Our Top Reports For Today
- [00:00] Stories Of The Day
- [00:50] World markets take a hit on Israel-Hamas war, oil holds at $87 a barrel.
- [05:27] No supply chain issues, wait times down, Indian auto industry now in full demand mode.
- [15:07] Cellular phone exports rise sharply, target $17 billion by end of year.
- [21:25] Nobel Prize for Economics Goes To Professor Goldin for gender disparities at work and pay.
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Markets & Oil
Indian markets were affected by rising tensions in the middle east.
More than 1,100 people have died since the fighting between Israel and militant group Hamas broke out over the weekend.
The BSE Sensex dropped 483 points to end at 65,512 levels, while the Nifty50 closed at 19,512, down 141 points. The Volatility gauge, India VIX, zoomed 12 per cent today.
Stocks fell in early trade on Wall Street with the Dow Jones Industrial Average (^DJI) dropping roughly 0.2%.
Oil prices surged partially after an unexpected attack on Israel by Hamas raising tensions in the middle east.
US crude futures surged as much as 5.4% in New York, at one point topping $87 a barrel but slipped back a little.
Oil has been otherwise on a downward journey from around $94 to touch $84 in just weeks. Last month, oil was projected to reach $100 on the back of supply cuts by Saudi Arabia and Russia.
What was not quite predicted was the lack of demand the high prices would trigger and prices started sliding back.
Back to supply, there is no real impact seen on supply in the current situation and as things stand, hence prices are not really reacting.
Bloomberg News quoted Citigroup saying the hostilities reduce expectations that Saudi Arabia will cut or eliminate its 1 million barrels a day of output curbs.
The only unknown risk is that of Israel attacking Iran, according to some analysts. That is not the situation prices are yet reflecting though.
Morgan Stanley said that they thought the impact of the conflict would be limited. For now they don’t expect a spillover into other countries, meaning there will be a muted longer-term impact on crude prices.
Societe Generale SA said heightened geopolitical tensions could add a $5-$10 risk premium to crude prices.
In Israel itself, the Government and the central bank, the Bank of Israel has moved swiftly to support the shekel, Israel’s currency which fell despite the intervention.
The Bank of Israel said it would sell as much as $30 billion and extend up to $15 billion through swap mechanisms as part of an unprecedented program to support markets, according to a statement on Monday quoted by Bloomberg.
Israel’s currency slid to a session low despite the intervention, after briefly erasing losses when it was announced. The currency was down 2% to 3.9235 against the dollar as of 1:01 p.m. local time, its weakest since 2016.
The country’s benchmark TA-35 stock index however rose 0.2% after recouping a loss of as much as 1.3% earlier Monday.
There have been other unfortunate outcomes on the business side.
Nvidia cancelled its AI conference in Tel Aviv next week due to safety concerns.
The chipmaker had scheduled its in-person AI summit, with a keynote by CEO Jensen Huang, for October 15 and 16 at Tel Aviv calling the event as “the #1 conference for developers, business leaders, and AI researchers.”
About 2,500 developers, researchers and tech workers were set to attend the two-day conference, Nvidia confirmed to CNBC. Israel has a buzzing AI tech startup ecosystem with thousands of active startups.
Back home again, India’s government will probably scale back on its investment spending in the coming years as it curbs its budget deficit, said Goldman Sachs Group, giving the private sector scope to pick up the slack.
With the government planning to cut the fiscal shortfall by about 1.5 percentage points over the next two years, the rapid pace in capital expenditure growth in the past few years “cannot be sustained going forward,” Goldman’s economists said in a note.
Meanwhile, it's that time of the 5-years now, with more state elections lined up.
The Election Commission (EC) on Monday announced the dates of Assembly polls in five states, namely, Madhya Pradesh, Chhattisgarh, Rajasthan, Telangana and Mizoram.
The elections will start around November 7 and end on December 5.
The elections will take place in a total of 679 Assembly constituencies, representing one-sixth of all the constituencies in India. There are 82 million male and 78 million female voters in these five states or 160 million of which 6.02 million first-time voters in these states this year.
Auto Industry On The Roll, Waiting Times Crash
Indian auto is having a good season if not a year. OVerall sales are up 20% to 1.9 million units.
Within that passenger vehicle sales are up 19%, two wheelers 22% and 3 wheelers are up a record 49%.
Actually, if anything is really booming, it's three wheelers, including of course electric.
The rise in two wheeler sales also suggests a positive shift in rural fortunes despite the unusual monsoon patterns and loss to crops.
And 3 wheelers are going gangbusters with every month seeing new records. We have touched upon the reasons earlier but will come to them shortly.
But perhaps the most significant trend is that there is a clear shift on the supply side.
There is no post Covid effect beyond the fact that supply chains have mostly stabilised and waiting periods are down quite sharply, going by what the Federation of Automobile Dealers Associations is saying.
I reached out to Manish Raj Singhania, President of FADA and also the Managing Partner of Ralas Motors based out of Raipur, Chhattisgarh and I began by asking him what was keeping demand so strong.
Speaking of things going well for the automobile industry, things are not going well for electric two wheelers.
Bloomberg is reporting that the government is demanding that six companies — including Hero Electric Vehicles Pvt, once India’s top e-scooter maker — return around Rs 500 crore ($60 million) of subsidies for violating localization rules.
The Government is also holding back unpaid subsidies from others.
The issue has of course been festering for a few months and the Government had already withdrawn subsidies causing electric two wheeler companies to jack up their prices.
Meanwhile, things as I mentioned earlier are brighter on the four wheeler side.
So much so that Maruti Suzuki India (MSIL) announced yesterday it would invest Rs 1.25 lakh crore or almost $15 billion in total capital expenditure (capex) between 2024 and the end of the decade.
Out of this, around Rs 45,000 crore will be allocated for expanding production capacity by 2 million units in this eight-year period.
The remaining Rs 80,000 crore of the capex until FY31 will be dedicated to expanding sales channels, building service and spare parts infrastructure and research and development (R&D) efforts.
Mobile Phone Exports On Course For $17 billion this year
India’s mobile phone exports have now touched $5.5 billion this year from April to August or Rs 47,500 crore and are on their way to hit $17 billion for the whole year, the electronics industry is saying.
Half of these are presumed to be Apple phones though the exact number could not be confirmed.
All of last year, mobile phone exports added upto $11.2 billion or Rs 90 crore or so while in 2021-22, they stood at Rs 45,000 crore.
India manufactures around 350 million phones in all for domestic and exports and can scale upto 500 million quite quickly.
I reached out to Pankaj Mohindroo, Chairman of the Indian Cellular and Electronics Association to find out, among other things, if Indian exports were going up, who was cutting back or losing out ?
I began by asking him what was driving the present jump in export numbers we were seeing.
Nobel Prize in Economics
Professor Claudia Goldin has been awarded the Nobel Prize in Economics 2023, the Royal Swedish Academy of Sciences announced on October 9th for addressing a question that is often asked nowadays but not perhaps clearly answered.
Why are there pay and employment gaps between men and women?
The Nobel Prize recognised Prof Goldin’s comprehensive research on women's contribution to the labour market and the causes of change and the main sources of the remaining gender gap.
Born in 1946 in New York, Goldin used more than 200 years of data to show that while the pay gaps could historically be explained by differences in education and occupational choices, they now exist mainly between men and women in the same jobs, and arise with the birth of the first child, Bloomberg said.
Goldin is the 55th recipient of the prize and the third woman to receive the award since its inception in 1969. This was the last Nobel Prize this year.