low-cost iPhone in February, people familiar with the plan said, as the company looks to address a wider swath of the global smartphone market ahead of its 5G handsets later this year.The Cupertino, California-based company is expected to officially unveil the new phone as early as March, one person familiar with its road map said. The assembly work for the new handset will be split among Hon Hai Precision Industry, Pegatron Corp. and Wistron Corp., the people added.This will be the first lower-cost iPhone model since the iPhone SE. It will look similar to the iPhone 8 from 2017 and include a 4.7-inch screen, Bloomberg News has previously reported. The iPhone 8 is still on the market, currently selling for $449, whereas Apple sold the iPhone SE for $399 when that handset launched in 2016.The new phone is expected to have Touch ID built into the home button, reusing established Apple technology instead of opting for an in-display fingerprint sensor like most modern Android rivals. It will not have Apple’s Face ID biometric authentication, but it will feature the same processor as Apple’s current flagship device, the iPhone 11.An Apple spokeswoman declined to comment.Apple’s more affordable iPhones have proven popular with consumers, including the latest iPhone 11, whose starting price was $50 lower than Apple’s typical pricing. Strong demand for iPhones has prompted Apple to ask Taiwan Semiconductor Manufacturing Co. to make more chips in the current quarter, according to two people familiar with the matter.Apple is planning a slew of new high-end iPhones for release later in 2020 that include 5G connectivity, faster processors, and new 3-D cameras on the back, Bloomberg News has reported.A cheaper offering may help Apple better compete in the most price-competitive and fast-growing emerging phone markets, particularly India. iPhones are still a hard sell in the country, which is overrun by aggressively-priced Android rivals coming in at less than $200. Still, Apple has shown a will to carve out a niche for itself and is eyeing locations for Apple stores within its borders.The U.S. tech juggernaut is hoping its handset shipments will return to growth this year, having set itself the goal of shipping more than 200 million units in 2020. The successor to the iPhone SE will play a significant role in that task.
Categories: Business News

Hopeful all countries will come together on AI: Pichai

2 hours 37 min ago
DAVOS: Google chief Sundar Pichai on Wednesday said the world needs a free and open internet for everyone and hoped that all countries will come together for a common regulatory framework for artificial intelligence (AI).Speaking here at WEF 2020, Pichai also said privacy cannot be a luxury good and it has to be safeguarded for everyone."We need a free and open internet for all, while data sovereignty is important for every country and that needs to be taken into account in any data protection framework in any part of the world."Internet is actually an export product. Even in India, if we talk about YouTube, a video created by an Indian gets audience from across the world. That's the beauty of digital economy" he said.Pichai, also CEO of Alphabet, said he has always been a technology optimist, having experienced firsthand the benefits new technology brought to his own life."Growing up, I had to wait for either a telephone or a television and each time these things came to my home I realised what an important role technology plays in our lives. More recently, we have seen how AI can play a great role, including for doctors and weather forecasts," he said.Pichai added he is clear-eyed about the risks of technology, but the risk of AI is failing to work on it, because it can affect billions of people.On quantum computing, he said this is a major milestone because quantum computers can do a lot many things that the classical computers cannot."With this, we can simulate nature better and we can better predict weather and climate change. They can make better batteries. It's very profound," he said."When I look at future, quantum will be the next big arsenal in the way of technology. We will need to work a lot. The combination of AI and quantum computing would be amazing. Also, quantum's combination with biology would present huge potential, but obviously we will have to be very careful," Pichai added.Addressing the challenges of regulating AI, he said: "AI is no different from climate - you can't get safety by just one company or country working on it - you need a global framework."Pichai said he is optimistic that all countries will cooperate in such a framework."I think there will be common gravitational pull - regardless of who you are, because people will recognise the need of such a framework for the sake of peace and prosperity," he said.
Categories: Business News

Sterlite Power inks pact with US-based Smart Wires to bring SmartValve to Indian utilities

2 hours 37 min ago
NEW DELHI: Sterlite Power on Wednesday said it has inked an exclusive agreement with the US-based Smart Wires to bring SmartValve to Indian market which will enable resourceful grid management. This cutting-edge technology is an intelligent 'valve' that will allow utilities to optimally utilise its existing transmission capacity and enhance grid flexibility, a company statement said. Commenting on the technology agreement, Sterlite Power Managing Director Pratik Agarwal said, "An environmentally sustainable electricity system is the anchor for a modern society. We are growing at an incredible pace and need to look for innovative solutions for rising grid outages due to climate change, lack of land to build new lines and integration of renewable energy." "Modernising the grid to make it 'smarter' through the use of cutting edge technology is going to disrupt the landscape and technology is going to be the game changer in this field," he added. Power networks in India have been facing major transmission congestion challenges due to exponential growth in demand for power and rapid urbanisation, the statement said. Congestion is often seen in sub-transmission lines where it is a challenge to connect renewable power. In this context, alleviating congestion and enhancing grid flexibility becomes critical, it said. SmartValve increases power transfer capability by making better use of existing network. As generation and demand changes, circuits can become unequally loaded. Some lines reach their maximum capacity while others are well below their limits. SmartValve technology can unlock this system capacity by more evenly balancing power flows and therefore provides a quicker-to-install and lower-impact alternative to building new lines, it added. It is quick to install and easy to scale or redeploy, providing valuable flexibility given today's rapidly changing electric system. Manish Agarwal, CEO, Solutions, Sterlite Power, said, "This technology will enable better power flow, grid stability and enhanced power transfer capacity in existing infrastructure without the need for investment in new lines." Smart Wires CEO Gregg Rotenberg said, "Given the pace and scale of renewable energy growth in India, our solutions can provide immense value to the market." Smart Wires is a leading player in modular power flow control. It has successfully deployed this state-of-the-art technology globally across the US, Europe and Australia, the statement said. Based in California, with offices in Ireland and Australia and a global workforce, Smart Wires works with utilities around the world to address the unique challenges they face.
Categories: Business News

Piramal Realty to invest Rs 3,500 cr in 3 years to develop mid-market projects in Mumbai

