Our Top Reports For Today
- (00:00) Stories Of The Day
- (00:50) Markets go into tracking mode, swing between global and local cues.
- (07:48) Is the Government dragging its feet on PSU privatisation because stocks are doing well?
- (15:30) India’s port sector is seeing more investment being committed
- (17:06) India’s biggest IPO at $3 billion could be from..a Korean company
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
Markets Swing As They Seek Direction
The US Federal Reserve is now hinting that a rate cut is further away from March, being the month the financial world was hoping, expecting and maybe praying for.
No rate cut means money will stay in the western world or flow back there, including from emerging markets.
Speaking of emerging markets, China is on the receiving end of prolonged battering even as the Government has apparently stepped into stabilising falling stock prices. More of that in a moment.
Indian markets stayed flat for most of the day and suddenly swung downwards towards the end of trading hours on Monday.
The S&P BSE Sensex closed at 71,731, down 354 points while the Nifty50 ended at 21,772, down 82 points.
Financials were particularly hit. Financial services, the highest weighted of the 13 major sectoral indices, fell 0.58% after gaining 1.7% in the previous week, its best in two months, according to calculations by Reuters.
Emerging markets were generally affected with MSCI Inc.’s index for developing-nation currencies fell 0.3% after Federal Reserve Chair Jerome Powell said the US may have to wait beyond March for the central bank to cut interest rates.
Chinese stocks were caught in another volatile session Monday following last week’s rout, as investors assessed the latest pledges by policymakers to stabilise the slumping equity market, Bloomberg reported.
The CSI 300 Index ended the day 0.7% higher after earlier dipping 2.1%. Some $7 trillion has been erased from the value of equities in China and Hong Kong since their peaks in early 2021
The China Securities Regulatory Commission said over the weekend it would guide more medium- and long-term funds into the market and crack down on illegal activities including malicious short selling and insider trading.
Well, I wish regulators didn’t only think of short selling and insider trading when the markets are crashing.
Back home, how indeed are fund flows looking at this point and what are investors buying into and to what extent are investors staying invested in India. Remember, FPIs have sold almost $3 billion of equities in January.
I spoke with Sonam Srivastava, fund manager and founder of Wright Research in Mumbai and began by asking her how she was looking at flows in the last month.
India’s PSU Stocks Are Doing Well, Will The Government Sell
A big question on the minds of analysts and financial journalists like myself is the fate, path and direction of the Government’s disinvestment or privatisation programme.
While the Government put out a fresh target of Rs 50,000 crore to be raised through disinvestment in the Interim Budget last week, it did sound almost like a consolation prize, given what could be achieved. But that of course depends on a more fundamental question, does the Government of the day want to get out of running businesses or does it want to stay in them ?
And more so, is it being tempted to stay on because stock prices of PSU companies including banks which it owns are rising ?
My colleague Pushpita Day of The Core caught up with Tuhin Kanta Pandey, a 1987-batch IAS officer who took over as Secretary of the Department of Investment and Public Asset Management (DIPAM) in 2019.
The IAS officer from the Odisha cadre is credited with successfully completing the long-pending sale of the national carrier Air India to the Tatas and overseeing the listing of the national insurer, the Life Insurance Corporation of India (LIC), also discussed and debated for years, if not decades.
In a longish interview, the full version of which you will find on www.thecore.in, she also asked him if the Government was going slow on disinvestment because PSU stocks were performing well in the markets ?
Oil Goes Local
A trend that was highlighted to us by Vienna based Viktor Katona of Klper Intelligence last week is gathering momentum.
A fall in tanker traffic through the Suez Canal is splitting up oil traffic flows between one trading region around the Atlantic Basin and including the North Sea and the Mediterranean, and another encompassing the Persian Gulf, the Indian Ocean and East Asia.
There’s still crude moving between these areas — via the longer and costlier journey around the southern tip of Africa — but recent buying patterns point to disconnection, Bloomberg reported.
Crude loadings from the US to Asia, meanwhile, plunged by more than a third last month from December, ship-tracking data from Kpler show. This is not likely to be permanent but the disruptions are there for now.
