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Markets Slip After Fresh Highs, HDFC Posts 34% Jump In Profits

Markets are less sure right now that global interest rate cuts could come as early as March, thanks to some hawkish remarks from central bank policy makers in Europe

By Govindraj Ethiraj
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Markets Slip
On today’s episode, financial journalist Govindraj Ethiraj talks to Jitender Bhargava, former Executive Director of Air India and a well known commentator on aviation issues. We also feature an excerpt from a Weekend Edition video interview featuring Captain Jimmy Sarbh.

Our Top Reports For Today

  • (00:00) Stories Of The Day
  • (01:00) Markets slip after fresh highs, HDFC posts 34% jump in profits
  • (02:50) More investors join the party, on the back of record demat accounts
  • (07:00) India’s auto industry pushes back on potential direct imports by companies like Tesla
  • (09:28) Why do airlines fail to communicate with passengers?
  • (19:32) Why private ports will help boost India’s growth


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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Indian markets once again searched for direction and slipped, taking a cue from global stocks ahead of the dollar and U.S. bond yields rising on Tuesday. 

Markets are less sure right now that global interest rate cuts could come as early as March, thanks to some hawkish remarks from central bank policy makers in Europe

Back home, Indian markets were pulled down by IT stocks which fell after a dramatic turnaround (my words) on Monday.

The markets seemed to be in a remarkably forgiving or accommodating mood when it came to IT stocks because while they did alright, they did not exactly set the street on fire.

Both the Nifty50 and the Sensex hit record highs for the third session in a row, before pulling back at close. The BSE Sensex fell 199 points to end at 73,129 levels while the Nifty50, on the other hand, closed down 65 points at 22,032 levels.

Meanwhile, the big result everyone was waiting for today was HDFC Bank which reported a  34 per cent jump in its standalone net profit to Rs 16,373 crore for the third quarter ended December 2023.

Driving home the point that the financial sector in general and banking sector in specific continues to be in good if not improving shape. And within that private banks are ruling the roost, so to speak. 

But results were strong in stockbroking, ICICI Securities, insurance ICICI Lombard and banking Maharashtra Bank..

Back to HDFC, Total income on a standalone basis rose to Rs 81,720 crore in the October-December quarter of FY24 against Rs 51,208 crore in the year-ago period, HDFC Bank said in a regulatory filing.

On a consolidated basis, the bank's profit increased 39 per cent to Rs 17,718 crore from Rs 12,735 crore.

The consolidated total income rose to Rs 1,15,015 crore from Rs 54,123 crore at the end of the same quarter the previous year.

There were some marginal increases in gross NPAs though net NPAs came down.

More Investors Join The Party

Elsewhere, more investors are crowding into the stock markets, suggesting that liquidity flows will remain strong for some time. 

The total number of demat accounts increased to 139 million in December 2023 while new account additions surged to 4.2 million in the last month of the year, according to data from  brokerage Motilal Oswal, reported by Business Standard. This is in contrast to average  monthly additions of around  2.1 million in FY23.

And when there is so much liquidity sloshing around in the system, what better time to raise funds, for yourself and the company, more often for yourself as was evident last year. Nothing wrong in that of course.  

Most IPO debuts so far this year have been on exchanges in Asia Pacific, with India’s equity market hosting more listings than other regional peers.

Of 38 global listings in the past two weeks, 34 were in Asia Pacific, according to data compiled by Bloomberg. The Americas followed with three newcomers, while the Middle East saw one and Europe had none, the data show. 

India has been the most active, extending last year’s record for debuts, as companies take advantage of valuations boosted by an equities frenzy and earnings prospects. 

Banks in general are doing well, internationally as well.

Goldman Sachs whose bullish reports we report here has reported a 51% jump in profits to $2 billion thanks to its  bet on asset and wealth management seems to be paying off. Revenue increased 7% to $11.32 billion.

Oil Prices Stay Down

And our energy segment is supported by IndiaEnergyWeek.

Despite all the turmoil in the Red Sea, which includes missiles flying back and forth, oil prices are still stable to edging lower. 

The passage of oil through the Red Sea and the Suez Canal is the issue, not the production of it in that region.

Brent Crude was quoting at…

In North America, extreme cold weather reduced oil production in some areas. And US equity markets were closed for a holiday.

Merchant vessels are being advised by the US Navy to avoid the Red Sea. And Houthi militants hit a US-owned commercial vessel with an anti-ship ballistic missile on Monday, Bloomberg reported.

In Africa, Shell (SHEL.L) is set to conclude nearly a century of operations in Nigeria onshore oil and gas after agreeing to sell its subsidiary there to a consortium of five mostly local companies for up to $2.4 billion, Reuters is reporting.

Shell pioneered Nigeria's oil and gas business beginning in the 1930s and has struggled for years.

Shell has been trying to sell its onshore Nigerian oil and gas business, but will remain active in Nigeria's more lucrative and less problematic offshore sector.

Shell’s presence in the Niger Delta has been mired with controversy over the years and the western oil majors have always been viewed as exploiting countries like Nigeria and their natural reserves.

Shell has faced multiple lawsuits for compensation over damage caused as a result of spills in the Niger delta.

