Markets Are Strong As Investors Search For New Themes

• (00:00) Stories Of The Day
• (01:00) Markets Are Strong As Investors Search For New Themes
• (02:38) A Strong Dollar Is Knocking More Currencies Out, Rupee Hits Fresh Record Low
• (04:31) HDFC Bank Brings In Large Chunk Of Deposits, Brokerages Smile
• (07:14) What Do India’s First Time Voters Want, An Economic Lens
• (18:52) The Tata-Vistara Pilot Crisis, Understanding The Symptoms Of The Problem
• (29:57) Asia Pacific Passenger Demand Up 52% In February, Global Up 21%

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 Stay Strong, Investors Hunt For New Themes

Heat waves have been predicted and the country is gearing up for a long and difficult summer. The markets obviously see these things differently as they should and as long as they can.

So power stocks are up and investors are hunting for bargains in air conditioning stocks or anything that could be connected to hot weather.

Meanwhile, The BSE Sensex hit a record high of 74,502 in the early hours, finally closed at 74,228, up 351 points.  The Nifty50, too, hit a lifetime high before ending the session at 22,515, up 80 points.

Meanwhile, gold prices have hit fresh highs, going above $2,300 an ounce on April 4, posting record highs for the 8th straight day on the expectation that the US Federal Reserve will cut rates soon. 

In India, the prices of the precious metal have hit an all-time high of Rs 70,248 per 10 grams. A year ago, gold was around Rs 57,000.

Oil prices are holding strong, more of that in a moment and stocks of oil marketing companies like BPCL and HPCL. were down in Thursday's trade amid a persistent rally in oil prices. 

Another trigger in general investors are watching out for of course is the credit policy today. It is quite likely that there will be no change, as is being projected.

Strong Dollar Knocks All Currencies Out

The Indian rupee declined to a record low on Thursday, thanks to increased dollar demand from local importers as well as high crude oil prices for which we have to pay out more dollars than before. The rupee was at 83.45 against the U.S. dollar during early trade and ended at 83.43 against the US Dollar, its weakest closing level on record.

Elsewhere, a strong  US dollar is frustrating central bankers and governments around the world, Bloomberg reports, adding that from Tokyo to  Istanbul, policymakers are stepping in to defend exchange rates.

The key reason, the American economy is strong and resilient and makes the case tougher for lower US interest rates in a hurry.

The greenback has gained against virtually every major peer in 2024, Bloomberg is reporting.  China and Indonesia have moved to steady their currencies, while Sweden and India which we just spoke of are also under pressure.

Of course exchange rates matter because while they help exports, they increase the cost of imports, including of course oil which in turn could push up inflation. 

Oil Prices Hold At 5 Month High

We talked about oil marketing company stocks losing ground because of rising oil prices and thus their margins getting squeezed.

Oil prices are now near a five-month high, a shade below $90.

Brent, the global crude benchmark, is up by about 16% this year thanks to tightened supply by OPEC countries, strong consumption and of course the geopolitical risk premium which we have been referring to. 

HDFC Bank Rakes In Large Deposits Chunk, Brokerages Smile

HDFC Bank is reporting a 7.5% or Rs 160,000 crore increase in its deposits in the last quarter. 

This amount is high given obviously the high base.

HDFC Bank’s total advances rose 55% while aggregate deposits were up 26% on a year-on-year basis though the share of low-cost deposits fell to 38% from 44% a year ago, the bank said.

The Economic Times quoted a report by Macquarie released soon after HDFC Bank disclosed the numbers to the exchange saying, "For a large bank like HDFC Bank to deliver 7.5% QoQ deposit growth, Rs 1.7 trillion deposit mobilisation in a single quarter, and even improve CASA growth – CASA growth was higher than overall deposit growth – All a fantastic outcome."

The share of the current and savings account, which constitutes low-cost deposits is referred to as CASA. This had fallen after the merger with the parent housing finance company HDFC, as of July last year. 

Retail deposits grew 27.8% over March 31, 2023 and there are other promising figures on consumer loan growth, among other categories.