2 hours 37 min ago
MUMBAI: Piramal Realty, the real estate development arm of the Piramal Group, is planning to invest over Rs 3,500 crore to develop residential projects in Mumbai Metropolitan Region (MMR) over the next 3 years with significant focus on mid-market segment, said a top company official.The company, which counts Goldman Sachs and Warburg Pincus as its investors, is foraying into mid-market compact housing segment with a 5-acre development as part of its larger 32 acre township project Piramal Vaikunth in Thane.Of the total planned investment of Rs 3,500 crore, the company will be investing Rs 1,500 crore to develop 2 million sq ft on this 5-acre plot. The company will be offering 1 and 1.5 bedroom apartments with configurations of 350-500 sq ft priced at Rs 60 lakh to Rs 80 lakh.“The combination of right product, location and ticket size ensures good response and our recent launches in South Mumbai have reinforce this. Luxury will do well but this is also a good segment to be in and right now the market prefers compact units,” Anand Piramal, Executive Director, Piramal Group told ET. “The proposed investment will be supported through a mix of internal accruals, debt and some part of equity.”The company is planning to launch 3 more projects by July--including projects at Mahim, Thane and a new tower at its Mahalaxmi development--and will be making compact housing a part of all of its projects hereon. Last month, the company entered into a joint development agreement with Omkar Realtors & Developers for a 2.2 million sq ft residential project spread over 4 acres in Mumbai’s Mahim locality.It is planning to add total 10 million sq ft projects in 2020 to its existing 17 million sq ft ongoing development portfolio. South Mumbai projects including Mahalaxmi and Byculla continue to contribute 50% of the company’s portfolio.Piramal Realty has clocked in sales of over Rs 1,250 crores in the first 3 quarters of the financial year 2019-20, of which over Rs 450 crore was achieved during the quarter ended December. The company witnessed growth of over 50% for ongoing projects during the first nine months as compared to a year ago. Piramal expects the company to end the financial year 2019-20 with revenues worth around Rs 2,000 crore led by performance of ongoing projects and new launches.The company will continue exploring new land parcels in the Mumbai Metropolitan Region (MMR) for residential and commercial developments, he said.“We have been receiving proposals from land owners for outright sale and joint developments. Most of the landlords have toned down their expectations now in line wih the market realities. Apart from land lords, lenders have also started approaching for completion of projects,” Piramal added.
Categories: Business News

Bank stress from agri side, won’t stay long: Taher Badshah

2 hours 37 min ago
Taher Badshah, CIO for Equities at Invesco Mutual Fund, says while reasonable inflation has always been positive for FMCG companies, the challenge in the current market comes from high valuations. Excerpts from an interview with ETNOW:Given the kind of recovery seen in pharma names, with the index up about 4% year to date, and the comments coming in from auto companies that the worst is perhaps over, are you feeling optimistic that we are on the road to recovery, or are you still cautious?For five to six months now, we have been holding this view that the market will see a gradual recovery. More than the market, we will probably see a better situation in the economy in 12 to 18 months compared with what it was in last 18-24 odd months. This is largely predicated on steadily improving global macros, decent liquidity situation in global markets and a gradual recovery in the Indian context from a liquidity standpoint, especially in the banking system, and supported by broader market valuations being relatively reasonable.We have been holding on to a relatively positive view for some time. We do not really speculate on the extent of the recovery, but we feel the market is more about reality versus expectation. If we were to move from 5-odd per cent GDP growth to 5.5 or 6 per cent over next few quarters, the market will heave a sigh of relief and take it positively and build in more optimism. That’s the way we are positioned ourselves going into 2020.Some would say the market has already priced that in, so where is the upside? We are right now focusing on contraction versus stability. Nifty is already at an all-time high. What could be that trigger for the market to go higher from this level?It will be a combination of improving micros, overall liquidity situation and a return of growth in NBFCs. There is a fair bit of excess capacity in the system. As we start seeing utilisation of that, it will be difficult for the market to immediately anticipate what kind of operating leverage will play out. We may probably have an earnings cycle running a little ahead of what the market estimates are. That may provide the necessary fuel for the market to stay up.In last three-four years, we have just been looking at Nifty valuations and dismissing the market. That has never really paid off, and the market has done what it had to do despite where the Nifty PE multiple has stood. So, opportunities are there in the wider market, and that is what the market has already started to appreciate in last three-four months, when we have seen the broader market perform or outperform Nifty or Sensex. This proposition, to my mind, will get a little wider in the course of 2020. Is it a concern what we have heard in terms of asset quality from an HDFC Bank or a Kotak? Do you fear that it could rub off on some of the other corporate-focussed heavily-owned banks like an ICICI Bank or an Axis?The asset quality-related pressures seen in a couple of banks that have announced their quarterly numbers are mainly stemming out of agriculture, as one, and maybe MSME to some extent.To my mind, the agriculture space will look a lot better as we get into the later part of the year. We have seen food inflation actually being pretty positive. In the initial phase of rise, the food inflation we have seen over the past few weeks should probably be a little positive rather than negative, simply because it will lead to better farm income and more spending power in rural markets. So, the problem that some of the banks faced in last few quarters due to the agri stress should get alleviated as we go along. They have expressed caution and tried to control their loan growth enthusiasm last quarter, but that is just a matter of precaution. Some of the stress will probably fade away, as we get stronger results out of the rural markets. That is an additional factor we would look forward to in terms of the overall macro recovery. It will be a slow process; we will have bumps along the way. But when we look at a confluence of factors, it suggests there is a reason to believe some seeds of recovery are being sown for next four to six quarters.What do you do with Bharti Airtel? The sector seems to be headed for a duopoly, but Bharti has got that FDI approval and a 100% quotient at that. The stock, of course, is just points away from its all-time peak. It is already at a 52-week high. What is in store for the telecom sector per se?We have not yet heard the last word on whether it is going to be a two-player or a three-player market. We have been positioned in telecom across a couple of names for more than six months now. Our view has been predicated on potential recovery in tariffs. Most of the players are sub-par in terms of returns on capital and it is not a business where capital intensity is going to fade away anytime soon. So restoring a healthy level of return on capital beyond a particular point is going to be paramount. We did not really expect it to play out because of the AGR issue, but it has started playing out. We are now at a stage where the telcos’ ability to take more tariff hikes is still in place, given the essential nature of the telecom activity as a utility.So, we still have a long way to go in terms of the operating leverage that can play out, because this is a highly fixed cost-oriented business and a small delta in rates can bring about a significantly large delta on earnings. I think that story still remains. To that extent, the journey could be pretty exciting from here on. We have seen a sharp appreciation in stock prices in a very short period. So maybe they will probably be some kind of calm-down, settle-down for a while. But directionally, we are pretty positive about the way the sector is shaping up. What about FMCG? Reports suggest the worst is over, but are we really looking at some kind of dramatic improvement there? We have seen a lot of stress on the rural side, and there are expectations from the Budget. What should be the strategies for some of those stocks?We are underweight on staples, as such. But that is primarily because of the high valuations, which have been deterring us from being overweight. We are currently underweight FMCG stocks across most of our strategies. We have some stray positions, as the return of consumer strength in the rural areas -- as I mentioned earlier – and inflation should benefit the FMCG names. Typically, food inflation or overall inflation being reasonable has always been positive for FMCG companies. The challenge there is of valuation.The other way to look at it is, the return of the same rural benefit or rural growth can benefit other businesses, either on the consumer discretionary side or other sides that are rural intensive. One can try and see whether there could be other businesses that address the bottom-of-the-pyramid in some ways. We are trying to see whether we can build positions and benefit from the same proposition through other businesses.What is your big call then? Banks, some would argue, cannot grow at this rate -- 5 times book for Kotak, 4 times book for HDFC Bank! The 15-20% incremental growth is here to stay, but will shareholders make money? Great businesses may not always be great stocks.Yes, you are correct. We need to differentiate between good businesses and good investments. But some of these banks that trade at relatively more expensive valuations have not lost their ability to grow as and when the market becomes conducive for better growth. They have done it in the past, and in the more recent past as well. Their longer-term growth potential is not impaired. It is just a matter of caution and return of a better economic growth cycle which we probably did not have in last 18-odd months.I think they still retain that option to always come back with better growth characteristics compared what we have seen in last one or two quarters. They are best equipped even in the current circumstances to come back to growth in terms of adequacy of capital, in terms of not having stretched themselves significantly as far as asset quality goes and still riding on very strong liability franchises. That still remains the key proposition over there. So yes, they are expensive in the short run, no denying that. But this expensiveness can be overcome very quickly with return to growth.
Categories: Business News

