Our Top Reports For Today
- (00:00) Stories Of The Day
- (00:05) Adani stocks zoom on likely clean chit from courts in Hindenberg case.
- (03:10) Indian Rupee among best performing currencies in the world this year.
- (12:04) Indian auto sales hit record festival highs, poll bound states do even better.
- (19:15) Independent directors come under fire as Raymond family members enter into dispute.
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.
India's blue-chip index Nifty 50 closed at a fresh two-month high boosted by a rise in Adani group stocks, while energy companies jumped on stable crude prices.
The NSE Nifty 50 index closed at 19,889.70, highest since Sept. 20, 2023. The S&P BSE Sensex closed at 66,174.20.
Adani group stocks jumped between 2.6% and 20%, with Adani Enterprises (ADEL.NS) and Adani Ports and Special Economic Zone (APSE.NS) climbing 8.90% and 5.30% to top the Nifty 50 gainers, Reuters reported.
Adani Total Gas (ADAG.NS), which was among the worst hit after the Hindenburg report, jumped 20% on the day.
The Supreme Court has reserved its verdict on petitions against the conglomerate on Friday on allegations raised by U.S. short-seller Hindenburg Research in Jan. 2023 after the country's markets regulator said that it would not seek more time to complete its probe.
Shares of Adani Group companies rallied, with the flagship Adani Enterprises Ltd. surging 13%,
The jump added more than $15 billion to the ports-to-power conglomerate’s market value, the most since Hindenburg Research in its Jan. 24 report alleged wide-ranging corporate malfeasance against billionaire Gautam Adani’s group.
Adani Group’s market value of $138.4 billion is still about $97 billion below the level before a US short seller released a report accusing the conglomerate of stock manipulation and accounting fraud. The group has denied all wrongdoing.
In energy, crude prices remained stable near $81 per barrel, after falling below $80 in the previous session, ahead of a crucial meeting of the Organisation of the Petroleum Exporting Countries and its key allies on Nov. 30.
A key discussion point in the meeting will broadly discuss production cuts or some way of curtailing supply so as to keep prices stronger, for the sellers of crude that is.
The next indicator for Indian markets is the results of state elections on December 3.
Indian Rupee Looks Weak At Home, But Strong Globally.
The rupee bounced back from record low levels hit last week, closing at Rs 83.34 against the US dollar which is weak, relative to how it has been performing in recent months.
But expand the field or arena a little bit and the rupee is looking quite strong.
After losing more than 10% against the dollar last year, making it one of the worst-performing large currencies in the world, the rupee has been remarkably resilient in 2023, a report in the Wall Street Journal points out.
So while we usually mourn about the rupee’s fall, mostly because of how expensive it becomes to travel or pay for overseas education, it is worth noting that it has lost less than 1% of its value against the dollar this year.
Now compare that to a fall of 3% for the Chinese yuan, a roughly 9% fall in the South African rand and an 11% slide in the Japanese yen.
The WSJ says solid management by the Reserve Bank of India, the central bank, deserves much of the credit.
India’s foreign exchange reserves stand around $600 billion. one the larger pools of reserves in the world.
While the RBI has intervened to defend the currency and cause the reserves to deplete, it has been careful or largely careful and not fallen prey to the rhetoric of a strong dollar.
The WSJ points out that Japan intervened in the currency market in September last year to prop up the yen as it approached 146 to the dollar but that did not hold even more a month, and is currently around 150 a dollar, lowest level in 33 years.
Bottomline being that intervening in currency does not necessarily work out if other, more fundamental factors are not in your favour.
So the RBI has been broadly doing the right thing in not going berserk trying to manage the dollar.
The rapid rise in U.S. interest rates is a key reason for many currencies losing value this year.
On the flip side, the rupee has not benefited as such from the recent weakening of the dollar as we have been mentioning in recent days.
10-year Treasury yields have fallen sharply over the last month. The Japanese yen, the Chinese yuan and the South African rand have all gained ground against the dollar over that period, while the rupee has barely moved.