Many western companies are pulling out from Nigeria as they focus on newer, more profitable operations. Exxon Mobil (XOM.N), Italy's Eni and Norway's Equinor (EQNR.OL) have sold assets in recent years.

Nnimmo Bassey, Executive Director of Nigerian advocacy group Health of Mother Earth Foundation told Reuters: "Shell must own up to its responsibility."

"This means full payment for the remediation and restoration of the polluted areas as well as reparations to the host communities. " Bassey said in a statement.

Indian EV Makers

The Core Report has argued consistently for a level playing field for auto makers and not allowing companies to sell directly into India as has been the stated and accepted policy for several decades.

This is in the context of Tesla who obviously has been negotiating with the Indian Government to sell directly into India and phase in manufacturing.

India’s automobile industry has now begun speaking up. Earlier Kinetic’s Sullaja Firodia Motwani made a case for domestic investment being respected and now Mahindra & Mahindra’s CEO has also opened up.

The interesting thing is that Tesla does not seem to be really poised to enter India at this point, at least that’s my view from what I have gleaned. This is of course despite all the clamour which would have you believe that they were pounding at the doors to enter.

While a Tesla investment would of course be welcome, the interests of a pretty large invested automobile base in India, including by various foreign giants ranging from Japanese to German and of course Korean, all of whom are also now strong in electric, is also something to bear in mind.

Also, Tesla is being wooed desperately (almost) by several countries, including in Asia and a decision to invest for the company would not be a simple one.

Tesla is a cool car no doubt but a car upwards of Rs 25 lakh, as is rumoured, is unlikely to set the country’s roads on fire.

Mahindra & Mahindra’s chief said they told the government there must be a level playing field between domestic and foreign players and local manufacturing must be promoted.

Mahindra (MAHM.NS) and Tata Motors (TAMO.NS) have pressed Indian officials privately not to lower import taxes of 100% on electric vehicles and protect domestic firms and their foreign investors as the government reviews Tesla's plans to enter the market, Reuters reported last month.

"Our approach is essentially to create a stronger industry in India, and not to be in a situation where manufacturing is done outside India, and India just becomes an importer of products," he added.

India sold 4 million cars last year and just 82,000 of those were EVs, but the nascent segment clocked sales growth of 115% versus the previous year.

India’s Flights To Nowhere

Dense fog in northern India on Tuesday for the third straight day of an intense cold wave, disrupted more than 160 flights.

As many as 128 flights from the international airport in New Delhi, the capital, were delayed, with 33 cancelled, aviation site Flightradar24 showed, an effect that cascaded through flight schedules nationwide.

Due to the prevailing conditions, the Delhi airport said, passengers are advised that flights not equipped for low-visibility landings (Category III compliant) may experience delays or diversions.

The last few days of course have seen perhaps the worst of both airlines and passenger behaviour thanks to cascading delays and the quite terrible handling of them.

It is also increasingly turning out, from The Core Report’s conversations with aviation experts that most airlines lack a clear SOP to handle delays, criticall at a communication point of view.

It is my own belief as a reasonably frequent traveller that good, consistent communication in a situation involving mounting delays will reduce passenger angst dramatically.

Yesterday, I spoke with pilot union president Capt Sam Thomas about the cockpit view on delays and the handling of them. Today, I try to bring in a slightly broader perspective by reaching out to Jitender Bhargava, former ED of Air India and a well known commentator on aviation issues.

I began by asking him that given the cascading delays and tempers, could airlines have managed and communicated better to passengers, accepting that the larger problem of fog induced delays could not be helped.

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Meanwhile, in what is emerging as a tragicomedy of sorts, the Bureau of Civil Aviation Security (BCAS) has issued notices to IndiGo and the Mumbai airport operator, MIAL, citing multiple violations of security rules and inadequate arrangements in handling passengers of the Goa-Delhi flight that was diverted to the nation's financial capital on Sunday night.

The reason for the notice.

Passengers got off a Delhi - Goa flight that was diverted to Bombay, sat on the tarmac and began eating their food there. This was after a delay of 12 hours or so and they landed at 11 pm.

Of course, the passengers must have refused to budge having been treated as cattle for the best part of the day.

What do you do, lathi charge them into submission ? 

I suspect the day is not far and would have arrived sooner were it not for this thing known as camera phones.

Speaking of camera phones, quite obviously a video of the passengers eating on the tarmac went viral on social media.. on Monday. 

India’s aviation minister held a meeting at midnight apparently, as the announcement took care to mention the timing of the meeting after which the notices began flying.

Why The Private Sector Must Run Ports

While the aviation industry has not exactly covered itself in glory in the last few days, it is largely accepted that the private sector is doing a good or better job of running India’s airports.

Well look at the difference and I do stress on the word look in efficiency and aesthetics of Delhi, Mumbai, Bangalore and Hyderabad.

So, if airports, then why not sea ports as well.

The same logic roughly applies.

India’s port sector is seeing much interest and activity recently, including with privatisation of several ports. 

Captain Jimmy Sarbh,  former chairman of P&O Ports in India, and now an independent consultant told me. 

Sarbh pointed out that the port sector would shape up much better if the efficiency of the private sector came into play. “The government has no business to be in ports,” he emphasised. 

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