UBS bullish on earnings after 5 yrs, sees $25b FII equity inflows

2 hours 37 min ago
Mumbai: UBS Securities on Wednesday said it sees a 20 per cent upside in Nifty by December 2021 in its base case scenario, driven by strong foreign fund inflows. The broking firm has also turned bullish on earnings growth after five years on the basis of its four parameters -- exports, policy, capex and credit growth. “We expect an inflection point in growth after seven disappointing years. India is the second-largest populated country in the world, but over the past seven years it has underperformed its growth potential,” UBS analysts said in a note. From an average 6 per cent earnings growth over FY15-19, UBS estimates Nifty earnings could grow around 15 per cent in FY21-23 in its base case and around 20 per cent in its upside scenario. “This growth acceleration, not discounted by broader market, will have profound implications not only for local, but also for global companies,” UBS said. UBS believes India's golden opportunity lies in exports. Capex, private and public capex may underwhelm, but property cycle will likely revive, with any policy support a bonus. The credit cycle will be supportive as a repaired and recapitalised banking system emerges. Policy (fiscal and monetary) will likely be neutral but at least not a drag on growth, unlike the past five years. The four factors could drive GDP growth recovery to 6.4 per cent average in FY21-23. The rupee and interest rates could be well supported too, also by capital flows. UBS’ top-down model for foreign portfolio inflows suggests $20-25 billion equity inflows annually, three times the five-year historical average. AUM for equity mutual funds in India could go up two times to $280 billion in its base case and three times in its upside case. The policy bias is changing from repair over the past few years to growth. “Unlike earlier near-term growth disruptive reforms (GST, anti-corruption agenda, banking system clean-up), current ones (corporate rate cut, labour reforms and a privatisation push) are supportive,” UBS said. “There remains material risks too, with tail risks in the banking sector not yet resolved, apart from global risks,” it added. In its downside scenario, UBS assumes earnings growth could continue to languish at around 7 per cent, real GDP growth remains sub-5 per cent till FY23, and Nifty could drop by 20 per cent from current levels by March 2022 and there could be foreign portfolio outflows.
Categories: Business News

73% IT professionals willing to pay Rs 10,000-20,000 per year for upskilling

2 hours 37 min ago
NEW DELHI: About 73% of IT professionals are willing to pay Rs 10,000-20,000 per year for upskilling, according to a TechGig survey. About 87% of survey respondents are looking to learn or adopt a new software development technology in this year.TechGig surveyed 1,057 IT professionals to understand their preference for learning new-age software development technologies. Most respondents (57%) of this survey belonged to the 25-34 age group.“This is a critical finding because it shows the seriousness of software developers towards staying relevant at work floors,” said Sanjay Goyal, Business Head, TimesJobs & TechGig. Python emerged as the top choice for learning, with as many as 35% of respondents saying that they would learn the language. This was followed up by Java, as voted by 15% of respondents and C++ as voted by 12% of respondents.
Categories: Business News

