Do it yourself

Economy: Activity holds up; strong sequential rebound led by seasonality (Nirmal Bang) Early data for March’23 indicate that 78.1% indicators were in the positive territory on YoY basis, up from 68.8% in Feb’23. Final data for Feb’23 indicate that 71.4% indicators were in the positive territory on YoY basis. On a sequential basis, there was a sharp rebound in March’23, led by seasonality. Around 75% indicators were in the positive territory in March’23, up from 50% in Feb’23. Final data for Feb’23 indicate that 34.7% indicators were in the positive territory. Urban unemployment edged up to 8.5% in March’23 from 7.9% in Feb’23. Rural unemployment rose to 7.5% in March’23 from 7.2% in Feb’23. Rural wages have sustained their rebound since mid-FY23 and rose by 8.1% YoY in Jan’23 vs. 7.6% YoY jump in Dec’22. In other rural indicators, tractor sales continued to hold up, growing by 13.7% YoY in March’23 vs. 20% YoY growth in Feb’23 (up by 32.9% MoM). Two wheeler (2W) sales grew by 9...

 R ecently, the Central Board of Direct Taxes (CBDT) released the latest data on direct collection in India. The data highlights some interesting trends in direct tax payments in India. In particular, the following points are noteworthy: Personal taxes growing faster than corporate taxes The growth in personal income tax has been far higher relative to corporate tax collections. In FY12 personal tax collection amounted to 53% of corporate taxes. The proportion of personal tax relative to corporate taxes. Top 5 states contribute 3/4 th  of total tax collection Top five states contributed about 73% of the total tax collection in FY22. Out of these the top 3 states (Maharashtra, Delhi and Karnataka) contributed over 61% of the total tax collection in FY22. Though separate city wise data is not available, the anecdotal evidence suggests that the top 3 cities (Mumbai, Delhi and Bengaluru) may be contributing over 30% of the total tax collections. This highlights the massive regiona...

FY23 sales highest ever, PVs lead, 2W lag In FY23, the sales of passenger vehicles in India seems to have reached an all-time high of 3.9mn units, recovering fully from the Covid induced slow down in the previous two financial years. In the next three years the sale of passenger vehicles in India is estimated to cross half a million mark. Two-wheeler and commercial vehicle sales have been slow to recover. These are expected to reach their all-time high levels in FY24e. Overall, 21.4million units of automobiles are expected to have been sold in FY23. The number is expected to increase to 24.7mn in FY24e and 28.7mn in FY25, registering an annual growth rate of over 15%. Besides local sales, Indian manufacturers exported about 3.7mn units of two wheelers and about one million units of other vehicles to other countries in FY23. Government pushing for faster adoption of EVs The government has identified automobile carbon emission as one of the primary sources of air pollution in Ind...

  As per the recent projections made by the United Nations (UN), India may have overtaken China to become the most populous country in the world. The current population of India is projected to be 1.417bn as compared to China’s 1.412bn. Notably, China has reportedly recorded a decline in population in the year 2022, as compared to the previous year. This could possibly be due to Covid related restrictions and deaths, but there is no denial that Chinese population growth has been plateauing for a few years, forcing the government to shed its legacy ‘One Child’ policy and encouraging people to have more children. In respect of India, the official data is not available as no official Census has been conducted since 2011. The data is therefore based on various estimates and extrapolations. Interestingly, The Diplomat , reported that “India’s population has consistently been undercounted. For example, India’s last census, held in 2011, missed 27.85 million people. On the other hand...

  India technology (ICICI Securities) Banks’ ongoing technology investment programmes remain intact : Citi management mentioned in their earnings call that their overall technology expenses grew 12% YoY in Q1CY23. Management acknowledged that these investments have driven a significant increase in expenses, but believes they are crucial to modernise the firm and position Citi for success in the years to come. Citi’s ongoing technology investments include consolidation of its platforms, modernising IT infrastructure, improving data and IT security, and investing in data to create advanced decision-making and risk management capabilities. Citi is also leveraging cloud-based solutions to modernise its systems and eliminate manual processes and operating costs over time. JP Morgan management mentioned the 16% YoY increase in their expenses last quarter (Q1CY23) included technology investments among other things. Banks are investing in technology for efficiency gains: Wells Fargo ...

  The market has generally responded to the RBI pause on rate hikes positively. The financial sector stocks, especially non-banking lenders, have attracted particular interest from investors and traders. The analysts have also been marginally positive on the sector post the shift in RBI stance. The RBI, in its latest policy statement, (i) paused the streak of rate hikes; (ii) maintained the “withdrawal of accommodation” monetary policy stance; (iii) upgraded the GDP growth estimates for FY24; and (iv) indicated inflation to stay closer to upper bound of policy tolerance range (4-6%) with upside risks. For a common small investor like me this translates into the following: (a)     Banks may find it hard to hike lending rates, especially the floating rate loans indirectly pegged to the policy rates. It is pertinent to note that most banks did not pass on the entire repo rate hike of 225bps done in the past one year, to the borrowers. (b)     The liquidit...

The global financial crisis in 2008 and the unprecedented quantitative easing that followed it triggered a debate over sustainability of the USD as global reserve currency. The simultaneous fiscal crisis in peripheral Europe, especially in Greece, also created doubts over the sustainability of the European Union with a common currency. The debate subsided materially over the next one decade, as the US Federal Reserve (Fed) and Government initiated a corrective action to taper the monetary stimulus and balance the fiscal account. The situation in Europe also improved as the troubled economies of Greece, Italy, Portugal, Iceland, Spain etc. stabilized due to the combined efforts of the European central Bank (ECB), IMF and respective national governments. The European economy even endured the BREXIT rather calmly. The onset of Pandemic in early 2020 however undid most of the corrective actions undertaken by the central banks, multilateral agencies and governments. The US Government and Fe...