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Indian Markets Beat Back Wall Street Blues On Wednesday

Indian markets opened weakly on the back of Wall Street and then Asian market blues but rebounded sharply with the BSE Sensex index closing 268 points higher at 71,823. The Sensex recovered almost 1,000 points from its intra-day low.

By Govindraj Ethiraj
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Indian Markets Up
On today’s episode, financial journalist Govindraj Ethiraj talks to Arvind Chari, fixed income veteran and now CIO of the London-based Quantum Advisors as well as Navkendar Singh, AVP, Client Devices Research, IDC India.

Our Top Reports For Today

  • (00:00) Stories Of The Day
  • (00:50) Indian markets beat back Wall Street blues on Wednesday, set to rise further.
  • (02:53) Global oil supplies to satisfy demand and keep prices in check, says IEA.
  • (05:38) India’s debt markets are brimming with interest, what is going on?
  • (16:06) $1,200 foldable phones are flying off the shelves in India but many other segments are slowing


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.

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Markets, Oil & Rest

U.S. stock futures were higher on Wednesday after the Dow Jones Industrial Average posted its biggest decline since March 2023.

The 30-stock Dow on Tuesday shed 1.35% for its worst day since March 2023. The S&P 500 lost 1.37%, and the Nasdaq Composite  slumped 1.8%. 

All thanks to hotter than anticipated inflation leading traders to conclude that the Federal Reserve may not cut interest rates as early as they had hoped.

Which brings us to India because lower Federal Reserve rates as we know means more capital flows into markets like India.

Indian markets opened weakly on the back of Wall Street and then Asian market blues but rebounded sharply with the BSE Sensex index closing 268 points higher at 71,823. The Sensex recovered almost 1,000 points from its intra-day low. The Nifty50 ended 97 points up at 21,840.

The horror story on Wall Street on Tuesday was the ride company Lyft which is similar to Uber but not India seeing its stock price rise 60% after it added a zero in its profit margins by mistake.

The adjusted earrings margin as a percentage of bookings was only 50 basis points but was wrongly reported as 500 basis points.

 In case you are wondering what this metric is, fret not, because the Wall Street Journal also calls it a wonky one, though acknowledges it is closely watched.

The interesting part actually is this.

The reason the stock shot up immediately is because computers are doing what is known as algorithmic buying, responding to number announcements.

At some point the humans realised that there was a human error, I am guessing. The stock was up around 18% on Wednesday in early trades, so presumably the human traders were somewhat forgiving.

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Meanwhile, oil prices were holding steady on Wednesday, around $83 a barrel, thanks to, among other things, a robust demand growth from OPEC and a sharp decline in U.S. fuel stocks.

The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. 

Both forecasts were unchanged from last month, reported Reuters.

Here is the interesting part.

OPEC’s 2024 forecast is higher than that of other forecasters, such as the International Energy Agency (IEA) and banks including Morgan Stanley. The IEA releases its own monthly oil report on Thursday.

So while Bloomberg reported OPEC’s top official saying on Tuesday that global oil demand is set to expand strongly, a monthly outlook from the group revealed limited compliance with the members’ latest round of supply cuts. 

And importantly, the Paris-based International Energy Agency flagged comfortable markets this year, with expected supply growth more than satisfying worldwide consumption.

World consumption will increase by 1.2 million to 1.3 million barrels a day in 2024, a “significantly weaker” pace than last year as economic growth slows in China and elsewhere, Executive Director Fatih Birol said. This will be easily matched by swelling production from the Americas, predominantly the US, Canada, Brazil and Guyana, reported Bloomberg.

“This growth is more than enough to meet the global oil demand,” Birol told Bloomberg TV, adding . “ in the absence of major geopolitical turmoil or major extreme weather events, we would expect a rather comfortable oil market and moderate oil price evolution throughout 2024.”

Elsewhere, Coal India  plans to start operations at five new mines and expand capacity of at least 16 existing ones to address growing demand for the fuel, its chairman told Reuters on Wednesday.

The rise in coal-fired power output is outpacing renewable energy growth for the first time since at least 2019.

A record output by Coal India could boost inventories at power plants running on domestic coal by 16.1% year-over-year to 40 million metric tons by end-March, Coal India Chairman P.M. Prasad told Reuters adding that Coal India aims to boost output by more than 7% to a record 838 million tons for the next fiscal year that starts April 1.

Debt Markets Are Picking Up

Foreign institutional investors have been largely selling Indian equities but buying debt. So much so that they have invested over Rs 35,000 crore in the last month

In the last 10 days, they have already invested over Rs 15,000 crore over close to Rs 20,000 crore in January, so Rs 35,000 crore in all, according to a report in PTI quoted by NDTV Profit.

January was the highest inflow since June 2017.

The broader economic indicators are obviously looking better for FPIs right now. It of course helps that JP Morgan Chase & Co. in September last year said that it will add Indian government bonds to its benchmark emerging market index from June 2024, a move expected to attract  around $20-40 billion in the subsequent 18 to 24 months.

So what is driving this interest in Indian bond markets and what are investors specifically gunning for and why ? What are the instruments that are on the shopping list and what is the outlook for the coming months ? I reached out to Arvind Chari, fixed income veteran and now CIO of the London-based Quantum Advisors which invests into India from overseas.

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Folding Phones Are Doing Well, Others Not So Much

The International Data Corporation ’s (IDC) Worldwide Quarterly Mobile Phone Tracker has said that India shipped 146 million smartphones in 2023, but that figure was only 1% above the previous year.

Consumer demand remained stressed, leading to excess inventory levels across channels despite price corrections and schemes by the vendors. 

But the top level figures conceal more than they reveal.

The average selling price of phones is rising steadily, hitting a record of US$255, rising 14% YoY in 2023. 

Almost a million shipments of foldable phones were shipped, with ASPs declining at US$1,236, though that is marginally down. 

Samsung led the foldable phone market, although its share dropped to 73% in 2023 as other players such as Motorola, Tecno, OnePlus and OPPO have entered India’s foldable market.

This also marks the third consecutive year of double-digit ASP growth, thanks to premium segment growth.

As we have discussed earlier on The Core Report, shipments to online or ecommerce channels are falling, dropping 6% in this case to 49% while offline grew 8%.

Telecom research firm Counterpoint Research analysts told us earlier that one reason for this was that people preferred to go to stores to buy the more expensive phones and more importantly, it was easier to strike finance deals at physical stores.

Apple sold 9 million phones, despite having the highest ASP of US$940. This was led by previous generation iPhone models and its push for local manufacturing. Its iPhone 13/14 were amongst the Top 5 shipped models annually.

As a brand, Samsung remained in the leadership position, with a record high ASP of US$338, although with a 5% shipment decline YoY. Its Galaxy A14 was the highest shipped device of 2023.

I reached out to Navkendar Singh, AVP, Client Devices Research, IDC India and began by asking him about the key highlights of 2023 before coming to the outlook for 2024?

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