Tinker, tailor, solder, buy: What Budget can do for Modi's $5 trn

5 hours 38 min ago
By Dipti DeshpandeIn fiscal 2020, India’s economy grew 5% in real terms – the slowest in 11 years. In nominal terms, the size of the GDP is almost $3 trillion – or $2 trillion short of the touted goal.For perspective, it took us nearly a decade to go from about $1 trillion to $3 trillion. This time, the window is less than four fiscals. That means India will have to more than double its current growth rate in these years, to about 10% per year in real terms, with some inflation and stable exchange rate.Monetary and fiscal policies can only bring about a short-term revival in the economy through a demand boost. But to increase the ‘trend’ or ‘potential’ growth rate, would require a much bigger reforms push and an improvement in global trade. Fiscal pressures have intensified already, limiting the government’s ability to stimulate growth. And continuing financial sector woes is delaying a pick-up. If that weren’t enough, the ongoing global slowdown is also a material constraint. There is little the Union Budget for fiscal 2020-21 can do to address the latter two. On the fiscal side, though, anything can be on the table.So far, monetary policy has almost single-handedly attempted to revive growth but with moderate success as transmission of interest rate cuts to the real economy remains weak. This has put the onus on fiscal policy to trigger short-term growth.As things stand, there appears neither room to spend extravagantly nor the possibility of drastically reducing tax rates. Government borrowings have already surged in recent years keeping bond yields high. Because these yields act as a benchmark, other interest rates in the economy, too, have risen or stayed high despite the recent monetary easing. Any further rise in borrowings will, therefore, put more pressure on yields and crowd out private sector borrowing.Yet, if the goal is to kick-start growth, then breaching the fiscal deficit temporarily to spur consumption is an option.But such moves in the past have been unsustainable and raised domestic macro vulnerability. To avoid a repeat, the government should use additional fiscal space, if any, to push capex or spend in sectors where the income multipliers are higher. But this will not immediately yield a growth surge. The government in the budget will need to spur consumption by augmenting incomes in the rural areas where the propensity to spend is higher.The stepping up of NREGA and rural construction works is one way to do so. Also, improving the effectiveness of ongoing schemes and spends under the PM Kisan scheme to enhance its reach is the other option available to the Budget when the fiscal hands are tied. Problem is, this may push the $5 trillion goal further.As for the financial sector, stress has spread from banks to non-banks, and credit growth has declined sharply. This is due to weak credit demand, shortage of liquidity with some lenders, and risk aversion. Banks, for instance, are parking a larger proportion of their loanable funds in government securities which are risk free and are also giving higher yields.The slowdown in credit growth, therefore, reflects both macroeconomic challenges (which have constrained loan demand) and tighter loan supply by banks. The stress among non-banks is also hurting credit growth. Given the high penetration of non-banks in certain household-consumption segments, the stress is constraining demand further. The Budget can do little to address this. To be sure, the financial sector clean-up bodes well for the long term. But in the short-term, the stress feeds into real sector and slows growth. There’s some way to go before things improve materially. The kind of clean-up initiated in the financial system has not been attempted in India earlier, and entails radical improvement in transparency (through restructuring of bad loans) and focus on improving credit culture. The short-term cost of such a clean-up is slower growth.The global economy is confronting many uncertainties and risks – trade and geopolitical tensions being the biggest. This has weighed on consumption and investment demand globally, too, causing growth to slip. Though the US-China trade tensions have not directly hurt India, indirect consequences have been significant.Typically, in periods of high global economic and trade growth, India has benefited through its exports sector. During the mid-2000s, when global growth was ~5% and trade growth ~7% per year, India’s exports grew about 24-26% on average. After the global financial crisis, when many countries stimulated demand, economies and trade grew rapidly, lifting India’s boat, too.Global growth has slowed to 3% in calendar 2019, the slowest since the global financial crisis of 2008 and 2009. Ditto trade growth. Importantly, prospects for next five years look no better than the last five, with growth set to average 3.5%. So the flank of exports is unlikely to deliver unless India improves its competitiveness drastically.The upshot? The path to $5 trillion will be gradual, and three things have to happen: growth momentum picks up and sustains; there is a material revival in consumption; and, private sector investment cycle kickstarts, backed by reforms.A blockbuster Budget and daring follow-throughs can be the perfect start for this.(The writer is Senior Economist, CRISIL. View expressed are personal)
Categories: Business News

Palm Oil in the crossfire as Mahathir angers India

5 hours 38 min ago
By Anuradha Raghu and Pratik ParijaA brewing diplomatic spat between India and Malaysia has got an unusual victim in the crossfire: palm oil.New Delhi abruptly restricted imports of refined palm oils this month, apparently irked by Malaysian Premier Mahathir Mohamad’s comments on steps taken by the administration of Indian Prime Minister Narendra Modi that affect Muslims in India. The South Asian country is the world’s biggest palm buyer and is a major market for Malaysia, the No. 2 producer.While India didn’t publicly say the move was in retaliation to Mahathir’s comments, the Southeast Asian nation counts refined palm oil as an integral part of its economy and any loss in sales will deal a huge blow.If India’s refined imports from the nation drops from about 2.6 million tons a year to reach to 2018 levels, about 2 million tons of Malaysian processed products worth $1.4 billion may need new buyers, said Khor Yu Leng, an independent economist with Segi Enam Advisors, who has published papers on Malaysia’s political economy.Tensions between the two countries began in September when Mahathir told the United Nations that India “invaded and occupied” Kashmir and later criticized India’s citizenship amendment act. His comments made the Modi government uneasy and led to an influential processors’ group in Mumbai asking its members to avoid buying palm oil from Malaysia.The Indian government has also informally told local importers to avoid purchasing crude palm oil from Malaysia, according to traders and industry officials, who asked not to be identified due to the sensitivity of the matter. The spokeswoman of the commerce ministry was not immediately available for comment.Imports SlumpSince then, many Indian palm oil buyers have started shifting to Indonesia amid concerns that Modi’s government may restrict purchases from Malaysia or hike import taxes.Malaysia’s refined palm oil shipments to India surged to about 2.66 million tons last year from 650,000 tons in 2018, while exports of the crude variety dropped to 1.75 million tons from 1.87 million tons, according to Malaysian Palm Oil Board data. Benchmark palm oil prices fell 0.4% to 2,875 ringgit a ton on Bursa Malaysia Derivatives by the midday break on Wednesday.PremiumsThe rift may not only hit Malaysia, but also hurt Indian consumers as suppliers from Indonesia have started charging a premium of $15-$20 per ton over benchmark prices, traders said. Although, Malaysia on Friday said it will raise its export duty on crude palm oil to 6% in February from 5% a month earlier, analysts said it may come under pressure to cut the levy.“If India doesn’t buy from Malaysia, the country has to find other buyers,” said Oscar Tjakra, analyst at Rabobank International in Singapore. “Malaysia may have to change its export duties to remain attractive.”Palm may average at 2,950 ringgit per ton in the first quarter and at 2,750 ringgit in the April-June period, Tjarka said. That compares with an average of 2,588 ringgit during the Oct.-Dec. quarter.To minimize the blow, Malaysia has started promoting its palm oil in other markets. Primary Industries Minister Teresa Kok said during a recent visit to Pakistan that both the countries were planning to improve trade in palm oil and other commodities. While Malaysia will use diplomatic channels to reach a solution with India, the country is also exploring ways to boost palm oil shipments to central Asia, Africa and the Middle East.Malaysia’s shipments to Pakistan surged more than 80% from a month earlier to 74,000 tons during the first 20 days of January, according to cargo surveyor SGS Malaysia Sdn. Exports to India slumped almost 49% to 30,500 tons, figures showed.Indonesia CheeringMeanwhile, rival Indonesia is cheering as it expects higher purchases by India.Indonesia has enough supply to fulfill India’s demand, and the country is hoping to regain its export share in the south Asian nation that was lost after China overtook India in becoming Indonesia’s biggest buyer, said Mukti Sardjono, executive director of the Indonesian Palm Oil Association.“Indonesia is bound to benefit from this but it’s negative for palm oil as a whole,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental. “Demand will be hit badly.”
Categories: Business News