Oil tanker transits through the Suez Canal were down 23% last month compared with November, Kpler said in a note released Jan. 30, reported by Bloomberg. The drop was even more pronounced for liquefied petroleum gas and liquefied natural gas, which fell 65% and 73%, respectively.
Meanwhile, the flow of diesel and jet fuel from India and the Middle East to Europe, and European fuel oil and naphtha heading to Asia have been most affected.
Asian prices of naphtha, a petrochemicals feedstock, hit the highest in almost two years last week on fears it would become tougher to source it from Europe, said Bloomberg adding that the delivered cost of oil to Asia from the US, where production is surging, rose by more than $2 a barrel over a three-week period in January, according to traders involved in the market.
The Energy Segment on the core report was brought to you by India Energy Week starting today in Goa. For more details, log onto www.indiaenergyweek.com
JSW Says Will Invest Heavily In Ports
Private port company JSW Infrastructure which claims the spot of the second largest commercial port operator in India says it has earmarked some ₹6,000 crore for acquiring strategic assets, aiming to bolster its presence in an industry that is presently dominated by the Adani group, reported Mint newspaper.
JSW, part of the Sajjan Jindal Group, has 9 Port Concessions as of December 31, 2022 across India and two terminals at Fujairah and Dibba in the UAE.
The firm is exploring the acquisition of a stake in a government-owned port slated for privatisation, a move aimed at enhancing port connectivity, as a senior executive of the company told Mint.
“We have one of the strongest balance sheets in this infrastructure sector of this size and scale. So, the headroom is good enough to expand much more aggressively,” a top official told Mint.
Ports in general is a sector seeing considerable action as we have been reporting in The Core over the last few months. Many port projects that were held up for various reasons and in some cases for decades are seeing the light of day.
India has 12 major and 200 non-major/intermediate ports (under state government administration). Jawaharlal Nehru Port Trust is the largest major port in India, while Mudra is the largest private port. Moreover, India is one of the world's top 5 ship recycling countries.
The Maritime India Vision 2030 has identified over 150 initiatives to boost the Indian maritime sector.
India’s Biggest IPO From A Korean Company
When Hyundai launched its Santro car, the first version of its tall boy design on Indian roads in1998, people used to stare at it incredulously and usually start laughing. Was this a car or what ?
The Korean car maker grappled with this and worse reactions elsewhere in the world when it first launched, like in the US where a Hyundai car was almost like a bad word.
Much water has flowed under the bridge since.
Hyundai Motor is planning to list its Indian unit to raise at least $3 billion in what would be the country's biggest IPO, Reuters reported yesterday, adding the company is in early talks for an initial public offering (IPO) and has held discussions with several banks.
The fund raising by Hyundai, the second-biggest automaker in India with a 15% market share, would value its Indian operation at up to $30 billion, which is more than half its market capitalization of $42 billion in Seoul.
Shares of the company soared 5% on Monday, to their highest in nearly three years, Reuters reported adding that a valuation of up to $30 billion would put Hyundai's India unit behind rivals like Tata Motors at $41.43 billion and Maruti Suzuki India at $40.11 billion.
In 2023, 239 companies raised $6.78 billion via IPOs in India, according to LSEG data. India's biggest IPO was the 2022 listing of its largest insurer, Life Insurance Corporation in which it raised up to $2.7 billion.
For its India IPO, Hyundai has held talks with investment banks JP Morgan, Morgan Stanley Citi and Bank of America.
Hyundai came to India 30 years ago and has ramped up in India almost against all odds and of course against Maruti Suzuki who had an early entry advantage.
Going IPO, if it happens, reflects a higher level of commitment by Hyundai to the Indian market because that would bring far greater scrutiny and of course would make it more of an Indian company than it was earlier given that shareholding, or some of it, would be dispersed into hands of Indian shareholders, including retail.
Hyundai has said it plans to invest close to $4 billion in the Indian market in parts over the next decade to launch new EVs, charging stations and a battery pack assembly unit. Part of the money is being invested in buying a former GM plant to help Hyundai expand its production.
Elsewhere, share prices of Tata Motors, India's most valuable carmaker, hit a record high on Monday, rising as much as 7.2%, after it reported a more than two-fold increase in third-quarter profit, driven by strong sales in its British luxury car unit, Jaguar Land Rover (JLR), Reuters reported.