HDFC Bank’s stock price was up yesterday and Macquirie says it is a great time to add a quality franchise like HDFC Bank," Macquarie report said." 

Veg Thali Prices Rise Further

Rating agency Crisil has put out its monthly thali price or an Indian full meal plate saying the cost of  a home-cooked vegetarian thali increased 7 per cent in March to Rs 27.3 compared to Rs 25.5 in the same month in 2023, said a report on Thursday.

On the other hand, a “non-vegetarian” thali’s price decreased 7 per cent to Rs 54.9 from Rs 59.2 in the same period, said the report by rating agency CRISIL. 

A vegetarian thali comprises roti, onion, tomato, potato, rice, dal, curd, and salad. A non-vegetarian has the same foods but chicken (broiler) replaces dal.

The shift in prices is a measure of inflation. In the case of vegetarian food, prices of onion, tomato and potato have risen by anywhere between 40 to 22% annually. 

If one were to go month on month, veg thali prices are down slightly compared to February 2024, that is in March while non-veg thali prices are up, albeit this could be seasonal. 

Crisil said it expects wheat prices to decline with fresh harvest arriving in the market and tomato prices to stay benign, but onion prices could see some near-term firming up because the rabi harvest is seen 20 per cent lower.

What Are India’s First Time Voters Wanting

The 2024 general elections will see over 18 million first-time voters cast their ballots.

A new and just out study, into which we will delve in much more detail in coming days by polling firm C-Voter has brought out some interesting insights on what first time voters think and more importantly with their predecessors over the decades.

An important insight. The shelf life of issues has reduced, meaning you may not be so influenced by what happened even a few months ago, however important it was.

I reached out to Yashwant Deshmukh, founder-director at CVoter and began by asking him what was changing in young voters' minds and what were the key differences as the data went back over 50 years.

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The Vistara Air India Merger Blues

After some 120 flights being cancelled because of pilots not turning up over the last three days, the situation has improved somewhat as operations have stabilised.

Pilots were upset with lower compensation levels ahead of a merger with Air India whose parent Tata owns 51% in Vistara.

Moneycontrol is reporting that two Air India pilots union meanwhile wrote a letter to Tata brass in support of Vistara Pilots, urging the leadership to engage in constructive dialogue with pilots and take proactive measures to address their  grievances.

In a joint letter, Indian Commercial Pilots' Association and Indian Pilots' Guild said that issues pertaining to reduction in minimum guaranteed flying allowance to 40 hours, leave approval and roster malpractices extend to all Tata Group airlines, i.e Air India, Air India Express, which also includes AirAsia India.

"Pilots are being exploited, overworked and deprived of their basic rights," said the pilot unions.

Vistara may also consider a reduction in its network as it has been running on full capacity, leaving no margin for error, the senior leadership of the airlines told employees in a town hall on April 3, people present at the meeting told Moneycontrol.

To sum up what has been going on including a deeper understanding of which pilots are specifically affected and why and of course the outlook ahead for the airline, I am joined by Sanjay Lazar, aviation consultant who has spent close to 38 years in Air India, including managing inflight crews.

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Air Traffic Up In Asia And Globally

The baseline problem if you want to call it that is demand, whether in India or elsewhere and not enough capacity, including of pilots.

Meanwhile, the International Air Transport Association (IATA) has said that Total demand, measured in revenue passenger kilometres (RPKs), was up 21.5% compared to February 2023. 

Total capacity, measured in available seat kilometres (ASK), was up 18.7% year-on-year. The February load factor was 80.6% (+1.9ppt compared to February 2023). 

International demand rose 26.3% compared to February 2023; capacity was up 25.5% year-on-year and the load factor improved to 79.3% (+0.5ppt in February 2023). 

IATA said that for the first time, demand for international services exceeded pre-pandemic levels (+0.9% compared to February 2019). 

This, however, is skewed by February 2024 being a leap-year with an extra day compared to February 2023.

Asia-Pacific airlines saw a 53.2% year-on-year increase in demand while . capacity increased 52.1% year-on-year with a load factor rose to 84.9%.

In case you were wondering why ticket prices are refusing to come down.