Tata Motors' Tiago, Tigor score 4-star in crash test: Global NCAP

5 hours 38 min ago
NEW DELHI: Vehicle safety group Global NCAP on Wednesday said homegrown auto maker Tata Motors' compact cars Tiago and sedan Tigor achieved four star rating for adult occupant protection in a crash test. The two cars achieved three stars for child occupant protection in the #SaferCarsForIndia crash test, Global NCAP said in a statement. Vehicle safety group said it tested Tigor model as Tiago and Tigor are the same car in the front and passenger compartment. Tigor/Tiago offers two frontal airbags as standard. Its structure and footwell area have been rated as unstable. Head and neck protection for adult occupants was good, it added. "Chest protection for passenger was adequate and marginal for the driver. Femur and knees showed marginal protection as there is risk of contracting dangerous structures behind the fascia," it said. In terms of child occupant protection, the car scored three stars. The Tigor/Tiago does not offer three point belt in all seating positions and does not offer ISOFIX anchorages, it said. This result follows the recent five star achievement of the Tata Altroz and the previous five star result for the Tata Nexon, it added. Global NCAP had launched #SaferCarsForIndia Campaign in 2014 with an aim of promoting safer vehicles in the country. "Between 2014 and 2020 Global NCAP has completed more than thirty-seven safety assessments which have acted as an important catalyst in the safety improvement of Indian cars," it said.
Categories: Business News

Power Mech Projects bags orders worth Rs 351 crore

5 hours 38 min ago
NEW DELHI: Power Mech Projects on Wednesday announced that it has bagged orders worth Rs 351 crore from state-owned Bharat Heavy Electricals Limited (BHEL) and Jaiprakash Power Ventures.In a filing to BSE, the company said that it has "received letter of award/work orders for....civil and architectural works of all buildings structures and associated works... for 2x660 mw Maitree Rampal Project, Bangladesh... for a total contract price of Rs 211 crore awarded by BHEL."The project is to be completed in 20 months, the filing said.The company said that it has also received work order for operation and maintenance services for 1320 mw Jaypee Nigrie Super Thermal Power Plant at Nigrie, Madhya Pradesh, for a period of five years for a total contract price of Rs 140 crore awarded by Jaiprakash Power Ventures.The shares of Power Mech Projects were trading at Rs 729.60 apiece on BSE in morning trade, up 1.62 per cent from the previous close.
Categories: Business News

If promoter buying is cue, these 46 stocks saw a lot of it in 2019

5 hours 38 min ago
When 80 per cent of stocks on Dalal Street were facing severe selling pressure in Calendar 2019, promoters of at least 46 midcap and smallcap firms were busy in gradually raising their ownership.Promoters’ activity analysis can be one of the methods to judge where a business headed. A rise in promoter holding indicates that company owners are confident of their company’s growth prospects, as at any point they are the best judge of the strengths and weaknesses of the business.Data available with Ace Equity suggests promoters from across sectors including auto ancillary, batteries, casting, chemicals, consumer food, real estate, engineering, electrode, finance, information technology, hotels, pharmaceuticals, pesticides, sugar and textiles increased holdings every quarter in 2019.Some of the second-rung stocks in which promoters increased their holdings last year included Balaji Amines, Radhe Developers, Steel Strips Wheels, Bright Brothers, Libord Finance, HBL Power Systems, Kanpur Plastipack and Sukhjit Starch. These stocks have also been seeing a lot of action of late and have managed to deliver positive returns ranging from 3 per cent to 32 per cent to investors so far this year. 73512707 Analysts say promoters increasing stake typically sends out a message that they see value in the company at that level or there may be some positive development in store. Sometimes, promoters use such depressed markets to increase their holdings in order to prevent any hostile takeover, again a positive indicator.“A promoter gradually increasing stake in the company is definitely a positive sign for investors. This implies his conviction, commitment on and future growth prospects of the company. However, buying a stock just because the promoters are buying may not be the right thing to do. One must also do some research on the company and its business model. Promoter buying should be seen as a confidence-booster signal,” says Narendra Solanki, Head of Fundamental Research for Investment Services at Anand Rathi Shares & Stock Brokers.Some other stocks where promoter holding went up last year have actually seen further value erosion in recent weeks. Stocks like Tainwala Chemicals (down 55 per cent), DCM Shriram Industries (down 52 per cent), Plastiblends India (down 49 per cent), Avonmore Capital (down 49 per cent), Sybly Industries (down 47 per cent), Orient Bell (down 45 per cent) and Alembic (down 44 per cent) fall in this bracket. 73512726 A couple of these stocks also happen to be favourites of well-known investors on Dalal Street. For instance, Anil Kumar Goel held over 1 per cent stake each in Panama Petrochem, Sarla Performance Fibres and Ador Fontech as on December 31, 2020. Vijay Kedia-owned Kedia Securities had a stake in Astec Lifesciences, while many others on the list were owned by various domestic money managers.“Promoters picking up stake could mean they are bullish on the long-term prospects of the business. However, nowadays it has also become a signalling mechanism to buy a small stake and prop up the price in the near term,” says Prabhakar Kudva, Director at Samvitti Capital.“Investors should only pay heed if or not the quantum of buying is significant enough compared with their existing stake. Even then it’s important to understand that this is just a starting point to start studying the company,” he said.Abhishek Basumallick, Chief Equity Advisor at Intelsense Capital, said promoter buying cannot be the sole criterion to buy into a stock. “You will always need to look at other parameters. Promoter can buy or sell due to many reasons, some of which are personal in nature and has nothing to do with the business fundamentals,” he said.(Disclaimer: Stocks mentioned in the article are for information purposes only. Consult your financial adviser before taking any buy or sell decision)
Categories: Business News

India’s painful double whammy spreads to other emerging mkts

5 hours 38 min ago
By Srinivasan SivabalanIndia may be experiencing the most glaring setback among emerging economies, but its double pain of slowing growth and surging inflation is spreading far and wide.While a debate rages over whether the latest data from India points to “stagflation,” a sixth successive quarter of economic deceleration and fifth consecutive jump in price growth are threatening “buy India,” one of the most popular emerging-market trades of the last decade.They’re also emblematic of how developing nations, as a whole, may be losing steam.An analysis of 30 major emerging economies, based on public data and Bloomberg surveys, shows half of them slowing or stagnating in 2020. Two-thirds are set to experience a simultaneous acceleration in inflation. That’s a potent source of mini-economic crises across the group.Here are the details:Six other economies are on course for a fate similar to India, and that includes China.73515445 Four Eastern European economies will probably manage to control inflation, but pay for it in terms of slower growth.73515458 Four nations are expected to maintain their gross-domestic-product expansion, but inflation will erode purchasing power in their economies.73515465 Seven other nations may see growth accelerating, but also have to tolerate higher rates of inflation. Two of these, the United Arab Emirates and Saudi Arabia, may welcome that given they’ve been suffering from deflation.73515471 The following eight countries are the pick of emerging markets. They will see lower or stable inflation and faster growth.73515503 The diverging rates of growth and inflation point to the impact U.S.-China trade tensions have had on emerging markets. Most of the countries on a “stagflationary” path are in Asia.India, however, is not a victim of trade wars. Its slowdown is self-inflicted, caused by the evaporation of consumer demand, proliferation of bad loans and erosion in business confidence. The Reserve Bank of India’s interest-rate cuts have failed to boost the economy, while the government has been distracted by social strife and its fiscal measures so far haven’t done much to spur demand.At the other end of the spectrum, Turkey is projected to post the biggest improvement in growth as private consumption and investment pick up. Yet the growth won’t be strong enough to drive up inflation, which is expected to fall back to 2017 levels.Russia has been a haven against trade-war risk and it doesn’t look like it will lose that status this year, even with Vladimir Putin overhauling his government. Add to that its famed twin surplus -- on the fiscal and current accounts -- and the nation looks well poised. Any increase in oil prices will be a further boost.Volatile Argentina will make progress bringing down inflation. Mexico, whose local bonds offer real yields of around 4%, will see its economy return to growth in 2019.The bottom line is that each country has its own demons to slay and trouble in its backyard that has nothing to do with tensions between Beijing and Washington.That calls for a dose of caution after a stock, bond and currency rally since August that’s been driven by optimism over the phase-one trade deal.
Categories: Business News

