Do it yourself

The union budget presented on 1 st   February 2022 was widely hailed as growth supportive. Almost all experts and commentators opined that ~14.5% in budget capex would catalyze a new wave of infrastructure and industrial development and growth in the country. The finance minister highlighted the following four pillars of growth as the basis of her budget proposals. 1.    Accelerated development of world class infrastructure (PM Gati Shakti) 2.    Using digital capabilities for delivering inclusive development 3.    Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action 4.    Crowding in private investment through enabling policy environment Most strategists projected high growth for the infrastructure and capital goods sectors in the wake of great emphasis placed on capex by the finance minister. However, collective wisdom of the markets did not concur wi...

Stabilization is the key (Yes Bank) This Budget would have the daunting task of progressing towards consolidation after the covid related fiscal push. On the other hand, an eye needs to be kept on the economic growth in an atmosphere of slowing global growth and tightening domestic financial conditions. On a strategic level, the broad reforms process should continue with outlays earmarked for rural development, boosting manufacturing, employment generation, and capacity building through infrastructure. Despite this being the last Budget before general elections, we do not anticipate much in terms of tax dole outs for the masses. For FY24E we anticipate the Budget deficit to increase to INR 17.8 tn, GFD/GDP to print at 5.9% (after attaining the 6.4% target for FY23BE). Net and gross borrowings are likely to increase in FY24E to INR 11.7 tn and 15.4 tn respectively. Despite RBI pausing after another 25bps hike in February 2023, we see a scope for yields to rise in H1FY24 towards 7.60...

Honb’le Minister, In the Dvapara Yuga, an epic war was fought between the forces of righteousness (Pandava) and unscrupulousness (Kaurava) , popularly known as the War of Mahabharata. In the 18 days long war, many important battles were fought. In one such battle on the 13 th day of the war, brave Pandav Prince Abhimanyu, son of Arjuna, was killed by the top Kaurav generals. Jayadratha, the king of Sindhu State, and son-in-law of Kaurav king Dthrutrashtra, played the most critical role in this battle. Jayadratha had a boon from Lord Shiva that for one day in a great war he will be able to check the advance of the entire opponent army, except Arjuna. In this particular battle in Mahabharata war, he used that boon to stop the entire Pandava army from helping Abhimanyu, who was ambushed by senior Kaurava generals and killed. Arjuna was tactfully distracted from the main battlefield. The next day, Arjuna avenged the death of his son, by beheading Jayadratha. The point in narrating t...

  Motherhood is inarguably one of the most impactful events in this universe. It is a miracle that sometimes even defies the laws of nature. It is a beautiful and strong emotion having power to transform societies and cultures. However, the physical process of motherhood is usually not the same for all women. For some it is a smooth transition from conception to delivery. For some it is a troublesome period of pregnancy followed by a normal healthy delivery. These women could suffer morning sickness, high blood pressure, anemia, swelling in feet and face, elevated blood sugar level, etc. Though these conditions normalize post-delivery and usually have no impact on the child’s health. Few women need to use medical intervention to get impregnated. There are some cases where a woman would get impregnated, but is unable to retain the fetus and suffers miscarriage. There are also some cases where the pregnancy is smooth but the delivery is troublesome. Very similar has been the case...

  Logistic sector (Jefferies Equity Research) Formalisation of the logistics sector is a multi-year theme that should play out. We adjust our numbers for lower international cargo volume growth seen in 3QFY23, but believe that follow-ups to the National Logistics’ Policy (NLP), continuing GST driven organised players’ share gain, Dedicated Freight Corridor (DFC) traffic increase, Concor privatisation should play out in 2023. NLP targets dropping logistics costs to less than 10% of GDP from the current 14-15% with initiatives including 1) Integration of Digital System (IDS) 2) Unified Logistics Interface Platform (ULIP) 3) Ease of Logistics (ELOG) and 4) Network Planning Group (NPG) and System Improvement Group (SIG). Under the IDS, thirty different systems of seven departments will be integrated and will include data of the road transport, railways, customs, aviation and commerce departments. We believe results will take time but systematically the government will reduce red ta...

  It was summer of the year 1997. The equity markets in India were struggling to come out of a four year long directionless phase. Though globally the technology sector had started to excite the investors, nothing much was happening in India. It was arguably the most dreary phase in the Indian stock markets in a decade. The National Stock Exchange used to follow a weekly settlement system in those days. Under the weekly settlement system, trades done during a week beginning every Wednesday and ending on the subsequent Tuesday were clubbed together and the net result of those trades was settled in the next three days. The net funds due were paid to the clearing corporation on Wednesday. The net sold securities were delivered on Thursday. The new fund receivable and net securities purchased were received on Friday. All deliveries were in physical paper form. A weekly settlement cycle ended on Tuesday, the 20 th of May 1997. The pay-in of funds due was made on Wednesday, the 21 s...

  The Financial Stability Report released by the RBI a few weeks ago, highlights the external sector challenges being currently faced by the Indian economy. The report however seeks to dispel the fears of any balance of payment crisis like 2013. It also assures about the adequacy of reserves to handle the present situation and stability of the INR. External sector facing challenges India’s merchandise trade deficit increased to a staggering US$198.3bn during April-November 2022, as compared to US$115.4bn in the corresponding previous period. Strong headwinds emanating from still elevated commodity prices, global economic slowdown, volatile capital flows and higher imports due to adverse terms of trade shock continue to exert pressure on India’s external account.  Rising oil import bill limits policy flexibility; CAD rises sharply India’s share in global crude oil consumption increased from 3% in 2000 to 5.2% in 2021. India presently accounts for almost 20% of each barre...

If we cut the noise and overcome our recency bias, Indian stocks have given a decent return over the past five years; though this period had been particularly eventful. We witnessed the worst pandemic in over a century crippling the world. A variety of economic and geo-political conflicts impeded the global economy. The financial markets witnessed unprecedented liquidity deluge that led to over US$20trn bonds trading at a negative yield; followed by sharp monetary tightening. The world moved from severe deflationary conditions to sharp inflationary spikes. Central banks cut the policy rates close to zero (even below zero in some cases) and then hiked the rates at the fastest speed in five decades. In the domestic economy, we saw macro parameters like inflation, fiscal deficit, current account deficit etc. worsening sharply. We witnessed a monetary easing and tightening cycle. Banks went through a massive credit cycle. The benchmark Nifty50 has yielded an 11.4% CAGR over the past fi...

Capital goods and consumer durables (Nirmal Bang Institutional Equities) In 3QFY23, the Capital Goods companies may record strong revenue growth for the Capital Goods companies (+30.3% YoY) on the back of robust order booking. In the Consumer Durables segment, demand collapsed in Nov’22 after a good Oct’22 before recovering again from mid-Dec’22. Consequently, we expect 17.3% YoY topline growth for Consumer Durables companies. For Consumer Electricals companies, we estimate 10.7% YoY topline growth, backed primarily by channel filling of non-rated fans ahead of the impending transition to new BEE norms. Also expect up-stocking of Wires & Cables by dealers and distributors as copper prices have risen by ~18% from July’22 lows. Capital Goods and Consumer Durables companies are expected to show margin improvement as most of the companies are most likely to have exhausted high-cost inventory by mid-3QFY23. Consequently, expect a sequential improvement in aggregate EBITDA margin (+4...