But the coming months should see more forex inflows, including because of an expansion of JP Morgans’ bond indices to include Indian Government bonds. Some $30 billion could come just because of that and the trickle has begun , though the formal inclusion happens next year.
So while Indian markets are broadly moving in a range, what could be the broader, more macro issues determining flows to and in between assets, ranging from oil to gold and of course equity markets.
While prices of commodities like gold and oil are set by global forces of demand and supply, currency obviously works a little differently. Except that in recent months, many Asian currencies have moved almost in tandem, and mostly downwards as the dollar has gotten stronger and stronger.
I reached out to Sydney-based Peter McGuire, CEO of XM.com, an Australian markets research and forex trading firm and began by asking him how he was seeing the broader markets across commodities, equities and currency from a top down view.
Auto Sales Hit Festival High
India’s automotive dealers association FADA or Federation of Automobile Dealers Associations has said that the festival season which of course was unusually long and lasted 42 days saw a 19% increase in overall sales.
Interestingly, poll bound states like Madhya Pradesh saw huge spikes in purchases, particularly 2 wheelers.
In the festive season, two wheelers grew 21% and passenger vehicles grew 10% in this period, the association said last evening.
The festive period starts on the first day of Navratri and ends 15 days after Dhanteras or beyond Deepawali that fall on November 12, also later compared to normal. Last year, or in 2022, Diwali was on October 24.
The tractor segment experienced a slight decline of 0.5% though it was even lower at the beginning of the season.
Record-breaking sales were reported in several categories, with rural areas particularly contributing to the surge in two-wheeler purchases.
Interestingly, the first few days of the festival season saw sluggish sales but things had picked up by the time Diwali arrived , which was two weeks ago.
FADA has said that they are still concerned with inventory levels for passenger vehicles as car manufacturers continue to push further dispatch thus keeping the inventory rate at near to all time high levels.
I reached out to Manish Raj Singhania, President of FADA and began by asking him how the overall numbers were looking in contrast to previous years and also if inventory levels were improving.
Meanwhile, most auto companies have announced plans to raise prices in January, attributing it to rising costs and overall inflation, reports the Business Standard.
The car companies include Maruti Suzuki, Tata Motors, Mahindra & Mahindra and Audi. Mercedes-Benz India said the company was contemplating a price hike in the new year, the Business Standard said.
Institutional Investors Haul Independent Directors Over Coals
The Institutional Investor Advisory Services has fired off a stern letter to the five independent directors on the board of Raymond Ltd following reports that emerged of a separation between managing director Gautam Singhania and his wife Nawaz Singhania, both of whom are on the companies board.
Raymond is primarily a branded textile and apparel company and is almost 100 years old.
The settlement process could turn acrimonious, as it appears now with a likely impact on the company’s ownership and control.
The news has already caused the stock price to fall 17% since November 10.
The letter asks the independent directors to step up to the occasion and not stay silent,
Despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don’t want stakeholders thinking that these accusations are to be tolerated.
At the very least, as Independent Directors, you need to communicate with investors and other stakeholders – assuage their concerns and articulate a course of action that you have taken following these public allegations. Your actions must protect the company from what proposes to be a long-drawn acrimonious battle between Nawaz Modi and Gautam Singhania, IIAS has said.
To protect yourselves and delineate yourselves from the allegations, you may wish to retain independent legal counsel.
Finally, IIAS says for the duration of this investigation, you must consider asking both, Nawaz Modi and Gautam Singhania, to take time off from their responsibilities as board members.
We recognize that asking the promoters to step aside is not easy – but as independent directors you have a fiduciary responsibility towards minority investors, employees and a larger set of the company’s stakeholders. Therefore, you will need to dispassionately separate ownership from management.
This of course makes it a test case to see how the independent directors respond since in most cases they don’t and surely did not sign up to land up in the middle of a messy promoter battle following a messy divorce.
Compensation for independent directors has been rising in India, reports have shown. While independent directors may perform their fiduciary roles, there is little to suggest from public evidence that they have taken tough positions on any issue.