A $21-billion slugfest between telecom firms comes down to just $2

8 hours 38 min ago
By Andy MukherjeeIndia’s great telecom melee was bad enough as a brawl between service providers and the state, with operators complaining about the government’s outlandish claims on their past revenue. Now, consumers have jumped into the fray. A confusing three-cornered fight could lead to ugly outcomes: The country’s broken financial system would take a fresh hit; new 5G networks could be delayed; and the government’s annual revenue from the sector might get squeezed.This week, New Delhi wants nearly $21 billion in back license fees and spectrum usage charges, including penalties, interest and interest on unpaid interest. Before they lost the case in India’s Supreme Court, the telcos maintained the government’s interpretation of what it was owed under the 1999 revenue-sharing agreement to be too broad and unfair because it included even their non-telecom revenue, such as interest and dividend income.It's a Pyrrhic victory for the government because not all the money it wants is coming. Of the 15 firms facing these long-contested demands, most have shut down, sold out or ended up insolvent. All eyes are now on Vodafone Idea Ltd., one of the three private-sector mobile services companies still standing. It has to pay 530 billion rupees by Jan. 23, by government estimates. Even taking Vodafone Idea’s own calculation of the liability at 442 billion rupees, the loss-making carrier’s net debt soars to a life-threatening 1.6 trillion rupees. It may not be able to meet all its obligations. 73513142 The threat of a bankruptcy was real when I wrote about Vodafone Idea’s grim prospects in November. With the two large shareholders — Britain’s Vodafone Group Plc and Indian billionaire Kumar Mangalam Birla — reluctant to throw more good money after bad, the equity value of the business is hurtling toward zero.Telcos have requested the country’s top court to extend the payment terms. Even if Vodafone Idea stays afloat thanks to a last-minute compromise, customers have read the writing on the wall. The mobile carrier lost 36 million subscribers in November. And that was before all three players raised prices in December. As the churn gets busier, the hypercompetitive Indian market will effectively turn into a duopoly. Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd. will see their market shares settle at around 35% and 45%, respectively, by March 2021, according to Jefferies Financial Group Inc.Where will this leave Vodafone, or the $1.7 billion that the government earns from the current No. 2 player as annual spectrum revenue? Of the many creditors that have exposure to the telco, Yes Bank Ltd. is particularly vulnerable. Saddled with bad loans, the Indian bank is struggling to raise funds as its capital buffers wear dangerously thin. If potential white knights get cold feet because of the lender’s outsize telecom exposure (as much as 29% of shareholders’ funds, including 18% for Vodafone Idea), then the country’s financial system may be looking at a big confidence shock. 73513168 Worryingly, future profitability of the telecom industry also remains unclear. Blame it on the cost-conscious Indian consumer. With telcos raising prices, using one SIM card for calls and another for data isn’t cost effective any more. Demand will consolidate, and some of it may vanish altogether. Bharti Airtel recently introduced a 179 rupee plan, valid for 28 days, which offers 2 gigabytes of data, unlimited calls, and comes packaged with 200,000 rupees of life insurance. This is a way to lessen the sticker-price shock for entry-level subscribers, especially in semi-urban and rural areas, who are being nudged to trade up from the current 149 rupee basic plan. Expect more such bundled offerings as both Bharti and Jio try to raise their average revenue per user to around 300 rupees, where the economics starts to make more sense.That’s still a ways off, though. Jio, whose aggressive entry three years ago with free voice calls and cheap data triggered cutthroat competition, garnered revenue per user of just 128 rupees — not even $2 — in the December quarter, practically flat from a year earlier. Being a new entrant, Jio isn’t saddled by the government’s revenue demands that have come to haunt Vodafone Idea and, to a smaller extent, Bharti. Until Mukesh Ambani, the deep-pocketed tycoon behind Jio, turns his attention from chasing market share to maximizing returns on his $50 billion foray, pricing will stay irrational and new investment will remain constrained.Although Bharti has raised new equity and convertible debt, at more than 1 trillion rupees, its net debt is onerous. It’s hard to see strong demand at the government’s auction of 5G airwaves in April. Vodafone’s long-standing tax dispute with New Delhi has been a cautionary tale. The business imploding because of another instance of government heavy-handedness will send a fresh bad signal about India’s business climate, though for the country’s telecom industry, the outlook will remain somber regardless of whether Vodafone Idea survives or not.
Categories: Business News

