Markets this week 📊
Despite a shortened trading week due to holidays, the markets were abuzz with excitement. Indian equities made headlines with an impressive recovery with gains of over 3%, defying global market trends. The week ended with the RBI ending the hikes, putting an end to a six-time streak of rate hikes.
While US indices, including the Nasdaq and Dow Jones, witnessed subdued movements with modest gains of 1%, the Indian market proved to be a pleasant surprise for investors. The debate of pause or pivot has however gained heat and the last quarter earnings may drive the next set of actions.
The US jobs data released this week will likely set the tone for market sentiment and guide investment decisions in the coming week.
Let’s now give you a heads-up on some of the important news that made headlines this week.
RBI plays a game of chess ♟️
Surprise hurray! That’s how the markets reached when RBI’s monetary policy committee unanimously agreed to keep repo rates unchanged at 6.5%. Imagine you are in an airplane and the pilot tells you to get ready for a crash landing, you prepare for turbulence and suddenly he manages to land the flight smoothly. This decision was on similar lines. Pause not a pivot was the governor’s underline disclaimer. Australia too paused the rate hikes this week.
Game of chess: Pausing at a time when all its peers worldwide are continuing with the rate hikes demonstrates prudent money management. As in a game of chess, one needs to keep thinking of forward moves. RBI also decided to pause and take stock of the impact of previous hikes (250 bps in total) on the economy. RBI had earlier received flak for being late in tackling inflation and wants to get its policy timing right this time to prevent choking off growth.
Why so confident? India is still untouched by recession fears looming elsewhere. Some positive data points also bring confidence like for starters, IIP expanded by 5.2% in Jan while the output of 8 core industries rose even faster by 8.9% in Jan and 6% in Feb. Domestic air passenger traffic, port freight traffic, e-way bills, and toll collections also bring some optimism. Amidst all the repo rate drama, the RBI has slightly raised its GDP growth projection for FY24 to 6.5% from 6.4%.
Our Take
The decision provides some relief to the homebuyers. Any additional policy rate hike could have pushed home loan interest rates closer to the psychological threshold of 10% impacting sentiments and affordability. The next course of action is now gone into a wait-and-watch mode, once better clarity emerges on the monsoon front.
Further Reads: RBI Rate Hike Paused: Consider Investing in Long-Term Bonds for Higher Returns
Cut out the Middleman! ✂️
Cheaper insurance: IRDAI, the Insurance regulator has given its nod to direct insurance plans, allowing customers to buy policies without the agents in between. Earlier, insurance bought directly from the company or through agents would cost the same. They are a breath of fresh air for those who prefer to buy insurance without any sales pressure and want to take matters into their own hands!
Details: Every insurer to have a well-documented board-approved direct insurance policy. The policy should specify the transfer of benefits to the policyholder due to a reduction in costs.
Hello Savings: Insurance companies heavily rely on insurance agents who are handsomely rewarded with commissions. These commissions go up to as high as 40-50% of 1st yr’s premium and are typically 5-10% from the 2nd year onwards with a blended average of 6%.
Our Take
Just like direct mutual funds gaining huge popularity among consumers, this is a welcome move in the interest of the common man. Lower costs and premiums and greater transparency.
P.S. But, like everything cost should not be the only factor. Choose the direct plan if you can choose the correct policy, know all the terms and conditions, be able to do the claim settlement easily, etc.
Rains washing away FMCG dreams 🌧️
Summer’s on pause: It’s the perfect time to sip a chilled beverage, savor some ice cream, and crank up the AC, right? Well, not quite, unseasonal rains and a sudden drop in temperatures have thrown a curveball at the summer season. Reports show that sales of cooling appliances have taken a hit, with companies like Godrej Appliances and Haier India reporting lower sales compared to last year. Consumers feel more like reaching for a blanket than cranking up the AC.
Who’s Screaming for Ice Cream?: With the weather not exactly cooperating, sales of ice creams have been impacted, leaving companies in a sticky situation. Rainy weather and rising flu cases have put a damper on the ice cream frenzy that takes on every summer. Ice cream brands started their summer campaigns in Feb itself as India recorded heat waves but a sudden climate change has dampened their plans (quite literally) as Delhi, Maharashtra, and Kerala witnessed a wet March.
Beverages to the Rescue: Companies like Coca-Cola and PepsiCo have reported robust sales in the December quarter, proving that nothing can dampen the love for a refreshing sip of the favorite beverage, come rain or shine!
Our Take
With unpredictable weather patterns, companies should keep a close watch on the India Meteorological Department’s forecasts for any signs of clear skies ahead. While ramping up production to meet anticipated demand, they should also be cautious to avoid supply issues in case of a sudden surge in sales.
WORLD
Hello Mumbai 🍎
First store: Apple is set to open its first retail store in Mumbai at BKC, planning for which had started way back in 2016. Apple released pictures of the store to be located in Jio World Drive, bringing an end to years of regulatory roadblocks and negotiations with the Indian government.
Desi inroads: With India overtaking China in population and US-China trade tensions running high, Apple has been looking to wean off its China dependence and tap into the promise of the South Asian nation. Apple has already started boosting ties with India on the supply side. Starting with producing lower-end phones in the country in 2017, it has now invested in new factories intending to produce 25% of all its iPhones in the country. Retail stores are next on the agenda to expand their customer base from the current 4% market share in the Indian smartphone market in 2022.
Our Take
Apple is a classic case of Make in India ambitions gone right. Starting in 2008 when Apple debuted in India, the company has come a long way albeit after intense lobbying. Apple currently supports 1 million jobs in the country and its hiring spree is a testimony to its ambitious local plans. FYI, Apple already plans to build another store in Delhi very soon.
What else made the news?
📈Auto Sales up: The auto industry saw increased demand in all the segments in March, with multiple vehicle manufacturers reporting best-ever whole sales in FY23 last month.
✂️Delist: British casualwear brand Urbanic in a bold move plans to delist from Flipkart to go direct-to-consumer.
🚫No tax: India has cut all windfall tax on crude oil from 3,500 rupees per tonne effective from Tuesday.
💰Middle East Moolah: Construction major L&T has bagged multiple contracts worth more than Rs 7,000 crore in the Middle East region.
💡Offshore odyssey: Adani Group’s partnership with EdgeConneX is in discussions with several banks for a $220 million loan offshore.
💰Pay off: Johnson & Johnson may pay ~$9 billion in compensation to thousands of people who sued the company over its talcum powder causing cancer allegations.
👎Qcommerce shrinking: Quick delivery platform Dunzo, backed by Reliance, laid off 30% of its workforce and will slash about half its dark stores as part of a rationalisation plan.