After Aadhaar, Nilekani is testing drones

8 hours 38 min ago
BENGALURU: Nandan Nilekani backed ShopX and SpiceJet’s cargo unit SpiceXpress are among five consortiums selected by India’s civil aviation authority to conduct experiments of long-range commercial drone flights, people familiar with the matter told ET.The move is part of the Directorate General of Civil Aviation’s (DGCA) beyond visual line of sight (BVLOS) drone experiments, for which it had sought expressions of interest in May last year.ET reported in December that DGCA had approved two consortiums – of delivery app Dunzo and drone startup Throttle Aerospace – for the experiments.“These agencies will now conduct their tests, based on which we will then develop the entire architecture for the beyond visual line of sight drone operations,” said Amber Dubey, Joint Secretary, Ministry of Civil Aviation, without either confirming or denying the latest developments.“This is just at the experimentation stage, the rules will take at least 6-8 months to be finalised,” Dubey added.The second batch of approvals comes ahead of a planned drone pilot training programme that the DGCA is organising on February 4-5 at Begumpet, near Hyderabad. All 30 consortiums that had applied to participate in the BVLOS experiments have been invited.Trained pilots are mandatory for firms to conduct BVLOS experiments, as per the DGCA’s original plan. Due to a lack of clearances for drone training institutes in the country, the DGCA will conduct the training itself to fast track the project, people in the know of the matter told ET. “There have been several delays, but the government has been proactive in overcoming the issues...This is one of the few examples of public-private partnership at a policy level, so it’s bound to run into some issues,” a top industry executive told ET on the condition of anonymity.Another government official told ET that the civil aviation ministry was keen to give clearances to as many firms as possible for the drone experiments but in a phased manner. He said final clearances to the consortiums that have currently secured approvals will be given after the pilot training exercise. “This (BVLOS drones) has huge positive benefits, but also has huge risks. That’s why we’re proceeding with extreme caution, and it’s the same across the world,” said Dubey. Amit Sharma, cofounder and CEO of ShopX, said the company was focusing on developing drone technologies that could be deployed within the next 18 months, without commenting on the DGCA approval.
Categories: Business News

Tata Motors to soon have half-a-dozen EVs

8 hours 38 min ago
MUMBAI: Tata Motors is readying a portfolio of about half-a-dozen vehicles targeted at prospective buyers of electric vehicles (EVs), seeking to establish an early lead in an automotive segment billed as the future of mobility.Tata Motors could end FY20 with sales of more than 1,000 electric vehicles. It expects a multi-fold jump in the next two to three years as more affordable EVs, priced below Rs 10 lakh, help expand the portfolio.Shailesh Chandra, head of Tata Motors’ EV division, said that with the introduction of new models and decline in battery prices, EVs could account for 10-15% of the overall passenger vehicle market by 2025, up from less than 1% now. Experts forecast the Indian market to grow to 4 million units by then, meaning half-a-million EVs could be sold annually then.“What really creates excitement is a new launch. With new models, personal buyers will go past the fleet segment. Our Nexon EV is on its way. We have already spoken on the Altroz EV and there are other affordable options on the board,” Chandra said, without confirming the number of planned EV launches.ET learns that after the Altroz EV, the Hornbill or H2X EV is the next offering, and these cars could be priced below Rs 10 lakh.The company already has two different versions of Tigor, which will be followed by Nexon, Altroz, Hornbill and yet another offering in two-three years.Tata Motors believes that when the price difference between EVs and conventional engines narrows to about 20-25% from about 40-45% now, the consumer will start switching to EVs. And that is why it plans to price the Nexon EV – SUV at about Rs 15-17 lakh.Subsidies and tax benefits will play crucial roles in narrowing the price gap between EV and ICE vehicles, Chandra said.For a fleet buyer getting almost ?3 lakh in subsidies and other cumulative benefits in the shape of lower taxes and interest subvention, the prices of a Nexon EV and a top-end diesel Nexon are about the same. But a personal buyer will have to pay a higher price as s/he can’t get subsidy benefits.According to the EV subsidy policy, the first 35,000 vehicles registered will be entitled for subsidy of Rs 3 lakh, provided the exshowroom price of a car is less than Rs 15 lakh.Tata Autocomp will make the battery backs, while Tata Chemicals is exploring partnership options to make the cells locally. Meanwhile, Tata Power is setting up charging infrastructure at strategic locations.To be sure, Tata Motors’ market share fell to 5% in December 2019 compared with 16% a decade ago in the passenger car segment, according to data from Society of Indian Automobile Manufacturers. At present, it enjoys a 30-40% share in the nascent EV segment.
Categories: Business News

Financing may not come easy for purchase of high-priced EVs

8 hours 38 min ago
MUMBAI: Inadequate charging infrastructure, reliance on battery imports, range anxiety and high prices are not the only problems in India’s electric vehicles (EV) industry. Financing these cars isn’t too easy either.At the core is viability — and volumes. Financiers said electric car sales must show up sufficiently on the dashboard for them to build a viable finance plan.For the personal buyer, car prices range anywhere between Rs 12 lakh and Rs 20 lakh. Financiers believe that the consumer would default because of the high prices, making it difficult for them to sell the attached vehicle.Ashok Khanna, head, auto finance, HDFC Bank, is a veteran in the motor financing space. “Our bank will finance as and when vehicles are introduced. However, we have to see how many customers are eligible for a Rs 15-lakh car,” he said.Khanna added that after a 5% GST cut and reduced registration cost, amounting to total relief of more than 30-35%, it is doubtful the government will extend any further benefit to the personal EV space.Another leading auto financier said that it is looking to rejig its loan schemes to make them a bit more attractive for potential EV consumers.“The FAME-II benefits are currently extended only to vehicles used for commercial purposes and not personal use. Large electric fleet operators are able to get finance. It’s the small fleet operator or the personal buyer who is finding it difficult to buy such cars,” said Neeraj Gupta, founder of the shared mobility cab company Meru, in which Mahindra now has a majority stake.Gupta added that banks have to play a vital role in opening up financing, which will see volumes expand in the electric vehicle segment.About 3,600 electric cars were sold in FY19 against a total of 31.6 lakh cars; so, less than 0.5% of sales were electric-powered vehicles, data from SMEV (Society of Manufacturers of Electric Vehicles) showed.Electric cars are costlier by at least 30% compared with conventional cars, primarily due to the high cost of batteries. In addition, the major components are still imported.Shailesh Chandra, head of electrical mobility of Tata Motors, said the situation is easing out as more and more products with a value proposition are being launched. “I think the challenge for banks is the new technology and low resale value,” said Chandra.For its latest launch, the Nexon EV, Tata Motors has extended the warranty to eight years or 1.5 lakh km, something Chandra believes will give more assurance to financing companies. Hyundai Kona also offers a battery warranty for eight years, or 1.6 lakh km, whichever is earlier.While finance companies are ready to experiment with new products and new technology, the high product cost is a deterrent. “The financier is keener on assessing the creditworthiness of the individual than the product,” said Vikas Jain, head, sales, Hyundai India.Besides vehicle viability, financiers assess customer background and cash-flow, said Ramesh Iyer, managing director, Mahindra Finance.To be sure, volumes are slowly picking up, making financiers more comfortable and confident about financing a new technology vehicle, said Sohinder Gill, director general, SMEV.Earlier, EVs were 95% subsidised products: With the dependence on the government reducing, volumes in this space should increase, Gill said.
Categories: Business News

SB Energy on track to achieve solar energy target in India: Raman Nanda, CEO, SB Energy Global

8 hours 38 min ago
SoftBank’s arm SB Energy Global will meet the target of setting up 20 GW of capacity in the next five years in India despite challenges, Raman Nanda, CEO, SB Energy Global, told Rachita Prasad. The next target would be to become a global 100 gigawatt-company. Edited Excerpts:SoftBank committed to invest $20 billion to set up 20 gigawatts in India. How has the journey been so far. Is that target achievable given the challenges? In 2015 Masayoshi Son, along with Sunil Mittal, made a commitment that we would do 20 GW. Today, we are a little over 5.5 GW. We have built a strong team. We won and executed large-scale solar projects which helped us create a robust playbook for building a big solar plant — right from the auction stage to the commercial operations. We entered the industry when building scale was possible. We have done construction on time and met budgets. Our investors are satisfied with our financial results. This is a young industry that’s changing fast. Before we entered India, solar tariff was over Rs 6; we won our first auction at Rs 4.60, and now it’s a little more than half of it. With such rapid change, such hungry demand for land, there's a lot of challenges for an industry that moves that fast. With our great team and the resilient playbook, we are on track to execute 20 GW in the next five years.What’s the way ahead and next target for SB Energy?The real target for companies with long-term vision to be a global leader would be to build 100 GW. Within the next 10 years, we will see 100 GW companies in renewables or even in just solar. We are prepared to be one of them. India maybe contribute to half of that capacity.Solar power tariff has fallen and many renewable power generators are facing delay in payments from discoms. What is the motivation for somebody trying to expand in the renewable space?Our contracts are 100% with the central government, or central government entities. We have not faced much payment delay problems. We walk in with open eyes. There is still a lot of pressure on bidding.We have a clear set of rules on equity return, operating income. We don't bid where it doesn’t make sense.Are you looking at divesting a part of your majority stake in SB Energy? Or is there a possibility of inducting another investor?There are no plans to divest. We have got results; we have a playbook and we are still bullish on solar. We are looking at other countries where we can do big-scale solar projects. We have just entered the US. We couldn't be in a stronger place, so there are no plans of divestment. We don't plan to get another investor. We have taken years to create the dynamics between our investors and the platform; it's a special dynamic; why change it?Any plans for fundraising?We are fully funded.There are concerns that a lot of SoftBank’s recent investments have played out as expected and they would have an impact on investment strategy of SB Energy. Are you cautious?We have a strong platform and understand the business. We have a plan to achieve our goal and that's what drives our goals. The results have been what we had hoped for. We continue with our plan.Are you looking at expanding the wind energy portfolio?We are doing a large-scale solarwind hybrid project. We are putting our foot into wind as well.Are you looking at acquisition opportunities in renewables?We are open to the idea but it comes down to the rules we have set for ourselves. The price has to be right.What is your assessment of government policy on renewable?The government is doing the right thing. We only would want that that more of the solar parks should come because they have succeeded in setting up scale.
Categories: Business News

D-Street may see $2.5b in foreign inflows on this policy tweak

8 hours 38 min ago
By Abhishek VishnoiThe Indian stock market is set to see billions of dollars of inflows after a policy tweak comes into effect on April 1, analysts predict.The nation will increase the foreign portfolio investment limit in a company from the current 24 per cent to a higher threshold set for its sector. The move could eventually trigger net inflows of between $2 billion and $2.5 billion to Indian equities from passive funds, according to estimates from Target Investing and Morgan Stanley.The change will likely increase India’s weighting in the MSCI Emerging Markets Index by about 70 basis points, according to the two brokers, compared with 8.6 per cent as of last month. The inflows will add to the demand that has driven Indian stocks to record highs just as the pace of economic growth has slumped to its lowest in a decade. 73512449 Global index compilers such as MSCI Inc. take into account the percentage of shares available to investors when determining a stock’s representation in equity gauges. MSCI’s next semi-annual review will happen on May 12 and will be effective from June 1, according to its website. A spokeswoman for the index provider declined to comment.India’s maximum permissible investment limit differs across sectors. For example, foreign investors can hold only up to 49 per cent in an insurance company, while they can own 100 per cent in a coal miner.Unless companies pass resolutions to keep the foreign portfolio investment limit at 24 per cent, all firms in India will irreversibly have their threshold lifted to the sector’s cap after April 1, Morgan Stanley strategists including Sheela Rathi and Ridham Desai wrote in a note last month.
Categories: Business News

Foreigners dump bonds fearing widening Budget deficit

8 hours 38 min ago
By Subhadip SircarGlobal funds have turned net sellers of India’s sovereign bonds for the first time in four months, as expectations grow of a wider budget deficit.Foreign investors sold 110.2 billion rupees ($1.5 billion) of government bonds so far in January, set for its first sell-off in four months, according to data from Clearing Corp. of India, compiled by Bloomberg. An increasing number of analysts predict that Prime Minister Narendra Modi will again announce a record borrowing plan at the Feb. 1 budget.The sell-off may be a sign that India’s weakening economy, as well as limits on more policy rate cuts, signal the start of prolonged pain for the nation’s bond markets. The benchmark 10-year yield has gained for three consecutive weeks as Modi contends with an inflation surge and slowing growth. 73512945 “The spike in inflation and concerns around the upcoming budget might be the main reasons for offshore selling,” said Rohit Garg, a Singapore-based emerging markets strategist at Bank of America Merrill Lynch. While the current account is under control due to slowing imports, it also suggests economic growth will continue to struggle, he said.Morgan Stanley expects the government to announce a fiscal deficit at 3.7 per cent of gross domestic product for the fiscal year ending March, higher than the 3.3 per cent expected. Aditya Birla Sun Life AMC Ltd. also sees a shortfall of about 3.8 per cent.Modi’s government had announced a record borrowing plan of 7.1 trillion rupees for the current fiscal year as it attempts to revive an economy expanding at its slowest pace since 2009. Bonds though had rallied in 2019 after the Reserve Bank of India cut rates five times, and introduced a U.S. Federal Reserve-style Operation Twist in December to lower long-term borrowing costs.Monetary ConstraintsA surge in December’s inflation to 7.35 per cent, the highest since 2014, though has changed sentiment among bond traders. Analysts now expect the central bank, which next meets on Feb. 6, to be on a prolonged pause in its policy.The benchmark 10-year yields have risen 15 basis points after dropping to a one-month low on Jan. 3. It closed down 1 basis point at 6.64 per cent on Tuesday.“RBI’s easing expectations have shifted materially with the spike in inflation - so you have less support coming from that front,” said Dushyant Padmanabhan, strategist at Nomura Holdings Inc. in Singapore. “Until now you had accommodative policy but lower inflation - so real yields were quite attractive.”
Categories: Business News

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